Michael Boggs: NZME Chief Executive on the company posting $54.2 million in earnings and net loss after tax of $16 million after impairment

Media company NZME is considering separating its property brand OneRoof into an entirely new business.

The company - which also owns Newstalk ZB and the New Zealand Herald - is reporting full-year earnings of $54.2 million and a net loss after tax of $16 million after impairment. 

Operating revenue is up 2 percent, but earnings are down by 3.6 percent.

Chief Executive Michael Boggs says they're doing a strategic review of OneRoof.

"How is it structured, and what is the best way of the shareholdings of that business? Should we own all of it - or should there be other shareholders in it, for example? Should we be investing more into it?"

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Episode Transcript

Speaker 1 (00:00):
Media company enzed Me, which owns this station, News Talk
ZB and the New Zealand Herald, is reporting a full
year net loss of sixteen million dollars today, but they
did have a big impairment of twenty four million dollars.
We'll have more on that shortly. Earnings were down at
down three point six percent for the year, but operating
revenue was actually up slightly up two percent. Michael Boggs

(00:22):
is the CEO of nzed ME. Hello, good afternoon, good afternoon,
Good to have you on the program. So what's this impairment? For?
What's worthless to the business.

Speaker 2 (00:31):
Effectively, what we have to do is every year assess
all the different parts of the business. And as you
can imagine, print is a business that is in decline
and has been for many, many years. So what our
auditors make us do is have a projection looking forward,
using very conservative estimates as to what revenues and profits
might come from that. And based on that conservative estimate,

(00:51):
what are the assets worth on the balance sheet? Oh,
what's the brand's worth? And masteed, so not things you
can physically touch, and if they're worthless, you have to
take an here in charge.

Speaker 1 (01:00):
In other words, newspapers are worthless, which would be no
surprise to anyone, I suppose absolutely. So where does that
Where does that leave you going forward? If you've got
you know, there's talk that maybe you'd split off part
of the business, your print business.

Speaker 2 (01:13):
Well, certainly no talk of splitting off the print business,
because it's a very successful part of our business, and
in fact, we continue to have really strong readership. Our
print business actually only declined by three percent last year
from the number or the revenue we got from our subscribers,
so people are still absolutely loving the product and advertising
remains really strong.

Speaker 1 (01:33):
You're just not growing. You're talking print as an online
and the newspaper purely just the newspaper. Interesting, So where
do you see when you look ahead, what are the
areas that you see for growth? Obviously you've mentioned One
Roof as a big one.

Speaker 2 (01:47):
Yes, indeed, so one Roof. For the last three years,
we haven't been trying to make a profit. Effectively, we're
putting every dollar of incremental revenue we've made back into
investing in the business to get it to grow. And
what we see it is twenty twenty four we will
look to try and make a profit with one Roof,
So we did have a four million dollar improvement in
the bottom line.

Speaker 1 (02:07):
And there's talk that maybe you would split that off
into a separate business. Yeah.

Speaker 2 (02:10):
What we've announced is that we'll do a strategic review
of One Roof. So we've appointed an external party, Jarden,
there are investment bankers to really review a number of things.
One is how is it structured and what's the best
way of the shareholdings of that business. Should we own
all of it or should there be other shareholders in it?
For example? Should we be investing more in it to
go faster again to actually make it worth more for

(02:31):
our shareholders? And our key focus is we don't think
the value of One Roof today is being reflected in
the NZB share price, and that's what we want to see.
What should we be doing better.

Speaker 1 (02:42):
Let's talk about the market more generally. It's been a
pretty tough time. It's been a pretty tough year for
media businesses. How have you managed to I mean many
people would look at this and say you've actually you've
got away pretty well here.

Speaker 2 (02:54):
Yeah. So in total, our ebit DAAR was down two
million dollars on last year. So last year we did
a fifty six point two million dollar. Ever, this year
we did fifty four point two, so in an environment
that's pretty tough, we're pleased with that result. However, it
was still down. So one of the things we've seen,
and I think you'll be talking about your show every day,
is there are glimmers of hope out there. We are

(03:15):
seeing inflation down, we are seeing interest rates down, we
are seeing GDP at beginning to grow, and so we
think those are great indicators of future success, not only
for New Zealand, but for our business.

Speaker 1 (03:28):
You've cut thirty jobs, you've saved four million dollars that
you've finished.

Speaker 2 (03:31):
Look, we're always looking, obviously as you'd expect, for ways
to improve the business. But at the same time we're investing.
We're introducing a new video, new show which requires more
people back into the business.

Speaker 1 (03:42):
The revenue from that you've spoken about today, What do
you make at the moment from video In terms of revenue.

Speaker 2 (03:47):
It's a very small amount, so it would be a
minor amount of our overall digital revenue, but every person
that watches a video we would earn significantly more a
multiple times more than a person just looking at a
stat ad for example, on the Herald, So we truly
think we've got a real opportunity one to firstly engage
an audience and then to actually be able to sell

(04:08):
advertising on that show. Importantly, also, we've had a number
of advertisers already approach us and say how can we
be part of that, which I think is a really
good sign.

Speaker 1 (04:16):
Do you how much do you expect to make off
that video?

Speaker 2 (04:20):
It's not something that we're talking about publicly, but we
expect it to become a substantial part of our business.

Speaker 1 (04:25):
Does The Herald's digital revenue cover the cost of its
news production at this point or do you rely on
that print publication?

Speaker 2 (04:33):
No, it absolutely does. So one of the things we
did last year is we changed the way we report
our profit loss of print versus digital. So now all
of our journalists charges go to our digital business unless
they are purely for a print product, and we actually
make a profit from our digital business even after paying

(04:53):
for every single journalist. So we think that's a really
good sign for the future. It's an area we think
will absolutely continue to grow and become a bigger and
piggerparter business. Having said that print is really important for us.

Speaker 1 (05:05):
The portion can we know are we able to glean
some insight into how much money you make from you
your one roof versus your online versus your print versus
your radio business.

Speaker 2 (05:16):
Yes, indeed, so in our financial statements we do split
that out between the various businesses, and so our publishing business,
being the print in digital, is still by far the
biggest contributor, followed by our audio business, and then our
one roof is the smallest, but one roof is the
one growing the quickest overall.

Speaker 1 (05:33):
There was talk in the news a couple of weeks
ago about Nick Mowbray maybe wanting to own enz in me.
What did you think of that?

Speaker 2 (05:40):
Oh, lookie, you can never believe everything you read in
the newspapers, for.

Speaker 1 (05:43):
Example, not a great thing to say as the boss
of the newspaper.

Speaker 2 (05:47):
It wasn't ours thingfully.

Speaker 1 (05:49):
Michael, thank you very much for that. Great to have
you in the studio, Michael Bogs, the n zed ME
Chief executive.

Speaker 2 (05:55):
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