Latest / Best of Business / Michael Boggs: NZME chief executive on the company posting a $16 million full-year net loss

Transcript

Michael Boggs: NZME chief executive on the company posting a $16 million full-year net loss · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk SEDB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Media company enz ME, which owns this station, news Talk
• 0:20
  Speaker 2: SEDB and The New Zealand Herald, is reporting a full
• 0:22
  Speaker 2: year net loss of sixteen million dollars today, but they
• 0:26
  Speaker 2: did have a big impairment of twenty four million dollars.
• 0:29
  Speaker 2: We'll have more on that shortly. Earnings were down at
• 0:33
  Speaker 2: down three point six percent for the year, but operating
• 0:35
  Speaker 2: revenue was actually up slightly at up two percent. Michael
• 0:38
  Speaker 2: Boggs is the CEO of nz ME. Hello, good afternoon,
• 0:43
  Speaker 2: Good afternoon, Good to have you on the program. So
• 0:44
  Speaker 2: what's this impairment for? What's worthless to the business?
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  Speaker 3: Effectively, what we have to do is every year assess
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  Speaker 3: all the different parts of the business. And as you
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  Speaker 3: can imagine, print is a business that is in decline
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  Speaker 3: and has been for many many years.
• 0:57
  Speaker 1: So what our.
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  Speaker 3: Auditors make us do is have a projection looking forward,
• 1:01
  Speaker 3: using very conservative estimates as to what revenues and profits
• 1:05
  Speaker 3: might come from that. And based on that conservative estimate,
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  Speaker 3: what are the assets worth on the balance sheet? Oh,
• 1:11
  Speaker 3: what's the brand's worth and masteaed so not things you
• 1:13
  Speaker 3: can physically touch, and if they're worthless, you have to
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  Speaker 3: take an impairment charge.
• 1:17
  Speaker 2: In other words, newspapers are worthless, which would be no
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  Speaker 2: surprise to anyone, I suppose absolutely. So where where does
• 1:24
  Speaker 2: that leave you going forward? If you've got you know,
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  Speaker 2: there's talk that maybe you'd split off part of the business,
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  Speaker 2: your print business.
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  Speaker 3: Well, certainly no talk of splitting off the print business,
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  Speaker 3: because it's a very successful part of our business, and
• 1:35
  Speaker 3: in fact, we continue to have really strong readership. Our
• 1:38
  Speaker 3: print business actually only declined by three percent last year
• 1:42
  Speaker 3: from the number or the revenue we got from our subscribers,
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  Speaker 3: so people are still absolutely loving the product and advertising
• 1:49
  Speaker 3: remains really strong. You're just not growing.
• 1:51
  Speaker 2: You're talking print as an online and the newspaper purely
• 1:55
  Speaker 2: just the newspaper. Interesting, So where do you see when
• 1:59
  Speaker 2: you look ahead? What are the areas that you see
• 2:01
  Speaker 2: for growth? Obviously you've mentioned One Roof as a big one.
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  Speaker 3: Yes, indeed, so one Roof. For the last three years,
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  Speaker 3: we haven't been trying to make a profit. Effectively, we're
• 2:10
  Speaker 3: putting every dollar of incremental revenue we've made back into
• 2:14
  Speaker 3: investing in the business to get it to grow, and
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  Speaker 3: what we said is in twenty twenty four we will
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  Speaker 3: look to try and make a profit with One Roof.
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  Speaker 3: So we did have a four million dollar improvement in
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  Speaker 3: the bottom line, which meant we did make a one
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  Speaker 3: point six million dollar profit for One.
• 2:26
  Speaker 2: Roof And there's talk that maybe you would split that
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  Speaker 2: off into a separate business.
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  Speaker 3: Yeah. What we've announced is that we'll do a strategic
• 2:33
  Speaker 3: review of One Roof, So we've appointed an external party, Jarden,
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  Speaker 3: there are investment bankers to really review a number of things.
• 2:39
  Speaker 3: One is how is it structured and what's the best
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  Speaker 3: way of the shareholdings of that business. Should we own
• 2:44
  Speaker 3: all of it or should there be other shareholders in it?
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  Speaker 3: For example? Should we be investing more in it to
• 2:49
  Speaker 3: go faster again to actually make it worth more for
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  Speaker 3: our shareholders? And our key focus is we don't think
• 2:56
  Speaker 3: the value of one Roof today is being reflected in
• 2:58
  Speaker 3: the nzbshare price, and that's what we want to see.
• 3:01
  Speaker 3: What should we be doing better.
• 3:03
  Speaker 2: Let's talk about the market more generally. It's been a
• 3:05
  Speaker 2: pretty tough time. It's been a pretty tough year for
• 3:08
  Speaker 2: media businesses. How have you managed to I mean, many
• 3:12
  Speaker 2: people would look at this and say you've actually you've
• 3:13
  Speaker 2: got away pretty well here.
• 3:15
  Speaker 3: Yeah. So in total, our ebit DAR was down two
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  Speaker 3: million dollars on last year. So last year we did
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  Speaker 3: a fifty six point two million dollar EBITDAR. This year
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  Speaker 3: we did fifty four point two So in an environment
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  Speaker 3: that's pretty tough, we're pleased with that result. However, it
• 3:29
  Speaker 3: was still down. So one of the things we've seen,
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  Speaker 3: and I think you'll be talking about your show every day,
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  Speaker 3: is there are glimmers of hope out there. We are
• 3:36
  Speaker 3: seeing inflation down, we are seeing interest rates down, we
• 3:38
  Speaker 3: are seeing GDP at beginning to grow, and so we
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  Speaker 3: think those are great indicators of future success, not only
• 3:47
  Speaker 3: for New Zealand, but for our business.
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  Speaker 2: You've cut thirty jobs, you've saved four million dollars that
• 3:51
  Speaker 2: you've finished.
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  Speaker 3: Oh look, we're always looking, obviously as you'd expect, for
• 3:55
  Speaker 3: ways to improve the business. But at the same time
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  Speaker 3: we're investing. We're introducing a new video, new show which
• 4:01
  Speaker 3: requires more people back into the business.
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  Speaker 2: The revenue from that you've spoken about today, What do
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  Speaker 2: you make at the moment from video In terms of revenue.
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  Speaker 3: It's a very small amount, so it would be a
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  Speaker 3: minor amount of our overall digital revenue, but every person
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  Speaker 3: that watches a video we would earn significantly more a
• 4:17
  Speaker 3: multiple times more than a person just looking at a
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  Speaker 3: static ad, for example on The Herald. So we truly
• 4:23
  Speaker 3: think we've got a real opportunity one to firstly engage
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  Speaker 3: an audience and then to actually be able to sell
• 4:29
  Speaker 3: advertising on that show. Importantly, also, we've had a number
• 4:33
  Speaker 3: of advertisers already approach us and say how can we
• 4:35
  Speaker 3: be part of that? Which I think is a really
• 4:37
  Speaker 3: good sign.
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  Speaker 2: Do you how much do you expect to make off
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  Speaker 2: that video?
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  Speaker 3: It's not something that we're talking about publicly, but we
• 4:43
  Speaker 3: expect it to become a substantial part of our business.
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  Speaker 2: Does The Herald's digital revenue cover the cost of its
• 4:49
  Speaker 2: news production at this point or do you rely on
• 4:52
  Speaker 2: that print publication?
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  Speaker 3: No, it absolutely does. So one of the things we
• 4:56
  Speaker 3: did last year is we changed the way we report
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  Speaker 3: our profit loss of print versus digital. So now all
• 5:02
  Speaker 3: of our journalists charges go to our digital business unless
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  Speaker 3: they are pure print product, and we actually make a
• 5:11
  Speaker 3: profit from our digital business even after paying for every
• 5:15
  Speaker 3: single journalist. So we think that's a really good sign
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  Speaker 3: for the future. It's an area we think will absolutely
• 5:20
  Speaker 3: continue to grow and become a bigger and bigger, barder business.
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  Speaker 3: Having said that print is really important for us.
• 5:26
  Speaker 2: The portion can we know? Are we able to glean
• 5:29
  Speaker 2: some insight into how much money you make from your
• 5:32
  Speaker 2: one roof versus your online versus your print versus your
• 5:35
  Speaker 2: radio business?
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  Speaker 3: Yes, indeed so in our financial statements we do split
• 5:39
  Speaker 3: that out between the various businesses, and so our publishing
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  Speaker 3: business being the print in digital is still by far
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  Speaker 3: the biggest contributor, followed by our audio business, and then
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  Speaker 3: our one roof is the smallest, but one roof is
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  Speaker 3: the one growing the quickest overall.
• 5:54
  Speaker 2: There was talk in the news a couple of weeks
• 5:56
  Speaker 2: ago about Nick Mowbray maybe wanting to own ends in me.
• 5:59
  Speaker 2: What did you think of that?
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  Speaker 3: Oh, lookie, you can never believe everything you read in newspapers,
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  Speaker 3: for example.
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  Speaker 2: Not a great thing to say as the boss of
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  Speaker 2: the newspaper. It wasn't our thankfully, Michael, thank you very
• 6:11
  Speaker 2: much for that. Great to have you in the studio.
• 6:12
  Speaker 2: Michael Bogs, the in zid ME chief executive.
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• 6:18
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• 6:21
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