Media Insider: MediaWorks wins massive AT outdoor advertising contracts, valued in hundreds of millions of dollars
MediaWorks is now 100% owned by Australian outdoor firm QMS, and the announcement will lead to inevitable speculation about whether its New Zealand subsidiary retains its radio arm, or spins it off to focus on its outdoor advertising business.
MediaWorks - which owns a suite of entertainment radio brands including the Breeze, More FM, The Rock, and The Edge - has been adamant that it is an integrated company.
MediaWorks currently looks after advertising on AT buses and some billboards and was long rumoured to be the frontrunner to win the lion's share of the AT contracts.
But there have been a number of other industry players who have also been in the running, such as OohMedia – which currently looks after advertising at bus shelters – JCDecaux and Go Media.
The announcement today will be a blow for OohMedia, especially, which has had the co
OohMedia currently has the contract to look after advertising at AT bus shelters.
'We are thrilled to announce our partnership with MediaWorks to manage what is New Zealand's largest out-of-home asset portfolio, following a very competitive process,' said AT chief financial officer Mark Laing.
'The out-of-home media industry is experiencing exciting growth and MediaWorks' proposal demonstrated strong delivery capability and alignment with AT's strategic objectives.'
Laing says the partnership with MediaWorks will deliver a substantial increase in advertising revenues and is an excellent outcome for ratepayers.
'Under the new agreement AT expects to receive a minimum of $220 million revenue over the next ten years. Revenue will be higher than this if the market continues to grow as forecast.'
AT currently receives around a quarter of the gross advertising revenue generated from its Out of Home media assets. Under this new partnership AT will receive more than half.
'Last year AT earned $7 million in advertising revenue. This coming year this will more than double,' says Mr Laing.
'Every additional dollar brought in through advertisements across the public transport network helps to offset the costs of operating our services and gets Auckland closer to meeting the Government's 'private share' targets for public transport.'
MediaWorks chairman Barclay Nettlefold and chief executive Wendy Palmer.
MediaWorks chief executive Wendy Palmer saidthe company was 'absolutely thrilled'.
'This win is a game changer and re-shapes the way New Zealand out-of-home will be planned and bought by advertisers.
'Our team approached the tender strategically to demonstrate the value and growth we can provide both Auckland Transport and our clients with a new exciting offering that sees street furniture integrated into our existing Auckland Transport portfolio.'
Drawn out process
The tender process has been a long, drawn-out affair, with today's announcement marking almost a 12-month delay.
The new deals were due to be operational from January 1 this year but AT has been taking the outdoor companies on a not-so-merry ride.
In December, when AT suddenly pulled the pin on the already 18-month RFP process, it refused, publicly, to say why. A media manager said at the time this was 'confidential'.
AT's decision left the industry outraged and bamboozled, although few of the companies have been prepared to go on the record for fear it would harm future opportunities.
'It's been a clusterf***,' one source told Media Insider.
'They've had no idea what they've been doing. They had no idea of the scope of the project. And that is very evident in the fact that we are now going back to an RFP [request for proposal] again with new parameters after 18 months.'
XXXX
MediaWorks currently has the contract to run bus advertising for AT.
AT had taken almost three months to release to the NZ Herald limited official information, including a notice that it sent to outdoor companies on December 10.
In that notice, AT told RFP participants that it had decided to 'extend' the procurement process based on a 'further review of market dynamics and transition risk as well as market feedback. This review also suggested the RFP process would benefit from some modifications'.
The use of the term 'extend' might be considered a stretch, given that the RFP will be reissued with 'modified evaluation criteria and bid structure'.
The process essentially had to start all over again, although AT said in the notice it would 'endeavour to minimise any additional effort required from participants'.
The notice said, 'This is not a decision that AT has taken lightly, considering the amount of effort to date from all parties involved. We understand that this is disappointing for participants and the out-of-home media sector.'
Editor-at-Large Shayne Currie is one of New Zealand's most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
Watch Media Insider - The Podcast on YouTube, or listen to it on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Newsroom
an hour ago
- Newsroom
Sky taking the reins at Three makes sense for everyone
Comment: TV3 was New Zealand's first privately owned television station but in 35 years of operation it has lost well north of $1 billion in total for a string of local and overseas owners. While it produced some great TV it was also a great destroyer of shareholder value. The latest owner, US giant Warner Bros. Discovery finally cried enough and gave it away to Sky for less than you'd tip a waiter. Warners must have been close to shutting the doors on what was left of the local TV network after previously gutting the operation and contracting out its 6pm news production to Stuff. It may have stemmed the bleeding, but it clearly had no appetite for the investment required to keep the channel competitive. After buying the TV operation in 2020 (minus its only real asset – a large building and adjacent properties on Auckland's city fringe) for $20 million Warners lost hundreds of millions trying to keep a channel that produced some local shows, including news and (light) current affairs, afloat. In the end, it left a shell of a station (programmes are put to air from a control room in Sterling, Virginia) playing mainly reality shows. Sky has always been the logical owner of Three, but it has been smart enough not be sucked into paying over the odds for a free-to-air broadcaster in a small and declining market dominated by a state-owned network. There have been plenty of discussions between Sky and TV3's owners over the years, and at least one formal offer, which was turned down by the private equity funds that controlled MediaWorks (TV3's parent company at the time). Then CEO of Sky, John Fellet, dryly and correctly remarked at the time 'I think I've dodged a bullet.' One Australian private equity fund paid about $800 million for the business but lumbered the company with $700 million in debt. The banks moved in (not for the first time) and tipped MediaWorks into the hands of the receivers in 2013. A new set of private equity owners struggled along and lost hundreds of millions before selling up in 2020. No doubt Sky would have, once more, run the ruler over the TV operation at this point. It would have come up with a price tag of $1 but Michael Anderson (former MediaWorks CEO) pulled off a genius move and convinced US-based Discovery to pay $20 million for the TV assets. Discovery later merged with Warners – both companies enjoyed long-term relationships with Sky. From the beginning, Discovery seemed devoid of a strategy. The writing was on the screen when Warners left its major hits like Game of Thrones, White Lotus and other popular programmes on Sky channels. These shows could've transformed Three and seriously hurt TVNZ but clearly Warner Bros. felt it could make more money leaving them at Sky. The enduring relationship with Sky has clearly played a role in Warners giving Three to its local ally. Sky CEO Sophie Maloney told Newstalk ZB's Mike Hosking that she and her Warners counterpart (based in Singapore) had been discussing various options for Three off and on for about two years. Maloney also indicated that despite all of Warners' restructuring of the business and the deal with Stuff to supply it with a cut-price news service, Three was still unprofitable. Maloney's rock-steady confidence around the deal has been reassuring for Sky shareholders and, under questioning from a skeptical Hosking, she was unequivocal that TV3 would return to profit under Sky's management. Her optimism has been shared by share broking analysts with one predicting the deal might be worth $48 million to Sky. Sky says it has locked in a supply of Warner programmes for Three and judging by Maloney's confidence around profitability it is likely to be at a very good price. The synergies and value that Sky can bring to Three have always been obvious. Its sales and marketing team will take over the free-to-air inventory and add it to the advertising spots it's selling on the pay TV channels. Having more eyeballs available to advertisers will help it compete, and possibly give it an edge over TVNZ and other media companies. Three will also be a handy vehicle to promote Sky's own channels and subscription products. More rugby and cricket on Three will boost its ratings and Sky might also decide to migrate the best programmes from Sky Open (formerly Prime) to its new free-to-air platform. This would allow it to shut Sky Open, which is likely to have been losing millions annually. Sky has had to persist with its loss-making channel, so it could guarantee a free-to-air outlet for sport. That problem is now solved. Hosking put it to Maloney that TVNZ was now 'dead in the water' in terms of sport but the Sky CEO diplomatically suggested that certain segments of TVNZ's audience might be attractive enough to keep it in the hunt. NZ on Air will also find Sky a more attractive owner of Three than Warner Bros. While the reach of a platform rather than its owner should be the major factor in funding local shows for a network, there had to be some unease about giving millions in public money to an American corporate giant that has been rapidly reducing its staff and financial commitment to local programming. Will Sky look to up the level of quality programming (local and international) on Three? It's hard to know. Any significant cash investment in shows, unless they are a spectacular ratings success, is hard to recoup in this market. Warners and previous owners of Three have found out the hard way. Sky might be interested in a modest investment given its zero-capital outlay. It will want to stall the decline of the linear audience as much as it can while it builds up the on-demand platform, ThreeNow. Maloney described ThreeNow, which has been growing audiences, as a jewel in the crown. She will have a decision to make when Three's contract with Stuff to produce a 6pm news bulletin ends. The contract may have one, but most likely two, years to go. Sky will probably want a better product while Stuff will want more money. It might be an opportunity to move to a 30-minute, higher-quality bulletin. Before Warner Bros. shut its own news division (Newshub), it had, for many years, produced a nightly 30-minute news bulletin for Prime (Sky Open). It was a point of difference in the market and one of Prime's strongest performing shows.
Otago Daily Times
2 hours ago
- Otago Daily Times
First properties in affordable housing initiative hit market
Houses with a $100,000 incentive for first-home buyers have arrived on the market as a Dunedin businessman's philanthropic endeavour starts bearing fruit. Last year, Roger Fewtrell announced plans to develop affordable homes across Dunedin and sell them to first-home buyers. Yesterday, he told the Otago Daily Times about 170 sites had been secured for the project — he estimated about 40 properties would be built in the next year. "We've bought properties and some of them have got existing houses," Mr Fewtrell said. "We've subdivided the land off that we'll build other houses on." Those existing houses were to be redeveloped and two completed examples — 50 and 80 Panmure Ave, Calton Hill — went to market last week. "We've got a new roof and new windows in one of them, and the other one's all been tidied up," he said. "They've both got a new carpet and all that sort of stuff, new paint — they're looking pretty nice and tidy and liveable." The newly subdivided back sections would be developed for housing alongside an adjacent 16 acre block of land. "Eventually we'll build 68 houses in that 16-acre block." Three more redeveloped houses were expected to go on sale in the coming weeks, he said. The master plan was to build 250 houses and "probably lose $25 million ... about $100,000 a house if you do the maths," Mr Fewtrell said. "We're well under way with it." Houses had to be sold at or above cost as required by Inland Revenue Te Tari Taake, he said. "The way we get around it is, I personally chip in $100,000 towards the deposit, which means [buyers] get a decent deposit and a smaller mortgage so they can afford to make the payments." Mr Fewtrell said some of the redeveloped houses might be too expensive for first-home buyers even if he chipped in. "We look for first-home buyers for those ones, but if we can't find [them], we'll just sell them on the open market and put that money back into building more." It would be between 6 and 12 months before the first new builds were complete, he said. Work on a subdivision consented for 18 lots above Ross Home in North East Valley had begun and was expected to be one of the first finished, along with developments in Kaikorai Valley and Green Island. "We're not selling off the plan. "We want to complete the build so that people can actually walk through the house and have a good look at it, see if they can afford it and if they like it." Mr Fewtrell said prospective owners were required to have a 10% deposit — "otherwise I don't want to talk to them". "They've got to be able to service their own mortgage and then I'm happy to chip in the $100,000 to help them get into their own house. Mr Fewtrell co-founded Southern Hospitality in 1989 — a hospitality and food service industry supplier that grew to 12 showrooms nationwide. It was bought by Australian firm Reward Supply Co in 2023.
NZ Herald
12 hours ago
- NZ Herald
Explainer: Why have New Zealand butter prices gone up – and when will that change?
To paraphrase former US President Bill Clinton: it's the economics, stupid. One big factor behind the rise, according to economists, is that New Zealand exports wholesale butter products and the price for this has soared internationally. As Infometrics economist and chief forecaster Gareth Kiernan explained, a 74% rise in international butter prices at Fonterra's Global Dairy Trade auctions between August 2023 and May this year has 'directly flowed through into retail prices within New Zealand'. What's behind that jump? Kiernan explains it 'reflects a mixture of demand and supply factors, including lower dairy production volumes in the US, Europe, South America, and China' as well as 'a sharp drop in Australian [dairy] production between 2021 and 2023 that has not been fully recovered from; and strong demand growth in Asia'. 'Weather events, including both drought and periods of excessive rainfall, have been a contributing factor to many of the supply issues overseas. However, tougher environmental regulations, higher energy prices, and a bluetongue virus outbreak in late 2024 have also negatively affected European dairy production,' Kiernan added. So a reduction in global supply, together with stronger demand, has pumped up the prices. Michael Harvey, senior analyst in dairy and consumer foods for Rabobank, makes similar points and highlights the rise in the cost of dairy products that New Zealand exports. 'It's across all channels,' he told the Herald. 'And it ultimately comes down to global prices'. The reality is that New Zealand exports 98% of the dairy products it produces, Harvey says, and the country has a very large and very successful dairy industry. Because we export so much, our local prices are heavily affected by the demand in those export markets. In a sense, we are paying the price of our own success. New Zealand exports the overwhelmingly majority of the dairy it produces. Photo / NZME This morning, David Seymour told Herald NOW's Ryan Bridge that high butter prices are actually really good news for the economy, and we should all be happy about the money flowing into farmers' pockets. Is David Seymour right? Yes, Kiernan says. 'They are undoubtedly painful for consumers, but they mean that dairy farmers' incomes are increasing, which will help drive New Zealand's economic recovery over the next 18 months,' he adds. 'Low dairy prices (along with high costs) during 2022 and 2023 led to a pull-back in farm spending, hurting economic activity in provincial areas. Improving incomes will see more spending on farm supplies, equipment, and machinery, boosting economic activity and jobs in provincial areas.' Kiernan goes further and says that rising dairy prices are more important to the country's economic recovery than lower interest rates: 'In our view, the lift in dairy prices, along with rising meat prices and high horticulture prices, is shaping as an even more important component of the economy's recovery than declining interest rates'. Consumer NZ, however, said Seymour 'missed the point' with his statement. Deputy Prime Minister of New Zealand David Seymour says high butter prices are good news for the country's economy. Photo / Michael Craig 'Our research this month has found that 70% of New Zealanders rank the cost of food and groceries as a top three financial concern. 'Most New Zealanders don't believe the Government is doing enough to keep food affordable – two-thirds of people said they have low confidence in current government policies.' They said the conversation about butter prices 'overshadows' the wider issue – prices are becoming unsustainable for more and more New Zealanders. 'Of course, we should be focused on growing a high-wage economy to roll with global price spikes – but when this is contrasted with an increasing number of people who are struggling to pay for the basics, we question at what cost?' When can we expect butter prices to drop? Let's start with the good(ish) news for consumers: international butter prices have been stabilising over the past couple of months. 'There are expectations of improving supply conditions in Europe, in particular, that should help to alleviate some of the current mismatch between supply and demand. Growth in Chinese demand is likely to remain reasonably modest over the next 18 months, also helping to provide some relief in prices,' Kiernan says. The not-so-good news: The latest OECD/FAO forecasts show only an 8% correction in prices between 2024 and 2026, which means there is no immediate relief on the horizon, as this will still leave butter prices higher than people were used to a few years ago. The reason behind this, Kiernan says, is 'further growth in demand from India, Pakistan, the Middle East, and North Africa, which is expected to remain reasonably strong'. So the bad news for bakers, cakers and scone-makers: not only are butter prices not about to drop any time soon, they may actually go even higher. 'The full effects of international butter price rises through to May have probably not quite flowed through into retail butter prices in NZ yet, so there is still a near-term risk that retail prices could push a bit higher,' Infometrics' chief forecaster says. 'Because we have yet to see any dip in international prices, it's too early to be certain about the timing of any reversal in retail prices, so it might not be until late 2025 or early 2026 that supermarket butter prices start to ease a little from current highs.' Rabobank's Harvey agrees: 'We are not expecting the global price to rapidly decline in the next six to 12 months, but there'll be some pressure. Relief is on the horizon, but there won't be a dramatic decline'. If you look at the Global Dairy Trade (GDT) as a global indicator of prices, these have fallen marginally in recent months, but are still very high, Harvey explains. 'It becomes a question of when we will see some correction,' he adds. How that correction will happen also depends on several factors. 'It could be that customers just stop buying, because the price is too high, or a supplier response from manufacturers. You'll get a balance of that,' Harvey says. If it's a global issue, how can places like Costco sell cheaper butter than anywhere else? The question, Harvey says, gets complex when we try to do price comparisons across different geographies. 'There's nuance around the retail structure in each market and there's variability in the category itself,' he says, adding that there are 'excluding mechanisms' that could be at play. For example, some retailers could be buying on contract for a period of time, thus locking into a certain price for longer. West Auckland wholesaler Costco has put purchase limits on its Kirkland Signature butter, restricting customers to 30 blocks at a time. Photo / Grace Xin Yin Wu 'You're never going to get them all to line up and agree on a price, but the reality is consumers in all geographies are paying more for butter.' What other items on supermarket shelves could be set to spike in price? Rabobank's Harvey says products like cocoa and coffee beans are 'commodities to watch' because, among other factors, there are current shortages that could affect pricing. Canola oil is going through a similar cycle, he says. What can the Government do about this? Not much, apparently. Willis met with Fonterra chief Miles Hurrell this afternoon about the dairy giant's pricing model. As a result, Hurrell will publicly explain the different components of the price of butter, which Willis said will come later in the week. Willis did say the Fonterra CEO blamed supermarkets for prices being quite as high as they are. When asked whether anything raised in the meeting would lead to lower prices, Willis said, 'All roads lead back to supermarket competition. 'What Miles acknowledged, and what every New Zealander can see, is that supermarkets make choices about what margin they charge for butter. Now this is at the margin, it is a small proportion of the overall price that you pay, between 5% and 10% of the overall price shared between Fonterra and the retailer. 'What is clear is that different retailers make different decisions about what margins they charge,' Willis said. Speaking to the Herald before the meeting, Harvey said there's 'not much the Government can do' in the short term as the Beehive is largely unable to influence global pricing. There are some players along the supply chain who can have an impact, though. 'Retailers will look to trade down where they can. They are very mindful of this,' Harvey says, adding that we should expect to see more 'promotional activity' that customers can take advantage of. In summary Butter is expensive right now, but it's probably going to get worse before it gets better – and there isn't much anyone can do about it. That's good if you sell butter (or the raw ingredients used in production). For those who buy it as part of their weekly shop, it's something that's a lot harder to swallow.
