NZME posts $20.9m profit: Herald paywall in offing

NZME, the publisher of The New Zealand Herald, remains committed to merging with Stuff Ltd and seems likely to soon implement a paywall for premium content on the Herald website.

The company, which also owns several successful radio stations, reported a statutory profit after tax of $20.9million for the year ended December, compared with a statutory profit of $74.5million in the previous corresponding period.

Yesterday marked the end of NZME's first full financial year as a standalone business.

The statutory profit was hurt by the demerger from HT&E Ltd, formerly APN News & Media, and discontinued business.

Trading reported profit of $26.7million and trading earnings per share (EPS) of 13.6c were down 5.6% compared with the pro forma 2016 financial year.

A full tax-paid final dividend of 6c per share will be paid.

NZME chief executive Michael Boggs said 2017 included a difficult third quarter, partly because of the general election. Continued focus on the company's priorities and cost management provided some offset.

``We are pleased to see the decline in print advertising revenue slow a little, given stable print readership and the success of our integrated sales strategies.''

Strong digital growth continued, powered in part by NZME's work in mobile and video advertising.

The implementation of the Washington Post arc software, as well as improving the user experience, offered further revenue opportunities through innovative advertisement executions and premium content inventory, he said.

Print subscriber revenues were stable for the year and the company was happy to have outperformed the market in both print advertising revenue and circulation trends, Mr Boggs said.

``We are increasing engagement with our growing news, sport and entertainment audiences by enhancing content and talent, and addressing unmet customer needs by developing new revenue streams.''

Addressing the proposed merger with Stuff, which has so far failed at every level, Mr Boggs said NZME and Fairfax had announced their intention to appeal the High Court's adverse ruling on the Stuff-NZME merger.

Subject to a final decision on the scope of the appeal, it was expected the matter would be heard in the Court of Appeal in the second quarter of the year. A judgement was expected in the second half of the year.

There was a further right of appeal to the Supreme Court with leave on points of general public interest.

The transaction remained subject to finance and shareholder approval, he said.

``Merging with Stuff Ltd remains a priority to underwrite the competitiveness of New Zealand content generation and delivery.''

The company's radio division, which includes NewstalkZB, The Edge and ZM, posted a 4% fall in revenue to $110.1million, while its digital business boosted revenue 8% to $56.3million.

NZME eased back on its redundancies in 2017, spending $4.3million in the year, down from $6million a year earlier. The media company cut its wage bill 2.6% to $157.4million, and its production and distribution costs 8.9% to $75million.

That did not extend to its executive team and board, key management expenses climbing 32% to $7.6million, or 4.8% of the wage bill, compared with 3.5% a year earlier. There was $364,000 of termination payments and $1.2million of share-based payments, up from a $52,000 termination bill and $144,000 of share-based payments in 2016.

The shares last traded at 76c and have dropped 14% so far this year.

Stuff announced on Wednesday it was closing 28 community and rural newspapers, including some in Otago and Southland.


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