Sky TV says the deal is expected to be approved by shareholders.
Sky Television has received a positive response from investors after announcing at NZX that it is in talks to acquire media company MediaWorks.
The company’s shares fell 7.2% minutes after markets opened on the NZX following the announcement, and some shareholders were quick to express doubts about a deal.
MediaWorks owns about half of the country’s commercial radio stations, including The Edge, George FM, The Rock, Today FM and Magic, and also has a significant outdoor advertising business.
He no longer owns television channel Three after selling its loss-making television business to US company Discovery for $20 million in 2020.
* Sky TV stops broadcasting Russia Today in light of war on Ukraine
* Sky secures English Premier League rights for the next six years
* Sky TV strikes deal to sell Mt Wellington campus for $56m
MediaWorks is majority-owned by US private equity firm Oaktree, which was reportedly keen to exit the New Zealand media market altogether after a loss-making foray into the TV market here before the Discovery deal.
The remaining, smaller MediaWorks business posted a loss of $2.9 million for the year to the end of December and a loss of $4.8 million the year before.
Sky TV confirmed the talks after the Australian Financial Review reported speculation of a deal and Sky said the likelihood of a deal proceeding was “still very uncertain with ongoing and incomplete discussions and due diligence”.
Sky said it would not need to raise additional funds from shareholders to fund the potential acquisition, but would need to be approved by Sky shareholders.
David White stuff.co.nz
Political journalist Tova O’Brien joined MediaWorks’ radio business in March and can now find herself on Sky TV. (video first published in March)
Some Sky investors on the Sharetrader stock market forum reacted with indifference and others with hostility to the announcement.
“Do they also watch Video-Ezy?” joked one.
But another observed that “anything can be worth the right price”.
Sky said in February it was looking for opportunities to invest capital to accelerate growth and generate new revenue streams, and said on Tuesday it viewed the possible acquisition of MediaWorks as consistent with that strategy.
He declined to provide more justification for the possible acquisition on Tuesday.