Media experts have weighed in on Sports Entertainment Group’s (SEG) decision to acquire New Zealand’s biggest radio network, MediaWorks, for NZ$130 million (about A$107.4 million), with questions emerging over the direction of the business, the future of local programming and SEG’s decision to return to the market.
Comments to B&T reveal that while the acquisition could deliver benefits for both parties – including giving SEG a stronger foothold in New Zealand and creating new opportunities for advertisers, agencies and publishers – concerns are emerging over whether the deal could see popular Kiwi talent replaced by Australian programming.
Questions are also being raised over why SEG has chosen to return to New Zealand after previously exiting the market to focus on its Australian operations.
Chief operating officer of KingSt, Kwan Ng, warns there is “a real risk of losing listeners if popular local Kiwi hosts get replaced by syndicated Australian sports shows”.
“Please don’t Aussie my Kiwi radio,” she told B&T.
“If SEN tries to replace local Kiwi banter with sports syndication, listeners might hit the tuning dial faster than a flying pavlova.”
She said while the move could bring commercial benefits, with advertisers gaining “access to content sponsorships” and agencies gaining “better negotiating power”, publishers could also face tougher competition as a result.
‘If you can’t build the network, buy it’
Meanwhile, founder of EightyOne Media, Grant Maxwell, said the acquisition raises one big question.
“Why, after exiting New Zealand through the divestment of SENZ to focus on the Australian market, SEG has decided to return?” he said.
“The assumption is that owning the market leader in radio is a very different proposition to owning a minnow. The scale of the MediaWorks business should give SEG a much stronger platform to secure sports broadcasting rights and generate a return on that investment more quickly.”
MediaWorks has little presence in sports coverage and has largely stepped away from talk radio in recent years to focus on music formats, which makes it a natural complement to SEG’s strengths in those areas.
Add to that the prevalence of trans-Tasman sporting competitions – think NRL, men’s and women’s football, basketball, rugby and more – and SEG could have a compelling proposition when those rights next come up. That should also strengthen its offering to advertisers and sponsors on both sides of the Tasman.
MediaWorks’ AM/FM broadcast footprint will also be highly attractive to SEG. New Zealand’s topography makes broadcast frequencies both scarce and expensive to secure. That’s part of the reason SENZ struggled – it’s difficult to build a national network relying on digital distribution and the occasional AM signal.
On the face of it, this may appear to be a U-turn for SEG, but looking beneath the surface, it feels more like a classic case of lessons learned: if you can’t build the network, buy it.
Overall, this appears to be good news for advertisers and MediaWorks staff alike. The only group that may have reason to be concerned is the current owner of Sport Nation, formerly SENZ, the TAB. Time will tell whether those concerns are justified, or whether SEG chooses not to re-enter the sports talk market. The latter seems unlikely.
Today FM 2.0?
Meanwhile, Simon Teagle, CEO of Aotearoa Independent Media Agencies (AIMA), agreed that the acquisition of MediaWorks was a “positive outcome for both MediaWorks and the local media industry” and “has the potential to reshape the trans-Tasman audio landscape”.
“It will no doubt be a relief for our friends at MediaWorks to have an owner with genuine audio pedigree and a clear strategy, after spending the past year in limbo awaiting a sale,” he said.
“SEG is a specialist in sports audio and understands how to build content and platforms that serve the needs of a specific, like-minded audience. MediaWorks does much the same in music and entertainment, making the two businesses complementary rather than overlapping.”
Teagle believes that’s a “much stronger foundation” than a straightforward consolidation play.
“Where it gets interesting is talk.”
“SEG understands talk formats far better than MediaWorks’ previous owners did, so we’d expect it to develop products that recapture the audience segment MediaWorks walked away from not long ago,” Teagle told B&T.
“Before anyone starts imagining Today FM 2.0, however, SEG first needs to rebuild the sports rights position it relinquished when it sold SENZ to the TAB, now Entain, in 2023.
“Reacquiring those rights will be its first real test, and it won’t be either quick or inexpensive.”
