The news arm of Three, an underdog television station beloved for its feisty news and current affairs coverage, has this week all but passed away following a long battle with profitability. It was
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Three survived two receiverships followed by periods when it was owned by its banks, two private equity owners, and Mark Weldon. Its life story was largely one of spirited challenge while a series of opportunistic owners flamed out, collectively losing many hundreds of millions of dollars while waiting for and trying to engineer an upturn that never came.

A child of Rogernomics, Three was born from the market liberalisations of the mid 80s when licences to broadcast television – formerly the exclusive preserve of the state – were put up for tender.

The challenges faced at launch were not structural – the rise of the internet and fragmenting audiences and television’s advertising share still merely looming over the horizon at this point – but rather legal and commercial. Opponents dragged the licensing process through the courts for years. Its sole rival – state-owned Television New Zealand (TVNZ) – had absolute market share crystalised over a generation and fiercely defended its patch.

A consortium, including a public share issue and a stake from American giant NBC, was formed to secure the licence and launch the channel.

After job interviews for the first cohort of reporters and producers were run sitting on beer crate seats while permanent office furniture was still being arranged, Three was born onto our screens on Monday, 27 November, 1989.

Fittingly, the first show to air was two-hour breakfast news programme The Early Bird Show hosted by Joanna Paul. The lead item on the six o’clock bulletin – a flagship programme now expected to continue for only a few more months – concerned a murder in Auckland.

After the champagne fizz of a successful launch, reality quickly set in. The broadcasting business is mercurial and relies almost solely on building a mass audience and advertisers wanting to spend big to reach them. Downturns in either – or worse still, both – are brutal.

Chipping away at TVNZ’s audience proved to be a long-term proposition. The launch was unfortunately timed as the 1990 recession immediately put clamps on advertising spending. Finances got so tight that banker Westpac called in receivers barely six months after broadcasting had started.

While finances were in deficit, there remained surpluses of goodwill and hope which would not run dry for decades. Westpac elected to continue trading. Canadian media giant Canwest bought a 20 per cent stake in the company in 1991 and six years later bought out the bank and marked the dawn of what could be seen in hindsight as Three’s golden years.

Canwest was to prove the longest-term owner of Three, with added industry expertise and understanding that came from being primarily focused on news production elsewhere around the globe. Canwest bundled Three, along with Four, and a string of radio stations, to form broadcast heavyweight MediaWorks.

During this period Three became part of the media landscape and broadcasters Hilary Barry, John Campbell, Carol Hirschfeld and Mike McRoberts became household names.

Canwest would later run into financial troubles of its own (it itself would collapse in 2009), but it engineered a deal that would prove to be the only time Three’s owner engineered an exit without being themselves burnt. In mid-2007 Australian private equity firm Ironbridge – whose main involvement in New Zealand to date was buying up rubbish management firm EnviroWaste – bought MediaWorks in a deal that valued the company at $727 million.

If this sounds like a lot, it is and was. Adjusted for inflation the deal for Mediaworks, which had Three at its centrepiece, valued the company at $1.1 billion in today’s dollars. This over-payment would be cruelly exposed in the coming months as the Global Financial Crisis (GFC) economic meltdown led Three to struggle through yet another recession, but this time also saddled with hundreds of millions of debt to cover a purchase price now shown to be vastly inflated.

Debt loading on the balance sheet ballooned over the next six years with the financial pressure steadily increasing. Rival private equity firms began buying out the company’s bank debt at steep discounts. Notes to the company’s accounts began to regularly flag breaches of banking covenants.

It was during this time MediaWorks took up Government support by deferring $43m in spectrum payments. While decried at the time as a corporate handout, the deferred payments still attracted punishing interest rates of 11.2 per cent. Company insiders conceded this option was only taken up as it was the best credit the company was able to secure.

In June 2013 Mediaworks was placed into receivership, again. Brendon Gibson and Michael Stiassny – who’d become household names themselves during the GFC as corporate undertakers for the likes of the Crafar farming empire – were put in charge. Debt on collapse was calculated at $797m. Annual trading losses for the MediaWorks group were flagged as running into seven figures from 2010, with Three understood to be the most significant cost contributor.

But, as in 1990, receivers elected to continue trading. And private equity firms who’d made beachheads buying up slices of debt over the past few years now wrestled in earnest to secure control and the opportunity to try, again, to turn things around.

By mid-2015 Oaktree Capital, a United States-based hedge fund with a large distressed asset portfolio, emerged as controlling owner. The firm played a key role in crafting a controversial turnaround strategy led by Mark Weldon in a bid to renovate Three and prepare it for resale.

Whereas MediaWorks had formerly been largely helmed by hard-bitten Australian media executives broadly supportive of Three’s news operations, Weldon was an outsider whose previous experience was running the New Zealand stock exchange.

Weldon’s tenure was brief – not even two years – but his impact was considerable. In one of his few lasting initiatives, he consolidated news operations under the Newshub brand. He also championed the launch of gossip outlet Scout, based around the efforts of former Herald columnist Rachel Glucina. That venture didn’t survive a year.

Weldon pushed for a lighter touch, more entertainment and less news, and pushed a string of high-profile presenters out the door. During this period John Campbell, Paula Penfold, and Melanie Reid all left the building.

Weldon’s resignation from MediaWorks came just days after Three’s star news anchor Hilary Barry had announced she was also leaving. She and Campbell would later join arch-rival TVNZ.

After Weldon, Oaktree appointed a more conventional chief executive – Australian media veteran Michael Anderson – in a bid to stabilise the business. Internally the television business was carved out, and a buyer urgently sought.

But technological and societal changes were continuing apace, seeing viewership and advertising spending on free-to-air television trend down. Annual losses for Three now were exceeding $10m per year. The writing seemed to be on the wall – closure was considered the likely alternative for Three if a new owner could not be found – but there was one final hurrah to come.

Anderson was reportedly in tears of relief in June 2020 when he announced that Three would be sold to Discovery. The United States television giant was expanding its Australasian operations, and the acquisition would see it immediately become a major player in the New Zealand market.

Hope, it seemed, was still in the black.

But as large as Discovery was, it became only a small part of an even larger player when in 2022 it merged with Warner Bros. Whatever strategy Discovery had for Three was now subsumed into a new movie-heavy behemoth carrying tens of billions of dollars in debt and trying to stem hundreds of millions in losses each quarter.

Cutting bleeding in New Zealand may have been an easy decision to make from New York, but it was difficult in Auckland.

Warner Bro Discovery boss Glen Kyle was this week also in tears, but not of relief, as he announced Three will become a shell of its former self. Shorn of news operations and in future screening largely overseas-produced content, the proposal will see three and half decades of news and broadcasting history and nearly 300 staff – 85 per cent of the channel’s workforce – gutted.

Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He’s covered MediaWorks and Three for the past 15 years and has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.