MediaWorks - now 100% owned by Australian outdoor advertising firm QMS -secured in July the highly prized Auckland Transport outdoor advertising contracts, thought to be valued at $350 million over the next 10 years.
As Media Insider reported at the time, that massive tender win - in effect from October 16 - would lead to inevitable speculation about whether its New Zealand subsidiary retained its radio arm, or spun it off to focus on its outdoor advertising business.
After all, why would QMS want to have any of its attention diverted away from the burgeoning outdoor advertising industry, which has been enjoying revenue growth in recent years.
Today, MediaWorks confirmed it was splitting into two.
From October 1, its outdoor advertising business would transition to the QMS brand and report to QMS Australia in a "strateguc alignment".
"This important step change ... follows MediaWorks' success in winning the recent Auckland Transport street furniture contract and brings together the scale, capability, and deep operational experience of QMS - proven through its successful management of the world-leading City of Sydney street furniture concession - to drive even greater outcomes for Auckland Transport and the wider OOH business in New Zealand," said a MediaWorks statement.
It is understood the QMS New Zealand operation will be run by QMS chief commercial officer Adam Trevena, who played a pivotal role in securing the AT contracts.
MediaWorks staff have been briefed this morning on the proposal. It is understood there are no job losses planned, but sales staff will be separated into one of the two companies.
Direct sales staff will remain with the radio arm, while the agency sales team is likely to be split into two, between radio and outdoor.
MediaWorks chief executive Wendy Palmer - one of New Zealand's most respected media and radio executives - would continue to lead the radio firm.
"Aligning our OOH division with QMS makes strong strategic sense," said Palmer.
"With QMS' scale and proven capability, we know our OOH portfolio will go from strength to strength. At the same time, radio is in an incredibly strong position.
"We've just achieved our largest-ever survey share, revenue is growing every quarter, and we are continuing to invest in local markets and our digital platform, Rova."
She called the splitting of the company an "exciting next step forward".
However, the move will also renew speculation that the radio arm will now be on the block. Does QMS really want its attention on the growing outdoor advertising sector diverted in any way?
Locally, there is unlikely to be a lengthy list of potential buyers.
MediaWorks' biggest radio competitor, NZME - owner of Newstalk ZB, a suite of music stations and the NZ Herald - might be keen on certain high-performing stations, but it might also find the Commerce Commission has a view on that.
Australia's two biggest radio firms, ARN and SCA, might well be interested.
MediaWorks said in July that its AT tender win was a "game-changer".
The four contracts are to look after advertising on street furniture (including 970 shelters), vehicles (such as buses and trains), transport hubs and stations, and billboards.
MediaWorks and QMS chairman Barclay Nettlefold said today the separation of the New Zealand move was positive. He talked up radio's performance.
"Radio is standing tall, delivering consistent results and growth, while our OOH operation gains the backing of one of the most experienced and capable outdoor businesses in Australasia.
"Together, this positions both sides of the business for long-term success. The changes ensure that radio continues to stand proudly on its own two feet, while OOH benefits from the strength and scale of QMS."