While the headlines yesterday were full of the confirmation from Nine Entertainment that it had sold its regional newspaper operation, Australian Community Media (ACM) business to former Domain CEO, Anthony Catalano, and his backer, the former Fairfax shareholder, Alex Waislitz of Thorney Investments, the real news of interest was in the bad news from Domain, 60% owned by Nine.
While Nine shares rose 2% to $1.77 in early trading on the news of the sale of ACM (for $115 million in cash with $10 million of that withheld for a year), Domain shares slid nearly 8% at one stage after it revealed a 13% slide in third-quarter property listings and a fall in revenue for the third quarter.
Domain was one of the big attractions of Fairfax for Nine (along with the 50% of video streamer, Stan) and news that the slide in housing activity has hit home won’t make Nine shareholders all that happy.
Domain shares fell more than 8% to a day’s low of $2.63 on news of the update, delivered to the annual Macquarie investment conference in Sydney. They closed off 7.5% at$2.70. Nine shares ended the day up half a percent at $1.75.
The Domain update revealed sale listings fell 13% and revenue was down 6% for the three months from December to March. Online revenue was flat.
Total new market listings fell as auction volumes across Sydney fell 30% and by 36% in Melbourne. But in a small dollop of good news, Domain says its costs are expected to increase by “low single digit” are lower than previously advised.
But Domain said “Print revenue performance reflects these cyclical conditions” as its newspaper inserts in the Fairfax metros (and the Financial review) and in some of the major regional dailies contract to reflect the downturn in activity.
Domain is understood to have been making cost cuts in the print area to handle the downturn in business.
Some of the titles included in the ACM deal are The Canberra Times, The Newcastle Herald, The Examiner, The Border Mail, The Courier and the Illawarra Mercury, and rural papers such as The Land, Queensland Country Life and Stock & Land.
The money raised from the sale of ACM will be used to pay down debt and Fairfax Media reports yesterday and this morning say the next asset sale on the cards could be the Stuff newspapers and website in New Zealand, while Nine will also try and buyout the minorities in Macquarie Media which houses the 2GB, 3AW and 4BC and other radio stations.
Doing that could cost upwards of $140 million (for 45.6% Nine doesn’t own). That means Nine will be looking for more than $280 million from a buyer (or even a stockmarket sale).
In this climate, getting that sort of money for an AM radio business could be tough and for the buyer would be a bet that Alan Jones remains healthy in 2GB Breakfast for as long as possible.
The buyout of the minorities won’t happen until the future of Joes is sorted out – he will either stay or leave and the decision could come very soon.