Fairfax sells remainder of Trade Me

December 16th, 2012 at 10:00 am by David Farrar

Stuff reports:

Media is reportedly selling its remaining stake in for about A$650 million (NZ$810m).

If the sale were to proceed, it would considerably pay down the company’s debts.

The stake is reportedly being sold to a range of New Zealand and Australian institutions in a placement through UBS, according to market sources.

The quoted sale figure would exceed what Fairfax paid for Trade Me in its initial investment five years ago.

Fairfax bought the online auction company from founder Sam Morgan and his fellow private investors for NZ$700m in 2006 and previously recouped NZ$364m by selling a 34 per cent stake through Trade Me’s initial public offering in December 2011.

Morgan went on to be made a board member at Fairfax.

In June, Fairfax further sold down its holding by 15 per cent at a discounted price of $2.70 a share, retaining 51 per cent of the company.

The sale is surprising because it is regarded as the best asset in the digital arm of Fairfax, said Lance Wiggs, a former Trade Me insider who worked on the initial sale to Fairfax.

‘‘It does make sense for investors that you want to separate your assets, one old media, one new media. If I was Fairfax I would want to own Trade Me, not old media,’’ Wiggs said.

The purchase and sale has been a net gain for Fairfax. However I do wonder at the wisdom of selling the only part of your business that actually made money!

Tags: ,

22 Responses to “Fairfax sells remainder of Trade Me”

  1. Chris2 (765 comments) says:

    Your last sentence could just as equally apply to the Government’s sale of State-owned assets.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. tvb (4,229 comments) says:

    I am sure old media which is unprofitable and full of lefty guardinesque types would love to received the cross subsidies for new media. Murdoch has been resisting this move for years but the lefties who hate him cannot see this is how they have survived. What we are witnessing is the strange death of old media. More like an epileptic corpse and they restructure and restructure their way to eventual death.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. Ancient Dan (42 comments) says:

    Quite extraordinary.
    Fairfax seems top have no future strategy here in australia

    What I found surprising is after David Kirk bought Trade Me they did not immediately launch it in Australia
    E bay does not cut it here and there are a few minor players.

    Trade me is a superior product and had Fairfax pushed Trade Me in Australia they would have had a replacement revenue stream for when the “Rivers of Gold” dried up

    (the classified ads in the SMH and the Age)

    Corbett then picked a row with Gina and her ability to bring new capital to the table.

    Stupid is as stupid does

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. Viking2 (11,216 comments) says:

    Corbet trying to get Gina off his back by releasing cash.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. flipper (3,753 comments) says:

    Now, just a random, wicked thort…. wouldn’t it be fun to witness Gina v Judith???
    ……….

    Agree with comments above, but add what a now retired Age Editor in Chief tells me: Corbett has not got a bollters of taking on Gina Reinhardt (the richest woman in the world and biggest Fairfax shareholder), and winning. Silly bugger. Hoist by his own petard! Look now for the separation of Fairfax and the “green” (aka red melon) cult. Reinhardt has already foreshadowed that move.

    Kirk.D, gave Fairfax a chance to move into the 21st century and survive with its print offerings largely intact. The silly lefties shafted him.

    Corbett was finished the moment he sought to challenge Reinhardt. She does not hire a dog to bark for her. m:)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. Cato (1,095 comments) says:

    How likely is it that editors of Fairfax papers here in NZ will now write editorials slamming their corporate masters for using “asset sales” to reduce debt?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Barnsley Bill (982 comments) says:

    That is the end of fair fax. The moment it breaks from stuff the clock will start counting down

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. Reid (16,062 comments) says:

    What Fairfax should do with their online news presence is start journalists interacting live with the interested public on stories of the day.

    Just like a blog, but with real journalists actively addressing the issues raised by the public in the comments section.

    TradeMe and Facebook work because their models put the technology in the background and it simply enables a natural human community function. In this case the technology fades into the background just like streets fade into the background in a city and the traffic becomes the main point. And political and current affairs public square type discussions are another natural community which is why blogs have taken off.

    But the key is for Fairfax to open up a latent demand which is as yet unfilled, by enabling this community of us, to interact live, with real journalists and say anything we like. With everyone, from Tapu Misa to Fran O’Sullivan. I know they have made baby steps with some stories accepting comments and with some journalists blogging, but I’m saying take it further and make every story commentable and make the journalists behind it defend their story, live, in real time.

    Of course the journalists don’t want to sully their hands with bloggers, they’re real journalists but fuck em, they get it wrong all the time and they sometimes completely miss big stories and often they get the wrong end of the stick. Imagine if we could have commented for example on the Wussell money printing angle when it first broke and forced the useless journo’s involved in that to justify publicly why they didn’t slam it with furious anger for the utter idiocy it was but rather just reported it verbatim as if it made any sense at all.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. campit (467 comments) says:

    What I found surprising is after David Kirk bought Trade Me they did not immediately launch it in Australia

    Good point. Type http://www.trademe.com.au and you get directed to trademe.co.nz, where kiwis buy and sell. What a wasted opportunity.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. noskire (834 comments) says:

    However I do wonder at the wisdom of selling the only part of your business that actually made money!

    Yup, Warren Buffet has said that

    the changing media environment now means newspapers “have the possibility of unending losses” and he didn’t “see anything on the horizon that causes that erosion to end.

    Although he recently bought Omaha’s World Herald. http://www.cnbc.com/id/45492512

    I don’t see any logic behind this move, other than something akin to trying to rearrange the deck chairs on the Titanic.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. Berliner (16 comments) says:

    Reid

    Some of us do weigh in from time to time in comments section of Herald online (Tapu and myself i.e. Fran) both write columns there not on Fairfax; I have also done online chat on issues like Crafar farms which amount to lively one hour discussions with readers.

    All comes down to editorial policy.

    Fran

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. krazykiwi (9,189 comments) says:

    Fascinating to watch the MSM empires crumble. Fairfax will be all the more entertaining in that regard now they’ve sold the golden goose. Old information-control business models simply can’t survive in the era of ubiquitous, unregulated internet.

    Things are clearly more than a little tough for the MSM across the ditch: Nine Entertainment made a $972 million loss:

    Nine Entertainment made a $972 million loss for the financial year ending June 30 – taking its total accumulated losses to more than $2.5 billion – as the media group headed for collapse.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. Reid (16,062 comments) says:

    All comes down to editorial policy.

    Yes I know Fran. I’m suggesting this policy should be changed to better use the existing technology to engage with the interested public in a more ubiquitous way. I think if this was done it could possibly result in mutual benefit, with more coverage of relevant aspects of a given story and less “fluff” which I think the public is crying out for which is why the TV news ratings and circulation figures keep dropping. Not that your stories need that, you’re very good, but some other journalists and editors seem to think they’re best to stick with superficial trivia lest the audience furrow their brows in confusion. Personally I think that’s a misreading of the situation. Of course you don’t want to repeat Alan Gibbs’ error when he introduced the BBC World Service here in an attempt to address this same issue, and by using the public to comment, this gives the editors a chance to see in detail, which stories, which angles and which journalists generate the best levels of interest and heat. And that has to be good for all of us.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. Pauleastbay (5,035 comments) says:

    .. with real journalists actively addressing the issues raised by the public in the comments section

    how many real journalists are out there?, serious question. Jack Tame 25 years old,? hardly the grizzled veteran with informants running through the police, law firms and industry. I would wager the only source he would have out of the NZ police is the number of a media liason officer i.e someone who supplies him with press releases and if you have ever written one you kniow you only put in what you want out there and its kept very basic

    In another life there used to be journalists who would ring you, who you would meet at the pub, journalists you could trust.

    Now its all press releases,(the odd exception)
    .
    I use Google news as my home page, there are filters where you can take out press releases and blogs -doing this makes for a very small home page

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. Rex Widerstrom (5,307 comments) says:

    Aggregation rather than divestment has long been the key to success in media, and it still is – just as Kerry Stokes, who holds interests in:
    43 percent of the Seven network (Sydney, Melbourne, Brisbane and Adelaide, regional Queensland & Perth)
    33 percent of Sky News Australia
    Through Seven, Pacific Magazines, which accounts for more than 20 percent of all magazines sold in Australia
    Again through Seven, Yahoo7, the Australian front for the Yahoo brand and which Seven claims is “Australia’s most popular internet portal” (presumably with some figures to back that up which I’m too lazy to find)
    Seven is also involved in building or acquiring wireless broadband group Unwired, VOIP operator Engin and had a fairly mediocre outing as the Australian licensee for TiVo
    20 percent of West Australian Newspapers Ltd

    I think he has interests in media in China as well, and of course has a much broader portfolio of businesses including Westrac, which supplies the huge vehicles on mine sites etc.

    Seven West Media (as his company is called) posted a 2011/12 profit of $226 million, a 97 percent increase on the previous period.

    For a media magnate one would assume was purely profit-driven, he has an interesting take on the future, as he expressed in the ABC’s Andrew Ollie Lecture in 2001:

    Isn’t our role in the media, to ensure that all Australians understand the issues? And are given the facts, to be able to participate objectively? People who have an opinion, have the right to express that opinion. Where are the forums that give them the opportunity to do so?

    The ABC, through radio and television, has played a critical and vital role over the years, in that democratic process. Programs like “Australia Talks” are an initiative that demonstrates why the ABC should not be judged on its ratings alone

    The proliferation of national and international media has removed the focus from the grassroots of our own communities…

    As communication shrinks this planet, are we also shrinking diversity of opinion? Do we actually end up with just one source?

    And he’s something of an e-democracy activitist, seeing technology as offering opportunities for better democracy – a function in which he seems to see the media having a role:

    …today, we have better facilities than street corners, or a soapbox. Let’s go back to the grass roots, back to the local public meetings, Open public forums for members of our communities, no matter what their views or backgrounds, to canvas those views and opinions. Forums that would encourage inclusion rather than exclusion, providing an opportunity for citizens to interact with their neighbours and air their grievances, discuss their differences, in a secure and open environment. A chance too, for interaction with our electoral representatives.

    So it seems to me that at least one successful media boss is going against the tide of what seems to be conventional wisdom – that “old media” is dead, that new media is all about finding ways to make money and the old media ethos of a public service component is to be left to bloggers and other small players – and is making money while doing it.

    What Fairfax seems to lack – and has lacked for some time IMO – is visionary leadership at the top. Someone like Kerry Stokes, backed by new editors who understood how to adapt to the changing landscape, could still turn it around. I just wish a New Zealander with some insight and foresight would buy the company’s New Zealand interests before some once-great mastheads like The Dominion disappear forever.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. Berliner (16 comments) says:

    Rex – By flicking Trademe Fairfax will be endeavoring to stave off the risk of either having to recapitalise or possibly face receivership if adverse advertising conditions continue. Ex Trademe sale the Fairfax balance sheet will be very strong. Fairfax’s long term survival depends on their ability to leverage their media brands – including by great journalism -and also the readership base in respect of new digital products, verticals etc.
    Agree your points re Stokes.
    Counter-intuitively, if Fairfax doesn’t get it right it may well have to flick NZ brands.
    Fran

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. Rex Widerstrom (5,307 comments) says:

    Hi Fran

    I hope you’re right and the money raised from the sale is invested in quality journalism. That’s what Stokes has done (though some, myself included, would argue that “quality” and “The West Australian” are, most times, mutually exclusive) and the Seven Group certainly knows how to intelligently leverage cross-media ownership with the paper’s website carrying the TV channel’s video and the TV channel regularly promoting stories in the next day’s newspaper as part of its bulletins, all without being seen as overtly shilling for the other.

    The West was always a monopoly (unless you count the dire Murdoch offering The Sunday Times, which no one does) but what Stokes has done is to consolidate that, and Seven’s ratings lead, so that the other channels thrash about trying to gain a foothold. Ten has just let go one half of a very professional newsreading team while Nine tried bringing back an authoritative, grey haired newsreader and has now dumped him and (temporarily, they say) replaced him with someone who looks like he’s newsreading in his school holidays.

    I’m put in mind of NZ 20 or so years ago, when Phillip Sherry was dragged out of retirement to read the news, then put back in his box. Failed NZ experiments (e.g. Paul Henry) are now being tried over here and meeting with a similar response from the audience. Unfortunately Stokes has got the jump on the other networks and I don’t think they’ll ever recover – astonishing considering Nine was the de facto national TV channel since its inception almost till the death of the other Kerry, Packer.

    Wellingtonian’s loyalty to the Dominion and Evening Post was strong, but took a hit when the two were merged and is now sorely tested every day when only 12 or so pages land on their front lawn in replacement for the two weighty newspapers (even allowing for the decline in classified content) they used to get. If my parents weren’t wedded to sitting down with something, however pathetic, at the breakfast table I would not have renewed their subscription this year.

    Fairfax need to act to capitalise on that loyalty before someone else figures they can easily produce a few flimsy pages of news and pad it with “what’s on”, opinion and advertising and give it away for free like mX has done in Melbourne, Sydney and Brisbane.

    I acknowledge Fairfax for their commitment to quality journalism – keeping Phil Kitchin going and not expecting him to file daily, for instance – but they need to balance quality and quantity. They’re really not justifying their cover price at present.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. magsta (309 comments) says:

    Dompost seems to have cancelled its comments from readers this weekend. No comments have been posted up on local stories or Saturday’s Editorial on Zealandia’s financial mess. Wonder if the workers are at Xmas parties or all laid off.

    Maggy Wassilieff

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. Berliner (16 comments) says:

    Rex The NZ advertising market is down and very short. Bernadette and crew do a good job under trying circumstance. Same goes for NZH. Fran

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. Viking2 (11,216 comments) says:

    Nah, its gone digital. Sunlive captures it.

    http://www.sunlive.co.nz/news/2_sport.html

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. Rex Widerstrom (5,307 comments) says:

    Fran

    Just to clarify, my criticisms weren’t aimed at Bernadette or any of her staff. Like all newsgathering organisations they’re being asked to operate with ridiculously small budgets and staff compared to the heyday of newspapers.

    As I said, all credit to Fairfax for supporting some investigative journalism with a longer-term horizon than tomorrow’s deadline, but the most viable solution for the long-term survival of their mastheads (based on the Stokes model, anyway) is to support more journos and more reporting, even if that means relaxing the advertising-to-copy ratio and carrying the salary overhead for a while.

    Getting readers back is much harder than keeping them, so I’m hopeful that the cash from the TradeMe sale will be spent in the newsroom, where it’s needed.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. boredboy (250 comments) says:

    New Media Vs Old Media:

    Fairfax’s underlying profit was A$212 for FY2012. The multi-billion dollar loss was due to a write-down in goodwill related to old media assets such as mastheads.

    Reid: I never ever read the comments sections of online newspaper articles. They are utter drivel and I would not be surprised to see such sections vanish over the next few years.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.