BotW: The MOVE muddle; What the Domain deal means; WPP's revolution; Trump wrecks the Aussie screen industry
Welcome to Best of the Week, written on Saturday morning in chilly Evandale, Tasmania, after a hectic week in Sydney taking in HumAIn, Mumbrella Awards judging and another big news agenda.
Today: Domain looks like a done deal: what does that mean for Nine’s future? What’s gone wrong with MOVE?; Trump blows up the screen industry; and WPP prepares to rip up its operating structure.
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How will Bruce Gordon and family spend the Domain dividend?
So it looks like the Domain deal is going to happen.
In the end, CoStar didn’t need until the Monday night deadline to sign on the dotted line.
On Friday morning, Domain revealed CoStar had signed a binding offer to buy the real estate platform at a valuation of $3bn. The deal will be voted on by shareholders in mid-August and complete shortly after that.
No deal is done until it’s done, but from now on, if either side pulls out they will have to pay a break fee of $28.1m.
It means a nice payday for Domain’s shareholders, albeit one that missed the top of the market. The $4.43 price is some way off the $5.95 peak Domain hit at the end of 2021.
The biggest Domain shareholder is Nine, which owns 60.1%.
After capital gains tax, Nine expects to get $1.4bn.
As of four months ago, Nine’s net debt was $628.9m. Clearing that would leave it with around $770m.
So what could an ambitious board do with that big pile of money? Buy an outdoor company, maybe? Or maybe not.
Rather more prosaically, it appears that Nine plans to give most of that money directly to shareholders in a special dividend. It will be distributing about $777m. In other words, the whole lot, unless it keeps some debt (which it might).
At the end of that process, chances are Nine will be a sub-$1bn company.
That either says something about either a lack of ambition from the board for the company to grow again, or more likely what the major shareholders want.
Key to this will be the wishes of 96-year-old WIN founder Bruce Gordon and family.
Bruce Gordon retired from the boards of his family companies a few months ago. Back in September, the Australian Financial Review, owned by Nine, identified the key players in the succession as his 77-year-old wife Judith, 53-year-old son Andrew and 33-year-old daughter Genevieve.
Directly and indirectly, the Gordon family vehicle Birketu already owns 25% of Nine.
Just nine days ago, without much fanfare, Paramount’s Network 10 revealed it had acquired WIN’s Northern NSW TV licence. Until that deal was done, the Gordon family could only directly hold 14.95% of Nine shares because of the rules limiting the influence of individuals to a single TV network. The rest of WIN’s regional licences are Nine-affiliated.
Having offloaded the Ten licence, now the Gordons are free to creep up the Nine shareholder register if they wish, first by gradually converting their indirectly held stake (under the Corporations Act they can get to 19.9%, then would have to sit for six months before creeping 3% every six months).
And the Domain dividend would deliver the Gordons roughly $200m.
From there they have a route to effectively become the proprietors of Nine. That would likely be via some sort of merger with WIN, or it could be by simply continuing to creep up the Nine share register. As Kerry Stokes has demonstrated at Seven West Media and Rupert Murdoch at News Corp, 40% is enough to effectively be the proprietor.
The Domain sale has accelerated the process.
Domain deal peps up the Unmade Index
CoStar signing off on Domain put a rocket under the Unmade Index on Friday, delivering a jump of 3.29% to 557 points.
Nine’s market capitalisation grew by 6% to $2.5bn, the highest it has been since March. Domain grew 3% to a valuation of $2.8bn.
However Domain’s share price of $4.38 remains just below the $4.43 offer price suggesting that at least some in the market believe the deal could yet fall over.
Meanwhile, Australia’s two main audio players ARN Media and Southern Cross Austereo ended the week of almost equal sizes.
On Tuesday, SCA retook the lead over ARN for the first time in four years before ARN brushed back past later in the week.
Yesterday ARN Media lost 4.8% to land on $174m while SCA grew 1.4% to $170m.
Moving slowly
Just over 15 years ago I was in the room when the outdoor advertising industry finally launched MOVE, which back then stood for Measurement Of Outdoor Visibility and Exposure.
Sadly, I couldn’t be there for this week’s launch of MOVE 2.0 (not that they’re calling it that) because it was the same day as the live judging for the Mumbrella Awards.
That first stage of MOVE was huge, and ambitious, and late. Industry trading currencies are always late, and controversial. The now defunct readership metric EMMA seemed like it would never come. The same for digital TV currency VOZ. The messy launch of OzTAM back in the day is legendary.
Costing $10m to create, MOVE changed the game for the entire outdoor industry. It created a Likelihood To See metric across 60,000 billboards across the five capital cities.
Coming just as digitisation amped up outdoor inventory, the value of outdoor companies skyrocketed.
It was also a genuine industry collaboration, funded by the outdoor companies and with the Media Federation of Australia, the voice of media agencies, deeply involved.
One thing I remember from the 2010 event was a pledge that MOVE 2.0, including seasonality, would follow within months. Still, better late than never. If it actually launched.
I gather that this week’s event was an odd one, with the audience of media agency people and marketers turning up to find out when they’d be able to trade with this new tool, only to receive banal lifestyle advice instead.
It sounds like the sort of launch you cobble together when something’s gone wrong at the last moment but you can’t admit it.
One industry person in the audience messaged me afterwards:
“I’m afraid it was not good. Not good at all. More than 300 people there hoping for more insight into the new Move 2.0 measurement system but every session finished half an hour early. The first keynote session set the tone. It was a ‘motivational’ session about how to improve your life. It would have been perfectly suited for a weekend wellness retreat.
“Only one question from the audience: “When will we get access to it?” Answer: “We’ll get back to you!” Oh dear.
As Mumbrella reported: “Despite the unveiling, the new Move is not yet live. Later in the conference, OMA chair Charles Parry-Okeden said the system would be operational for planning in 2026 but he would not commit to timing for trading.”
As one reader asked in Mumbrella’s comment section: “What happened? June 2 was the day for it to go live only a month ago.”
Something appears to be quite badly amiss. Perhaps the technology itself is not ready, or maybe some of the Outdoor Media Association members do not like the results they are seeing for their own assets.
My colleagues at Mumbrella are looking into it further. If anyone would like to tell us what’s going on, please email my colleague Hal Crawford at hcrawford@mumbrella.com.au. We’ll keep you anonymous if you wish.
Trump up the jam
As is his wont, Donald Trump set off a hell of a bomb this week.
He threatened to extend tariffs to movies made “in foreign lands”. For Australia’s screen industry, that’s devastating.
Much of the local industry relies on tax offsets to bring in overseas productions. Without them, it would be a much smaller, much less skilled workforce.
Even before we come into the practicalities - how do you set up a system to tax a digital asset; Is this all screen content, or only work intended for the big screen? Is he even serious? - the damage is immediate. Many projects in the pipeline will now go on indefinite hold.
On a wider issue, once Trump establishes the principle of a tariff on what is effectively a service rather than a physical product, then the advertising ecosystem is in the cross hairs too.
Trump’s habit with these announcements is to set a general tone, and then leave it to his henchmen to turn it into policy.
More will come of this.
WPP faces the future
When I watched Sir Martin Sorrell’s interview at the MAD//Fest conference in London two years ago, one prediction stood out:
“Media planning and buying, revolutionised. Algorithms are going to replace 25-year-old media planners in fairly quick time. There won’t be 250,000 people at the holding companies running media planning and buying networks around the world.”
At the time it seemed a little pessimistic. But it’s all starting to play out.
This week news began to dribble out that WPP, the industry holding company founded by Sorrell himself, is to radically change its media agency structure.
Group M will rebrand as WPP Media. Agency brands such as Mindshare, Essence Mediacom and Wavemaker will likely vanish.
Since media split away from creative, it’s been a two-part process to get to this point.
An attraction for holding companies with multiple brands was handling client conflict. Driven by programatic, gradually, more and more of the business model (think principle media as the latest iteration) reverted to the holdco level. Many media groups are now effectively the same back end with a variety of front doors.
Now comes the next step. The clients seem ready for just one front door per holdco.
More from Mumbrella…
Time to leave you to your Saturday.
If you’d like a little more from me, there’s plenty in audio form.
On this week’s Mumbrellacast, Hal Crawford, Abe Udy and I discussed the state of the magazine industry, the shifting sands of audio and key moments from our HumAIn conference.
I also guested on today’s edition of Game Changers Radio: Melbourne Radio Wars where we discussed this week’s ARN Media AGM. Incidentally, the protest vote against CEO Ciaran Davis’ remuneration package was an embarrassing 13.7%.
And on last night’s edition of MediaLand on ABC Radio National, Vivienne Kelly and I discussed the washup from the election, the Trump film bombshell, and the extraordinary podcasting boom around the mushroom murder trial.
Have a great weekend
Toodlepip…
Tim Burrowes
Publisher - Unmade + Mumbrella
tim@unmade.media
