Welcome to a quick update from Unmade. I say quick because I’m starting this at 3pm my time, and I’m trying to get it out of the door by 5pm, before everyone knocks off for the day.
I woke up this morning to an (automated, of course) email from Substack, congratulating me that Unmade now has more than 1,000 readers. The first comma is the hardest, so thanks for joining me at an early stage. I never thought we’d get to this point in just 16 days. Word is getting out there - please do go on telling colleagues who might want to be kept informed about media and marketing shenanigans. And obviously keep it away from those you prefer to leave in the dark.
Also, happy National Ampersand Day. Today’s writing soundtrack: Dummy, from Portishead.
Things are more springlike by the day here at Sisters Beach. When I popped down to the general store just now, Antony Catalano’s The Advocate informed me that we’re in for an early snake season.
And The Cat has been out and about too. At lunchtime today an update popped up on the ASX from Prime Media Group.
Catalano and business partner Alex Waislitz have used their company WA Chess Investments to increase their stake in Prime from just under 20 per cent to just under 23 per cent.
According to the Sydney Morning Herald, they paid $2.6m for the additional three per cent in the company. That’s pretty much in keeping with the 24c share price - which sees the regional TV broadcaster enjoying a market capitalisation of just under $90m.
The share price is now up about a third on the price in late October 2019 when the duo piled into Prime to scupper Seven’s proposed merger-takeover of its regional affiliate. And it’s also more than double the low the stock fell to when the pandemic wiped out share prices. The Prime raid is starting to look like good business after all.
Normally a parcel of three per cent of a company changing hands would not be worth getting excited about. Particularly when this is the third time. They also bought a block from Gordon in March this year.
But in this case, the signal is the thing that makes it interesting.
The three per cent number happens to be the maximum an existing shareholder can raise its stake by in any given six months without having to launch a full takeover bid.
And the seller was Bruce Gordon, whose WIN Corporation is now pretty much fully inside the Nine tent, with his TV stations having switched away from Ten and back to Nine affiliation in July. With just under a 15 per cent stake, Gordon is Nine’s biggest shareholder.
Before the Catalano deal, Gordon held about 14.4 per cent stake in WIN. If he continues to sell down, and Catalano and Waislitz continue to buy, then they could end up with about a third of the company over the next couple of years.
What’s amusing about their use of the creep provisions is that it is a strategy previously effectively employed by Seven proprietor Kerry Stokes to capture companies without needing to pay a takeover premium. It’s how he snared The West Australian newspaper and created Seven West Media a decade ago.
It raises the temperature in a couple of ways.
First, by the time the Prime - Seven affiliate deal and the Southern Cross Austereo - Ten affiliate deal both expire in just under two years, it looks very much like we’ll think of Catalano as the proprietor of Prime.
Even as the biggest shareholder, Catalano’s not quite dominant yet - Seven West Media holds just under 15 per cent of Prime Media itself. But if the creep continues Catalano will get to that point. After all, Kerry Stokes only owns 23 per cent of Seven West Media, and he’s the executive chairman.
Second, it’s not just Stokes’s strategy that Catalano is replicating. Since the push into Prime began, it’s been a signal that Catalano wants to be the biggest regional player. He and Waislitz’s ownership of local newspaper publisher Australian Community Media speaks to that. He aspires to be to regional Australia what Nine is in metro.
Both Prime and ACM are potentially pieces in a bigger puzzle to create a regional digital classifieds vehicle. They own view.com.au. At the moment that merely redirects to their real estate portal realestateview.com.au. For now, it’s no challenger to REA Group and Domain. But when view.com.au launches into other classified verticals, the battle gets really interesting.
The name of the investment vehicle WA Chess Investments is an apt one. There is some corporate chess to play out. Will Seven stick with Prime as its affiliate in the next deal? Stokes and SWM CEO James Warburton were pissed off with Catalano for scuppering their plans for the company so might enjoy ditching Prime.
Would they instead switch to Southern Cross Austereo? Some of that might depend on who owns the SCA TV stations by then. All the signals are that SCA wants to focus on audio. Perhaps it will have spun out or sold its TV arm by that point. Maybe there’s an opportunity for Seven to do some sort of scrip deal to get its hands on the SCA stations. I bet they’ve considered it. In which case Prime would be pushed into the arms of the lower rating Ten.
And that’s just one part of the coming media consolidation.
That parcel of shares may only have been three per cent of Prime, but it makes life 100 per cent more interesting.
If you’ve got a view, please do share it. I’ve noticed the comment thread has begun to come to life already - which I had not been anticipating so soon.
Your comments are welcome.
And I also welcome hearing from you directly. You can email me at email@example.com.
Have a great evening.
Proprietor - Unmade