Will Brag Media buy Junkee? It wants to; And are we about to see a fourth breakfast TV player?
Ooh Media's sale process for Junkee moves into the due diligence stage, and NITV weighs up a permanent move into breakfast television
Welcome to Unmade, mostly written on a cloudy but pleasant Tuesday afternoon at Sisters Beach, Tasmania. Pleasant enough that it was a good day for my local builder to finally finish painting the deck, three years after starting. On a not-entirely-unrelated matter, does anyone know of a good technique for cleaning paint off cats’ paws?
And happy Banned Websites Awareness Day. Whether you’re for or against the practice, today is just for you.
Today’s writing soundtrack: The Lexicon of Love, from ABC. You have no idea how much of an argument took place with Alexa to persuade her that, just this once, I didn’t want the latest headlines when I mentioned ABC. It was worth it. Could The Look of Love be the most perfect three minutes of pop music ever constructed?
And there are now 1,313 of us signed up to the email. Welcome to members of Team OMD, who signed up in a big way yesterday. Please do urge a colleague to join jus.
A couple of new things from me today: Some info on how the Junkee sale is going, and a new TV player at breakfast?
First, I gather the moment is approaching when potential buyers of Junkee will be asked to show their cards.
As you may recall, Junkee owner Ooh Media’s new CEO Cathy O’Connor has said she prefers the simpler strategy of focusing on the company’s heartland of out of home media.
This strategy makes sense for Ooh Media which was a surprise owner of Junkee from the beginning. Not only does the recovering outdoor market have upside to offer, but having a simpler business structure may suit Ooh shareholders in the coming wave of media consolidation. Recently the company’s market cap finally moved back above $1bn, for the first time since the Covid crisis began.
But that means that youth site Junkee, and sister title Punkee, are orphans within the Ooh family.
Ooh Media bought Junkee Media in June 2016 on a valuation of $13m. At the time, there was a round of digital publishing exits, with Nine having picking up Pedestrian on a valuation of $15.5m in March 2015. And APN News & Media, or HT&E as it is now, bought Conversant Media - publisher of The Roar and Lost at E Minor - for $11.6m in October 2016.
I’d be surprised though if Ooh Media achieves anything like its purchase price a second time around. It quietly wrote off the final $2m of carrying value of Junkee in its last annual report.
Ooh Media will be hanging on to its bespoke client content arm Junkee Studio, which was one of Junkee’s major commercial engines. And just as importantly, two of the key driving forces of Junkee won’t be part of the deal. Tim Duggan, the editorial lead, stepped down a year ago and is now running the Google and Facebook-funded Digital Publishers Alliance. And Neil Ackland, who ran Junkee Media, will be staying with Ooh Media.
In reality, any purchaser is buying a media brand rather than a media business.
Since Ooh confirmed that it was looking to sell Junkee in July, the process has run relatively (but not unusually) slowly.
I gather that although potential purchasers have had opportunities to make an expression of interest, the due diligence process is only just getting under way. And to slow things further, there is no full electronic data room set up; buyers are being asked to go back and forth with individual questions, which is not the speediest process.
My guess is that the real deadline Ooh Media has in mind to complete a transaction is the end of the year to tie in with its financials - the company reports on a calendar year rather than the more normal financial year.
The lack of urgency might also suggest that there is not a lot of competitive tension in the process. The art of running a sale is to bring all the potential bidders to the point where they make an offer at the same moment. The slow pace suggests they may be hoping to yet bring in other bidders.
Among the names that have been publicly suggested as possible buyers, few make perfect sense.
Val Morgan, owned by The Hoyts Group, is one name that has been mentioned, as the company (which has its roots in cinema advertising) has been moving into the youth space with its acquisition of the Popsugar franchise. But given that Junkee is recognised as a news player, the fact that Hoyts is ultimately Chinese owned might be problematic in the current political environment.
Then there’s HT&E, which - depending how its battle with the ATO over its former NZ assets pans out - may have the excellent problem of sitting on too much shareholders’ money. But CEO Ciaran Davis may also be reflecting that the Conversant acquisition did not work out. Whether that was because it was a bad strategy, or merely badly executed, it’s impossible to tell from the outside.
If there’s a Schrodinger’s cat element to the process, it’s the question of whether Nine is interested. Nine owns Junkee’s biggest direct rival, Pedestrian, and has since added Vice Australia and Refinery29 to the portfolio.
There would be a logic that says it might be in Nine’s interest to buy Junkee cheaply, just to stop it from going into the hands of a strong competitor.
In this case though, Schrodinger’s cat doesn’t just have paint on its paws, but is dead. I believe that Nine and Pedestrian are not interested in picking up Junkee and are not part of the process.
Of the other major players, News Corp has been drifting away from advertising-led publishing operations in favour of subscription audiences. The only reason I could see News Corp picking up Junkee would be to indulge the company’s ancient instinct to fight with Nine.
Assuming Seven West Media is still focused on reducing its net debt, that leaves the independent players.
You could make a case for several among the 17 currently listed as members of the Digital Publishers Alliance.
If I had to choose one, I’d nominate Luke Girgis’s The Brag Media, which has been steadily building a portfolio of brands in the entertainment space, generally picked up at a low cost. That includes The Brag, The Industry Observer, Rolling Stone and Tone Deaf, along with local ad representation of Deadline, The Hollywood Reporter and Variety.
Girgis wasn’t willing to say much, but did give me a short statement: “We know the market is hot right now. There is a lot of interest in digital media properties, including Junkee.
“The Brag Media is excited at the prospect of acquiring Junkee, we are currently running due diligence. It would increase our audience reach by about 20%, and I believe we can significantly its grow revenue over the next five years.”
If I had to translate the statement, I’d suggest this is Girgis recognising that if Junkee sells to someone else at a good price, then it’s good for his own valuation. And if he gets Junkee, he’s got a plan.
However, if I understand the process correctly, it’s not an exclusive due diligence process, so I wouldn’t be betting everything on The Brag just yet.
An auction only becomes an auction if there’s a second player.
Forgotten Upfronts - A new breakfast show
We’re well into Upfronts season. Nine’s took place a fortnight ago, while Seven West Media and Ten’s are next month. Yesterday, media agency Initiative got in on the action, organising “The Forgotten Upfronts”.
I joined around 500 guests on the video stream to watch presentations from NITV (which serves Indigenous Australians), regional media marketing body Boomtown, the Chinese audience-focused S&J Media Group and Starts At 60.
What all had in common was an argument that marketers were missing out on the demographics that they were representing.
They all had a case to make.
But there was also an unexpected news line from the session. NITV, which is run out of SBS, is contemplating a move into the crowded space of breakfast television.
During the stream, Anna Dancey, national sales manager of NITV, revealed that Big Mob Brekky may become a permanent part of the network’s offering.
Big Mob Brekky has run during the last two NAIDOC weeks. It kicked off in November 2020, labelling itself as “Australia’s first Aboriginal Morning Show”, and returned in July of this year.
During her presentation, Dancey said she was looking for commercial partners to make Big Mob Brekky “a permanent fixture”. She offered the stat that Australia has 853,000 Indigenous Australians, making up 3.3 per cent of the population.
However, NITV’s typical reach is much less than that, generally attracting a share of significantly less than one per cent of the free to air metro audience.
I suspect there’s a pretty big hurdle to leap over. Daily breakfast television is expensive to make, particularly if it’s live. Putting together a weeklong show, once a year, is one thing. But a daily budget would require a significant budget.
Hence Dancey’s pitch to marketers. Commercial support is likely the only way it would happen.
SBS confirmed to me that the organisation is trying to get up a show, although nothing is locked in. They gave me a short statement: “Big Mob Brekky has been a part of our NAIDOC Week programming and we’re exploring ways we could make it part of the schedule at other times, but there are no confirmed plans at this time.”
If they want to make it happen, media agencies and marketers know where to find Dancey.
Dr Spin writes…
Pass the spoon
Dr Spin must confess that he missed this somewhat stomach-churning ad the first time round. Take a look and have a guess what it is for.
Dr Spin certainly failed to guess.
But a decade on from the creating of this ad, the “One charger for all” dream has finally come to pass, with the EU passing legislation last week that all smartphones sold in the EU must have USB-C chargers.
This week the ad was revived and once again began doing the (revolting) rounds on social media.
Now onto the ultimate dream: gazpacho soup for all.
There’s only one global media story to be reading this week. Ben Smith of the New York Times has written an amazing piece on the over-hyped (and probably over valued) digital media company Ozy.
Despite the name of the company, Ozy - fortunately - has no obvious Aussie connection. One of the extraordinary anecdotes features an Ozy staffer impersonating a YouTube executive during a due diligence conference call with an investment bank.
Fake it til you make it.
Time for me to let you go about your day.
As ever, I welcome your thoughts. Would the market support an Aboriginal morning show? What is Junkee worth these days? Should gazpacho soup be eaten hot?
Drop me a line to firstname.lastname@example.org, or via this button.
The week is getting busy. I’m yet to get my head around yesterday’s ACCC update on the market power of Google, but I suspect there will be more to come there.
And tomorrow is Foxtel’s group strategy day. I think we’re going to learn a lot, which I’ll write about in Friday’s edition of Unmade.
Tomorrow morning, I’ll have my own big announcement regarding the progress of Unmade. See you then.
Proprietor - Unmade