CoStar poised to take centre stage at Nine

Nine’s future is up in the air at the same time its old Kiwi business is the subject of potential buyout action. Picture: iStock

As Nine Entertainment continues to thrash out a potential deal with CoStar over online real estate operator Domain Holdings, of which it is a controlling shareholder, expectations of a sale are growing.

The question is just at what price. Most now say it will be at a higher price than CoStar’s initial $4.20 per share buyout proposal, but less than $5.

Yet Nine as a 60 per cent shareholder will be likely negotiating to get not only the best price possible but a deal where it remains a minority holder or where it can at least extract a ­lucrative marketing contract from CoStar.

The question remains, though, what Nine Entertainment will be without Domain.

Does it buy other businesses to bulk up or simply return some funds to shareholders and focus on its traditional media assets?

Its assets include free-to-air broadcasting, print publications including The Sydney Morning Herald, The Australian Financial Review and The Age, and its streaming service provider Stan.

Much of Nine’s future will rest on the wishes of its 14.9 per cent shareholder Bruce Gordon, which are represented by Andrew Lancaster on the board.

Nine’s future is under the spotlight as its old New Zealand business now becomes part of the saga playing out with the Kiwi media industry.

The Australian-listed NZME confirmed it had been in talks since late last year to buy Stuff, which consists of a media website and newspaper titles and was sold by Nine after it inherited it via its merger with Fairfax Media.

NZME’s activist investors will likely not be impressed if the company was offering to pay up for the assets. However, if they could pick them up cheaply — under $NZ2m — or even if out of receivership or administration, it would be another story.

It’s been proposed for the businesses to merge before, in 2016, but a deal was blocked by the New Zealand Commerce Commission.

The New Zealand media landscape has changed considerably since that time, where more competitors have emerged in the form of online publishers, so a deal would now likely be given the green light.

There’s also still a lack of clarity as to whether the Stuff online website would be included in a transaction.

At the right price, a deal could add value to NZME’s online real estate business One Roof with the catchment of NZME — which owns The New Zealand Herald — mainly the northern part of the North Island, and Stuff dominating the Wellington and South Island markets.

It comes as private ­equity tycoon Jim Grenon is proposing to overthrow the board of the loss-making NZME, saying he has backing from at least 47 per cent of the share register.

DataRoom understands before Stuff was subject to a management buyout in 2020, which ended up involving the purchase of the business for $NZ1, Mr Grenon also put his hand up to buy the company for the same price. His offer was unsuccessful.

The understanding is major investors in NZME may consider retaining one or two of the existing directors.

It will be interesting to see whether chief executive Michael Boggs gets offered a non-executive director role, if NZME’s shareholders remain keen for female representation on the board, and may target a director to remain should they have strong skills in the area of technology.

The situation surrounding Stuff and NZME has an element of deja vu for some of NZME’s investors who also own shares in Sky Network Television.

Sky, also listed in Australia, was in exclusive talks with New Zealand radio broadcaster and outdoor advertiser Mediaworks about a merger in 2022 in a move which sent Sky’s shares plunging.

Sky then backed out of the proposal following pressure from investors and Mediaworks came close to collapse in 2023.

The pay-TV provider is in negotiations over a broadcasting deal with the All Blacks, which is backed by private equity firm Silver Lake.

The pay television provider Sky is in current negotiations over a broadcasting deal with the All Blacks, which is backed byprivate equity firm Silver Lake.

Silver Lake is understood to have put forward a buyout proposal for Sky in the past that the company rejected.

NZME said in a statement on Friday it had been having discussions with Stuff since late last year in relation to the potentialacquisition of digital and print assets within the Stuff Mastheads business.

But Stuff paused discussions until the composition of the NZME board was known after the group’s AGM in April