The billionaire and the (ex) journo plot a path to property riches

Antony Catalano and Alex Waislitz outline their ambitions for View Media – with the help of Kerry Stokes — and reveal how they almost lost it all.

Alex Waislitz and Antony Catalano in Melbourne. Picture: Nicki Connolly

It is the $2bn plan for an emerging digital property giant that traces its origins back to a Botswana safari, where the protagonists started negotiating what they think could be the deal of a lifetime.

A plan hatched by a billionaire investor who, with his business partner, thought he had bought a regional media company at a bargain price only to be hit by bushfires and floods, and then suddenly go within days of not even being able to meet payroll.

Alex Waislitz feared he was going to go the way of other cashed-up investors who have bought into the media, like Frank Lowy and Network Ten in the 1980s, and end up being burnt when he and Antony Catalano’s Australian Community Media teetered on the brink of collapse in March 2020 when the Covid-19 pandemic shut down the world.

Instead, and with some prudent management of what had been an asset lift to wither by previous owners Fairfax Media, and with positive economic tailwinds actually caused by the pandemic, Catalano and Waislitz have turned ACM around to such an extent that it will underpin their next, and potentially much more lucrative, venture.

Catalano – the one-time boss of the ASX-listed Domain real estate classifieds business that is majority-owned by Nine Entertainment – and Waislitz took control of ACM, owner of regional newspapers like The Canberra Times, Illawarra Mercury and Newcastle Herald, some three years ago in a $125m deal. After a rocky start, the pair have paid off all the associated debt and made all the equity they put in back via dividends and asset sales.

Now they’re turning their attention to Catalano’s passion: property. This time, however, there are significant differences to what he has previously done.

For the first time, the pair reveal the full extent of their plans for their nascent View Media Group, which has received the backing of billionaire businessman Kerry Stokes, and how they believe it can become the “superstore” of real estate in Australia.

“Individually they are really good businesses (in VMG). Collectively, well I think you can do what we did at Domain, which was to create a company worth over $2bn by bringing a lot of assets together,” Catalano tells The Weekend Australian.

VMG initially comprises a 72 per cent stake in portal Real Estate View, and shareholdings in advertising group Tomorrow Agency/Media Plus and The Today Business, which offers advertising services for developers, data business Propic and utilities comparison and connection firm Beevo. There is also a stake in Apartment Developments, a start-up run by Catalano’s son Jordan and Tom Hywood, the son of ex-Fairfax Media boss Greg Hywood.

Catalano says the young pair drove a hard bargain in the negotiations to join the VMG stable. He says the total investment in assets will be about $250m and that VMG is in due diligence for at least another two acquisitions.

He and Waislitz will likely end up with a 40 per cent stake, Mr Stokes’ Seven will have about 20 per cent and the owners and investors in the other businesses in the group will own the remainder.

Catalano says the combined group already has about $50m annual revenue and EBITDA could reach $20m within 18 months.

Catalano and Waislitz are working on the premise that capturing a small slice of several parts of the $300bn overall property market – rather than just focusing on classifieds and trying to compete with behemoth REA Group (majority owned by News Corp, publisher of The Weekend Australian) and Domain – will be lucrative. “Both play in an addressable market of about $1bn of digital advertising … and they have a combined value of about $20bn,” Catalano says.

“If $1bn out of $300bn can create $20bn value in REA and Domain, and that’s just operating in listings for sales, then what’s the entire sector worth.

“The pie is so big, we’re not setting up a competitor to REA or Domain, so we’re looking at the whole real estate ecosystem and how do we tap into those markets within the real estate sector. There are literally dozens and dozens of transactional markets within real estate to get a slice of.”

Catalano has long been a player in the real estate sector in a colourful career that included a stint as property editor at The Age. It is there he first met Waislitz, who has amassed a billion dollar fortune from his Thorney investment business and dabbled in property.

Catalano wrote a story about a property development Waislitz and his father undertook in Melbourne’s bayside Brighton and the pair stayed in touch.

Catalano later left The Age to found the rival Metro Media Publishing, which was merged back into Fairfax and where he would later take the helm at Domain.

Waislitz, outwardly more measured, and Catalano, more flamboyant than most corporate bosses, would later cross paths when Waislitz, by then a shareholder in Tatts Group, approached Fairfax chairman Ron Walker in the mid-2000s with an idea of combining Fairfax’s media assets with a gambling company. The talks wouldn’t progress but Waislitz and Catalano would go on to invest in Updater, which provides services for Americans to move house. The pair invested when Updater was worth $20m. It now has a $1bn valuation.

As Fairfax’s share price fell about five years ago, Waislitz’s Thorney bought shares and began to press management to spin-off Domain to unlock value.

With Catalano in charge, Domain would float on the ASX in November 2017. But Catalano would leave the chief executive role in controversial circumstances a few months later.

Towards the end of 2018, after the pair had unsuccessfully tried to scupper Nine’s merger with Fairfax, Waislitz and Catalano travelled to South Africa for a charity festival and then on to Botswana for a safari holiday.

It was there they hatched a plan to buy Nine’s unloved regional newspapers and agricultural titles, which they believed had been neglected by city-based management.

“We had a wonderful time and we talked about what we could do together,” Waislitz recalls. “We thought there might be some orphans that got left behind after the (Fairfax and Nine) merger that might not be strategically material for Nine. So between rhinos and lions, Cat said ‘I think this (ACM) will come up and let’s go do it’.”

The pair rang then Nine CEO Hugh Marks and found him to be receptive to a deal.

Nine dubbed the sales discussions Project Cashew, which Catalano admits asking whether it meant “‘cash for Hugh’ or would you have to be nuts to buy this”.

A $125m price was eventually struck in mid-2019, though it included $10m in deferred money and an extremely lucrative three-year deal for ACM to continue to print Nine’s newspapers that Catalano says Marks would soon try to renegotiate. That cut another $14m off the purchase price.

There were also 29 properties on the balance sheet with a sworn value of $60m, crucial to the duo’s idea of a “capital lite” strategy for to sell off non-core assets.

Yet in a twist, in the 48 hours before a sales agreement was struck, Waislitz and Catalano’s debt deal with an investment bank collapsed. They would have to fund the deal themselves. “It was a life and death call,” Waislitz says. “The bank didn’t want to fund us because they said it was old media, even with the property in there. But we went ahead.”

It was smooth sailing for a few months, as the pair took on a business making about $35m EBITDA annually and began selling surplus property and recutting supply deals that hadn’t been renegotiated for years. “I remember going to a factory in Canberra and there was all this printing paper. I said to the guy running it they must have pretty good terms with the supplier. Was it 120 days, 90 days (to pay), I asked? Eventually he said they paid seven days in advance,” Waislitz says.

But bushfires raged through regional areas in late 2019, then floods in northern NSW and Queensland, closing printing plants and disrupting sales To top it off, Covid-19 hit in March 2020 and saw the entire country almost grind to a halt. ACM was hit hard.

“In that last week in March we were having board meetings three times daily. On the Monday we looked at the bank account and there was less money than needed to pay (staff). Some receivables came … and by the end of the week we just scraped across the line to pay the wages,” Catalano says. “We thought we’d bitten off more than we can chew. But what were we going to do, give up?,” Waislitz adds. “I did have visions though of being one of those people … even someone as good as Frank Lowy with Channel 10 who went into the sector only to get burnt.”

He admits the pair could have sold some personal assets to put money into ACM if needed and the JobKeeper program helped, but they decided to accelerate the process of selling off property – some deals have been struck at more than 60 per cent above book value – and outsourcing printing, among other efficiencies. There has also been a strong focus on digital newspaper subscribers. The business now has 125,000 online subscribers generate $30m revenue, and a target of 200,000.

ACM now has about $300m in annual revenue and EBITDA of more than $40m, and Waislitz says a combination of asset sales, dividends and capital returns mean he and Catalano have paid off all the debt and got their equity back on the initial purchase price.

Ironically given their tie-up for VMG, the pair also benefited from taking a stake in regional TV company Prime Media and holding firm for a bigger takeover offer by Seven last year. “There was no animosity,” Waislitz says. “We both identified it as a cheap asset … and it was a commercial thing.”

Catalano and Waislitz say they will consider other investments together in the future, and will both soon have adjacent penthouses in property magnate Tim Gurner’s $540m St Moritz project in Melbourne’s St Kilda.

But their media and property assets have prime focus for now.

“We’re having fun with it, it is stimulating,” Waislitz says. “We trust each other implicitly and we‘re honest with each other. If we’re not happy with something we thrash it out, and where we found difficult situations in the organisation we’ve tackled them and not tried to bury them.

“We haven’t finished the job though. It is ongoing.”