Terry McCrann: Nine finally gets the 1989 media mix

The media group finally has the radio reach to add to its TV and newspaper network but all a bit too late, writes Terry McCrann

The Nine Entertainment — interesting word that — group now has the first fully owned media network we have ever seen in Australia spanning newspapers, television and radio in the two biggest cities of Sydney and Melbourne and also mostly (TV and radio) in the third biggest, Brisbane.

Pity though, that it’s 2019, not 1989 or even 1999.

And 2009? Not so much. For by then the Apple iPhone had finally been invented (2007) and the rest — and especially the stranglehold of 20th-century print and TV media on eyeballs, and as a consequence dollars, had started to be history.

The Nine group of 2019 specifically includes the union of the Nine free-to-air TV network and the Fairfax papers in Melbourne and Sydney that the late Kerry Packer was supposed to have spent almost his entire life drooling over executing — and that word ‘executing’ is used very advisedly.

Although in truth, he had, long, long before his death at Christmas 2005, lost any interest in doing that ‘executing’.

And after his death, son James lost no time in selling out of Nine — in perhaps one of the two most spectacular and more pointedly, spectacularly timed deals ever in Australia corporate history.

James sold Nine — note, essentially just the TV stations — for a value of $5.5 billion in late 2006, spectacularly getting in ahead of both the Global Financial Crisis and the real explosion of non- mainstream media around the smartphone and the internet.

No one of course knew it at the time — or more pointedly what the consequences would be, more for FTA-TV than print media, which was already being buffeted by digital advertising — but the sale came just three months before the launch of the first iPhone.

The numbers tell it all.

The combined Nine FTA-TV, print media and radio empire now has a total value of $3.2 billion — barely half what James got just for the TV all of 13 years ago.

Further, around $1.1 billion of that comes from Nine’s 60 per cent stake in the Domain real estate print and mostly digital advertising business. ‘Everything else’ is worth barely $2 billion — almost exactly as much as the whole Domain is worth.

Compare those numbers also with the ‘ones that got away’ — the Seek digital jobs advertising business valued now at $7.3 billion and Car Sales valued at $3.7 million, it alone worth more than the entire Nine group.

The Packers, James and Kerry, had a knack of getting out while the going was good.

They ‘got away’ from the 20th-century Fairfax, which used to have a near total lock on those two advertising streams, along with of course property.

And with that ‘lock’, it should have had first dibs at also dominating digital.

It didn’t, in a combination of arrogance and timidity.

Now, almost exactly the same has happened at News Corp, the Murdoch-controlled ‘other’ major media group and of course publisher of this paper.

Today, News Corp is valued at $12 billion.

Nearly $9 billion of that comes from its 62 per cent stake in REA (Real Estate Dot Com), which has a market value of $14 billion — easily the biggest of any media/advertising company in Australia.

So everything else in News Corp adds up to $3 billion.

And there’s a lot of ‘everything else’ because it’s not just Australia.

It’s the papers in London — The Sun and The Times; the ones in New York — The  Wall St Journal and the NY Post; in addition to the ones in Australia plus the 65 per cent stake in Foxtel pay TV, a business that straddles the old and new media worlds.

News Corp co-chairman Lachlan Murdoch.

Thank goodness then, for the other of the two most spectacular and spectacularly timed deals: the decision by Rupert Murdoch’s eldest son and successor as executive chairman and CEO of Fox (the US electronic media business) and as co-chairman of News Corp to buy into REA when he, Lachlan, was running the Australian arm in the late 1990s in his mid-20s.

At that time REA was at death’s door; Murdoch secured a 40 per cent stake for just $2.5 million.

And the rest would be multi-billion dollar history.

Now, the News Corp stake in REA is up to nearly $9 billion, and three-quarters of the total group value.

And REA on its own is a very big chunk of the total value of all major media in Australia.

So on the one, Fairfax was letting its dominance of car and jobs ads evaporate to the digital players — and barely hanging on to a least a slice of property thanks to ‘the Cat’, Antony Catalano.

While on the other, News Corp — thanks to Lachlan Murdoch — was getting into the dominant position in one of the three major classified ad categories for the first time in its entire history.

And, like James Packer’s move out of Nine ahead of the GFC and decline of FTA-TV, News Corp’s dominance of real estate ads grew into the spectacular population and property booms of the 2000s and 2010s.

Packer of course poured his billions into Crown with the dream of building the biggest and best global gaming empire.

That’s had its ‘up and downs’ — ending in a ‘downer and out’.

MORE: Bizarre twists behind radio offer

MORE TERRY McCRANN:

Although, in straight dollar terms, thanks to the ‘ups’ he’s probably still ahead.

Finally, that ‘interesting’ word of the opening paragraph.

It makes it very, very clear that Nine is, despite its 50-50 takeover of Fairfax (Fairfax shareholders got half the shares in the new company), and corporate board and management clearly believe it is, in the ‘entertainment’ business not the news business.

Certainly, the two Melbourne and Sydney broadloids have — with the odd exception — long since ceased being in the news business.

[e-mail]

Originally published as Terry McCrann: Nine finally gets the 1989 media mix