Week in Review

Stuff orphaned as Nine sells Aust papers

A sale of Stuff, the country's biggest publisher and website, is still being pursued by Australian media giant Nine Entertainment after its successful offloading of its stable of 160 regional newspapers and magazines across the Tasman.

Nine sold Australian Community Media for about A$125 million to former Domain executive Antony Catalano and an investment group - 12 years after Fairfax Media had paid Rural Press around $3.5 billion for the papers which include the Canberra Times and Newcastle Herald.

Hugh Marks, Nine's chief executive, said the sale was part of the company's strategy of exiting non-core businesses and to focus on its portfolio of digital assets.

Stuff was formerly part of Fairfax Media, which merged with Nine late last year. Stuff and the former Fairfax Events business were both grouped under ACM in the corporate structure after the merger but today in a Nine presentation to a Macquarie Australia conference neither company had a home in the slide with a company organisation chart - and neither was mentioned by name.

In an internal email, Marks told Nine staff, including those at Stuff in this country, that the sale of the New Zealand business continues. There had been a "number of interested parties involved in the process".

For both Stuff and the separate Australian events business, "We will continue to speak with interested parties in the coming weeks and will work with both teams on the proposals being considered," he said.

Nine wanted each of its businesses which were for sale to "be well placed for their next cycle, with an owner who is strongly positioned to capitalise on the opportunities in front of them".

Stuff runs the country's biggest news website, stuff.co.nz, as well as the Dominion Post, The Press, Waikato Times, Sunday Star-Times, Sunday News and numerous regional newspapers, as well as interests in digital businesses selling broadband, power and on demand video.

BusinessDesk reported in February that in its first reporting period as a subsidiary of Nine, Stuff reported earnings before interest, tax, depreciation and amortisation of A$14.5 million ($15.1m) in the six months ended December 31, compared to A$18.9m a year earlier.

The 23 percent decline compared to a 14 percent slide in revenue to A$126m, where Stuff's print advertising slumped 21 percent to A$55.8m, while its circulation revenue of A$43.1m was down just 4 percent. Stuff's digital revenue - which has been a cornerstone strategy under local chief Sinead Boucher - reported flat revenue of A$22.1m.

The ACM sale price represented a profit multiple of about 2.5 times. On that basis, Stuff Ltd might be expected to fetch A$36m or so.

There had been speculation within the investment community in Australia that Stuff Ltd might have had to be sold as almost a giveaway to whomever bought Nine's ACM. That did not eventuate, and word in the local market is that potential domestic investors have shown muted interest in the printed newspaper businesses.

Nine's headquarters in Sydney would not comment further on what progress had been made by its sales advisers on the Stuff divestment. A presentation slide at the Macquarie conference simply said the sale of "ACM" would "variabilise the cost base".

The merged Nine said today its full year profit to June 30 was expected to be up 10 percent on the performance of the same businesses last year, to between A$420m and $430m. 

Catalano, the new owner with Thorney Investments of the ACM papers, told the Canberra Times: "I haven't invested in this business with a view to going in there and stripping it bare and closing it down. That's not the intent," he said. "The intent is to buy a business that I think has some value in it. What protects it against downside is the variety of income streams. There's currently printing, advertising revenue and circulation subscription revenue.

"Finding new ways of generating revenue are all the things we will look to explore. My experience in the past is to protect jobs. I've got a history of hiring, not firing. I want to grow the business, not shrink it to greatness. Not my style."

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