Domain Group head: Antony Catalano.
Fairfax Media is embracing the Victorian partnership model with real estate agents to control 50 per cent of a newly created property business on a national basis.
The move to the new model comes just a month after the publisher bought out the remaining half of Metro Media, the Victorian-based publishing group started by the head of Domain Anthony Catalano which pioneered the joint ownership model.
It will comes as Fairfax looks to beef up its property offering, one of its most lucrative revenue streams, to compete with News Corp backed rival REA Group, which has a market capitalisation of $6.49bn, compared to Fairfax’s $2.08bn.
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Speculation has been rife Fairfax could float Domain as a separate entity, although CEO Catalano was quick to pour cold water on that suggestion, telling Mumbrella: “It’s a question that I get asked a lot but It’s not part of my business plan, it’s not part of any business plan I have presented to the Fairfax board and is not part of any conversation I have had with the board.”
The new entity takes up the Metro Media model and will include a new product that will be 50 per cent owned by agents with the remainder to be held by the Domain Group and its parent Fairfax.
Catalano would not be drawn on how many agency partners would be accepted, or how much they would be asked to put into the new model, but said it was a logical conclusion to the original Metro Media Publishing venture. Expressions of interest have already been sent out to agencies in NSW and Queensland today.
While Catalano would not be drawn on how much would be spent on marketing the new product it is understood a war chest of around $30m has been budgeted nationally.
On the question as to whether there would be a conflict of interest in the model, with agents becoming the publisher that benefits from their clients’ ad spend, Catalano said the Victorian example again proved the case that the shared model was a win for everyone.
“If you bring about competition in the marketplace you improve the market. When I launched the magazine in Melbourne with the agents we had one very simple philosophy: we and to be bigger better and cheaper than our competitors and we produced a bigger distribution magazine, a better quality editorial product at a cheaper price. So where’s the conflict there?” he said.
When asked what the move meant for the REA group Catalano said he was focussed on Domain achieving market share and providing value for its customers, not what his competitors thought of the new venture.
“By having this industry participation model, agents can help improve the competition in the marketplace; the industry wants it and the consumers want the competition. It is only when the industry participates with a media company that they can bring true competition to the marketplace. It doesn’t matter who owns it, it’s that the consumer is better off.”
Robert Burton-Bradley
*A previous version of this story incorrectly stated that real estate agents would take 50 per cent of the existing Domain business.