Nine to face the market as Domain bid looms
This week is crunch time for Nine, as it reports its first-half FY25 results while facing shareholder questions regarding permanent leadership and deals with a takeover bid for Domain.
When US listing giant Costar’s offer of $4.20 per share to take 100% ownership of Domain was made on Thursday night, it was an enticing one.
Costar was willing to pay 34.6% more than Domain’s market cap at the time, which saw the company valued at $1.9 billion – trading at $3.12 per share.
By Friday close, the company was trading at $4.37 a share — a 44% leap in 24 hours — and Costar’s offer of $2.7 billion now undervalued the company.
Nine, who owns 60% of Domain, also closed 20.14% up on Friday, a combination of Domain’s ballooning value, and the market’s belief that this deal is a good one for the entertainment company.
A sale seems likely, although the recent share market spike may lead Nine to hold out for a revised, higher offer. The company has certainly done the ground work for an easy sale.
Last month, Nine restructured into three distinct divisions: TV and radio, publishing, and marketplaces.
The latter is build around Domain and automotive play Drive. Publishing does what it says on the tin, while TV sees streaming services Stan and Stan Sport under the same operational roof as Nine’s free-to-air and digital stations for the first time.
Last week, reports emerged that a consortium including former Macquarie Media owner John Singleton, recent 2GB retiree Ray Hadley, and ex-Nine CEO Mike Sneesby, were looking to lob a bid at Nine’s radio assets. Meanwhile ARN Media chairman Hamish McLennan recently expressed interest in Nine’s talkback stations, blasting the media ownership laws that prevent them buying a slew of stations he claims would “tuck in nicely under our wing”.
Long time TV operator Bruce Gordon is steadily increasing his holdings in Nine — and as Tim Burrowes noted on the weekend — the reticence from the board in naming acting-CEO Matt Stanton as the new chief may well be due to internal pressure from Gordon to appoint WIN chief and Gordon’s Nine board proxy Andrew Lancaster in the top role.
In the meantime, neither Domain — who recently appointed ex-REA boss Greg Ellis as its interim CEO for a twelve-month period — nor Nine have had steady leadership for close to half a year.
Nine’s former CEO Mike Sneesby decided to pass the torch in September, shortly after the Olympic Games, while Domain’s former chief Jason Pellegrino announced his resignation, after six years, in late October.
Further to this, Domain was forced to issue a rather embarrassing market correction on Friday afternoon, after outgoing CEO Jason Pellegrino crowed about a 23% year-on-year increase in site visits during the last half of 2024, claiming Domain was now “outperforming the growth rate of our major competitor over the same period”, meaning News Corp-owned REA Group.
The real growth was at a most modest 7%, the ASX release clarified, blaming “third party data sourcing”.
2024 was an annus horribilis for Nine: Multiple sexual harassment claims against senior executives; a third-party investigative into the workplace culture that found “concerning levels of inappropriate workplace behaviours at Nine”; the axing of 200 staffers, followed by the CEO leaving on a poorly-timed Greek holiday and a well-timed five-day strike at Nine papers, which began on the eve of the Olympics; and John Fairfax publicly stating he is glad his family name is no longer associated with the “tarnished” Nine brand.
Usually, going into an investor call after the value of the company jumped by a fifth would be cause for celebration — especially considering net profits were down 28% for the prior financial year, and shares had previously tanked 40% between the start of 2024, and when acting-CEO Matt Stanton took over in October.
It would be perfect timing for Stanton to officially take the reins, but it seems likely that questions about Domain — and its relative value once you correct the online traffic statistics and the share price — will occupy all talk.
And then, just maybe, we’ll also be able to take a look at Nine’s financial results.
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Great to pass Domain over to a US$34b MV “have a go” CoStar. In my research, of mature markets, only has already been beaten decade+ ago in France Lebencoin beating Seloger, and REA’s Casa It, beaten by Immobiliera also a decade ago. The onloy other place that it may occur was in NZ where NZME is at c54/46 UV’s ratio against Trade Me Property. Having realised with this sale c$1.7b NEC can concentrate on FTA, newspapers and Stan. Maybe buying an OOH operator to get the reach that FTA has lost (now c70% last time I checked in 2024), versus OOH media. runngng at close if not higher than 80% reach.
Unfortunately, with the woke crowd having forced out both Hugh Marks and Mike Sneesby -the two best FTA operators there were since David Leckie, the Australian media industry is unlikely to have a pool of operators as good as those two.
Note Bruce Gordon \, who now owns c25% of NEC , was not good for shareholders in his days operating Television Wollongong, which was, until privatisied by Bruce Gordon, an ASX listing with a very very poor return.
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