Fairfax Media yesterday announced they have entered into an agreement to merge Fairfax Community Newspapers in Victoria with Metro Media Publishing (owner of the The Weekly Review). Under the agreement Fairfax will contribute assets along with 35 million, in return obtaining 50% interest and voting rights in MMP.
The Weekly Review is a free weekly lifestyle magazine that competes against Fairfax’s existing magazine The Melbourne Weekly. It’s an important purchase for Fairfax as it means they will now retain the lucrative advertising contracts the The Melbourne Weekly lost last year when The Weekly Review was launched.
This is the second time Fairfax has had to buy a Melbourne based magazine in order to secure real estate print contracts, having previously paid $67 million to purchase The Melbourne Weekly from “Text Media” in 2003. What’s very interesting, is that on both occasions ex Fairfax employees were behind the creation of the magazines.
Commenting on the transaction, Fairfax Media’s CEO of Marketplaces Nic Cola said
“We are delighted to be partnering with Antony Catalano and MMP to provide a more integrated and improved suite of products to real estate agents and their clients across the combined network. The real estate industry has been a great supporter of Fairfax Media for many decades, and we are committed to ensuring that our product offering evolves in accordance with the needs of both our advertisers and our readers.”
Antony Catalano, Managing Director of MMP said
“We are pleased with the success that MMP has achieved since we identified the opportunity to work with leading real estate agents on the launch of The Weekly Review in April 2010. I look forward to a close relationship with Fairfax Media as we set out to embed the MMP ethos across the combined business.
The merger is a smarter move than buying the magazine outright, as it means the existing owners still have an interest in the magazine and an incentive to make sure these real estate advertising contracts continue.
14 Comments
Business Trader
Hopefully we will see a positive reaction on the stock market… 🙂
Ken
Does this mean I will only have to endure one of these useless rags in my mailbox each week ?
Glenn Rogers
Well come to think of it I don’t read them either, in fact I don’t even search the main portals anymore, I get the alerts and if they look interesting I click through.
Print ??? out of date before it’s distributed.
Agents must see it as a listing tool otherwise why would they bother ?
As a consumer I’m never impressed by the size of print ads because I know who’s paying for them and who gets the benefit.
Jezza
Glenn, that’s not the point here. You’re looking at the world as if it was 3ft around you and no further…expected.
The point here is this mag (no matter your view on it) is a great buy for Fairfax.
When Anthony and team launched this product it was cash-flow positive in its first edition and has been eating away at The Melbourne Weekly revenues ever since.
The part that’s most interesting is that Anthony and most of the key management are all ex-Fairfax and were shown the door (more than once in some cases) in challenging situations. The set up the mag in an anti big guy frenzy and have now sold it to the people they were so against.
Glenn Rogers
A great buy ?
They lose the business then buy half of it back for $35M ?
That doesn’t look good for Fairfax at all.
What about the agents that left Farifax to go with MMP ?, they’re now back with Fairfax and don’t say they aren’t because they are.
Strange to say the least.
Glenn Rogers
Al parties have obviously thought it through, Fairfx gets their business back (well half) and has the ones who took it away from them on side so it cant happen again.
But it does show weakness on Fairfax’s part that with all their resources they couldnt take the business back again for free the way it was taken from them.
And the agetnts ? well let them decide.
Glenn Rogers
Furthermore, the agents may well be involved in the deal, who knows, we’re just passing opinion without knowing all the facts so we may as well shut up, and that’s all from me.:)
forsaleforlease
Part of me wants to congratulate Anthony Catalano, Marshall White, Jellis Craig, Kay & Burton, Benison McKinnon & some Hocking Stewart franchises for collectively capitalising on their influence over where vendor paid advertising should be spent and owning the medium instead of giving this revenue to Fairfax. Particularly when it’s these companies sales consultants selling the advertising not Fairfax employees.
The other part of me thinks in the long term the conflict of interest these agents have when being asked to give impartial advise on where a vendors advertising dollars should be spent, will only further damage an industry that is not trusted. Why would this pubic Sinicism change when these agents now have an equity stake in the magazine and new revenue source. Which gives them a vested interest in selling advertising here.
In the long term this type of behavior will only further damage traditional real estate agents credibility.
These companies will receive a New Year bonus of $35 million dollars for 50% of what was Fairfax’s revenue 18 months ago, built from their own vendors advertising dollars. This is approximately 2400 more sales for this period. I would hazard a guess this is more than the entire revenue of these companies for the same period.
It’s no wonder the advertising budgets being recommended in these areas are often in excess of the commission being charged. Especially when all agents know that vendor enquiries come from the glossy mags and buyer enquiry comes for the Internet. Yet the proposed marketing spend is nearly always more heavily weighted towards the glossy mags in the premium suburbs. This is not a coincidence.
MAC
Seems like a legal mine-field! Were the MMP owner agencies here advising vendor clients of their vested interest in their advertising direction? Were they refunding any commissions/financial interest they gained, to their vendors? Is that the Law? More focus should now be on Enzo Raimondo and REView as its equity agencies viz. the REI’s, will want a pay-out some day in line with this.
Jane doe
Mac,
Care to share what you know about the secret commission deals that still go on?
Glenn Rogers
Are you the Jane Doe from A Current Affair ?
vic Del Vecchio
Glenn,
Jane Does are unidentified deceased females. LOL
Glenn Rogers
The Institutes don’t send the mob after people any more do they ?
Not after the “unpleasantness” of 2005.
Jezza
HI Glenn,
we actually agree – for once.
Perhaps my wording is wrong. Its a smart buy (back) from Fairfax rather than a a good buy. The reality was they were caught napping by a slick operation but have been smart enough to buy it back regardless.