Well, that didn’t last long did it. The enthusiasm for the Nine takeover of Fairfax Media ran out of puff on Friday, despite the ASX 200 jumping 55 points or 0.9% to a new ten year high of 63000. Thursday’s modest enthusiasm in the wake of the takeover announcement vanished as quickly as it came as punters, hedge funds and others realised that no one was really interested in a deal involving two members of a legacy sector that is heading towards a cliff. With the ASX expected to fall today after a poor session on Wall Street on Friday, the value of the Fairfax takeover will fall.
Based on Friday’s closing price for Nine, its offer price for Fairfax is worth 81.9 cents (against a nominal $1 a share when announced) while Fairfax shares ended at 80.5 cents. That means no one thinks there will be a counter offer and reckons there’s only money to be lost, not made. There was nothing in the thousands of words in the Fairfax and News Corp papers on the weekend that revealed any hidden value in the transaction — it is defensive and nothing more in the case of Nine and throwing in the towel by the Fairfax board.
Fairfax shares fell 3.6% on Friday and the shares ended flat on the week. Nine shares continued their slide of Thursday, losing another 3.1% and closed at $2.19, a level not seen since last February and down 13% for the week. Domain shares ended flat on Friday on $3.35 and were up 8% for the week and the winner. The value of the Nine offer was $1.85 billion at the close on Friday, down from the nominal $2.3 billion in Thursday’s announcement – that’s $450 million gone in two days in a loss typical of Australian media deals. Nine is already worried — chairman Peter Costello descended from his ivory tower to defend the idea to Fairfax Media.
Kerry Stokes’ Seven West Media, the week’s orphan, fell 3.9% to 85.5 cents for a loss on the week of 3.9% (ie all coming on Friday). It hit a high of 92.2 cents in Thursday’s trading, so its loss from that peak was 12% in just over 24 hours, a real loss of investor appetite.
We can now expect big Fairfax shareholders to start agitating for a higher offer price and Nine shareholders questioning why the deal is happening, perhaps led by Bruce Gordon who controls a regional TV group. Gordon owns just under 15% of Nine and is reported to have a further position sufficient to take his stake (via cash settled swaps) to a touch under 20%. Under a scheme of arrangement, insiders — board members and related parties can’t vote. Fairfax though has an open share register, so Gordon would need support from other holders, such to defeat the move a deal can be defeated.
More than 25% of the shares have to be voted against the deal to defeat it. Gordon would have to convert his swaps to shares to reach 19.9% to maximise his no vote, if he was opposed. But Gordon also controls 11% of Prime Media Group, Seven Network’s regional affiliate which might complicate his ability to control the future of Nine. Gordon’s 14.95% shareholding in Nine will be substantially diluted by the 72% expansion of the number of shares Nine will have on issue (from 871 million now to 1.5 billion).
Gordon has been a poor player in media deals — his failure to grab control of Ten last year saw the stricken network bought by CBS of the US — is the most recent example of his lack of ability to complete a transaction.
Gee, imagine that. Without the value adding that information-workers apply, information simply won’t increase in value past a certain point. No matter how much you shuffle it about, how big and shiny and loud you make its container, how broad and wide and fast and cross-promotable its reach, how cost-efficient you can render all that shuffling…it’s just not going to grow more profitable, without the loving ministrations of a toiling, talented information worker. Especially in a world where the worth of input information is trending towards zero. So much information, lying around, for free! (Free! Aye, long live…free speech! Hey Murdoch, you creepy old wad: your power-enabling, democracy-trashing, viciously-bullying media business model is dead. HOOORAY!!!)
So funny to watch these circle-jerking Oz meeja alpha chums come a bit of a cropper. Get gobbled up by the relentlessly arse-munching logic of their own feral abacus. These corporate capitalist-impostor maaaaates…these Marksy’s and Hywoody’s and Falloonsy’s and Costelloeys…you’d have thunk none of them had ever read Marx. You’d have thunk they ain’t got a clue what stock markets actually do. Which is find out what your information is really worth. The exquisitely vicious accountancy of high-speed, algorithmic, fibre-optic arbitrage: neoliberal petard, meet neoliberal big, swinging…dicks. This Nine-Fairfax thing is gunna get fun.
Meanwhile now – exactly now – is the time for ‘quality journalism’ to regain its self-confidence. Vocational…but market, too. Price yourselves into the business model of the future, you numbskulls. Price your information value-adding IN. It’s YOU we’ve really been paying for. Not all the bolted-on info-crap that the Nine-Fairfax pump n’ dump now exposes as relatively value-less information – or least, information that’s already at the wafer-lean limit of its profitable worth.
Quality Journalism is…quality information: quality research, quality reportage, quality writing, quality graphics. Value-added information. Price that value in – YOUR value. You journalists need to make sure the new business model you evolve is one that ensures we pay you what you’re worth; because if you don’t, and we don’t, you can’t be worth what we pay you. And that’s exactly the tail-chasing death-spiral into which neoliberalism has sucker-punched legacy media journalism. Legacy media journalism didn’t die because it became too expensive, it died because it became too cheap – because legacy media journalists let it get too cheap.
Don’t make the same mistake. Crikey, just for starters: you’re absurdly under-priced. Fifteen bucks a month? Are you serious? I’d cheerfully pay twice that. Have some goddamned self-confidence and self-respect.
I wonder how valuable Domain will be when the property market, currently a bukkase bowl, wakes up and has to do the walk of shame?
Not to mention Stan…this shit, this entertainment content shit…it sprouts itsekfxas amazeballs vue, butvits lying around in lumps on Teh Interwebz for free. Half the nightly commercial news is made up if stolen YouTube and FB vids, FFS. And just like every bugger with a shark attack story now phones Max Markson before even the ambulance…the gig is up for all that. What is ‘cheap for-profit news’ if not the stolen information of the masses? Likewise, advertising fidder. We’re not dumb. We know how eBay, Gumtree, et al all work…hiw long do you reckon anyone’s going to be paying any big legacy media company upfront to advertise anything? It’s money pissed away – into the pockets of the Maserati drivers…
Dead, gone, cactus. The legacy Meeja is gone.
ROFLMAO. The perils of posting OTR between bedpans. Sorry. Consider it rap, AR.