Fairfax’s famed ‘rivers of gold’ could dry up altogether, at least in Melbourne, with a new weekly glossy from Age turncoat Antony Catalano — backed by the city’s leading real estate players — set to cannibalise the lucrative eastern suburbs advertising market.
The as-yet untitled Metro Media publication to take on Fairfax’s Melbourne Weekly will formally launch next week, with the first edition slated to hit letterboxes by mid year. A number of production staff have already been hired to set it up. Crikey understands that more than 15 leading agents, including major players Jellis Craig, Kay & Burton, Bennison Mackinnon, Marshall White and Noel Jones have signed with the new venture.
Between them, the firms dominate Melbourne’s leafy eastern suburbs. Their defection could wipe some $5-10 million from Fairfax’s bottom line, already under severe strain from evaporating classifieds revenue. The Melbourne Weekly‘s total earnings before interest and tax is believed to be in excess of $12 million.
Crikey can reveal that commercial city law firm Cornwall Stodart and accountants Lawler Draper Dillon are the publication’s key stakeholders alongside Marshall White, Jellis Craig and Kay & Burton. The agents each own 15.6% of MMP Holdings (the owner of Metro Media) according to ASIC documents reported in Saturday’s Age. Catalano’s Kirant Investments owns a further 15.6% and Kay & Burton director Gerald Delany will serve as a director alongside Catalano.
The inclusion of Cornwall Stodard in the deal will help assuage conflict of interest concerns over a publication run by the same agents who influence the advertising spend by vendors. Both firms are believed to have reviewed Metro’s business plan with a fine-tooth comb.
Insiders say the major agents’ defection — which include Melbourne’s three largest advertisers — would leave second-tier outfits with little choice but to embrace the new venture for fear of being left out of the loop. It has also been mooted the new publication could align in some way with News Limited’s Herald Sun — depleting advertisements in the Saturday Age and tearing an even bigger revenue hole.
Since it switched to a distribution company half-run by Fairfax, residents and agents have complained the Melbourne Weekly’s availability has slumped, with some salubrious pockets failing to receive the bulky publication for months on end. It is unknown which distribution channels Catalano’s new publication will employ.
On Saturday, Fairfax Community Newspapers Victorian general manager Colin Moss bizarrely accused the agents of attempting to “take the advertising profits themselves”, a comment dismissed by figures close to the deal as self-evident.
Catalano, a former Herald Sun police reporter, was famously dismissed as The Age‘s marketing manager alongside editor Andrew Jaspan after a brawl with then-Age chief Don Churchill in 2008. He has been at the centre of the Melbourne real estate game for years, penning this story — as The Age‘s property reporter — that uncovered an ACCC investigation into his own paper’s payments to leading agents.
Despite rumours to the contrary, Jaspan, who was sacked by The Age on the same day as Catalano, is not involved in the new venture.
After years of tension between former Melbourne Weekly publisher Text Media and Fairfax, Fairfax eventually acquired a controlling stake in the company from current Crikey publishers Eric Beecher and Di Gribble in 2003, which valued the business at $67 million.
ANDREW: This is very, very interesting. Thank you very much for the article, indeed!
Go Catalano, Go!!!
I recently conducted a Future Of Agents Commission 2010 Survey and when asked in Question 12. Have sellers in your area become more reluctant to pay (VPA)for print media advertisements? 52.6% of agents surveyed said yes.
Some of the comments associated with this question were:-
“Expense of print media verses internet”
“Most people look on the internet”
“They believe that realestate.com brings in the buyers”
“Because no other agent charges VPA, if we try to obtain VPA, they simply choose the agent that doesn’t charge or ASK`s for VPA”
“They feel we charge enough and that we should pay all expenses ourselves”
“Many sellers feel the internet is the only way and the most modern way to market a property. Many feel the cost of say one paper ad for one day is very cost ineffective when compared for an internet ad which is on display 24/7.”
“Why pay for print media if so many buyers come from the internet. We use the internet”.
“Happy to pay for internet rather than print”
“Most vendors believe the internet is the biggest selling tool and no-one reads the newspaper to find a home anymore.”
“It’s the agent’s job to advertise at their cost and if they sell it then they can deduct it from their commission.”
“A new agency in town is giving away free advertising, free internet and the chance to win a car!”
“Vendors are requesting agents carry a larger share of advertising but realise the impact of the internet”
“Most buyers find properties on the net and local paper advertising too expensive.”
“Cost v inquiry rate”
“Too many agents not offering or explaining that it is not needed”
“It should be included in the commission. Most enquiries are coming from the internet so do we really need print media?”
“They want no sale no charge and other agents are willing to give it to them”
“They see print media as a waste of money”
(You can see the full report at http://www.realestateuniversity.com.au/future-of-agents-commission-2010-the-results/)
The ‘Rivers Of Gold’ will dry up even more if Fairfax & News Limited don’t start understanding what agents are really experiencing out in the field.
If the agents continuously have to ask for large vendor contributions for print media then naturally when a cheaper alternative like this new publication comes along then agents will jump ship. Plus, comments like those from Colin Moss won’t do them any favours either.
If they don’t watch out they will start to see industry owned publications like the http://issuu.com/mypropertyreview on the Sunshine Coast appearing all over the country.
There are a number of ways that Fairfax & News Limited could get themselves back on track with real estate print media if they want to. (especially with the iPad soon on its way).
Fairfax deserve to lose the custom of Estate Agents – I live in the delivery area of “The Melbourne Weekly” and only receive it about once every 3 weeks despite complaining – they don’t seem to care about distribution which would really annoy me if I was a property vendor paying for a glossy advert
GREG VINCENT: I live in Higgins electorate, so I receive the Melbourne Weekly regularly. It occurs to me-from the expensive lay-outs-that Real Estate Agents imagine it will be elderly people who have the money to spend. More important, I think they think the older the people, the less likely that person will be to use a computer.
I know both hypotheses are wrong, maybe someone should tell the agents the truth.