There’s plenty wrong with our long-running housing debate. But here’s a big one: the debate is mediated through a compromised media. While our moguls used to float their newspapers on classified advertising’s gently flowing “rivers of gold”, they’re now lowly coupon clippers in the buy-sell churn of the real estate market.
But it looks like the real estate advertising business has had enough of carrying the dead weight of legacy news media. They’re selling out and breaking up, unshackling the once-iron chains that tied the industry to news.
News Corp and Nine are now effectively holding companies for REA Group and Domain, their respective listed real estate advertisers. That’s bad for editorial independence; when it comes to information about housing and property, their media outlets are less sceptical news providers and more shameless FOMO marketers.
It’s a simple job: stoke the fear of missing out by urging everyone into the market with a message tossed out from either side of the media mouth. Sell while prices are high! Buy before they get higher! It’s an advertorial play in a market where the real estate industry is set up as toll booths between buyers and sellers, taking a cut of the money as it washes past.
It compromises journalism every week on the home pages of Nine mastheads The Age and The Sydney Morning Herald, where a good news story of a residential property sale is featured weekend after weekend. On the SMH this week it was a $4.25 million house in Gladesville — Sellers: that could be you! Buyers: don’t dither!) — together with a pointer on where you can buy with the income you have. The Age carried near identical stories, suitably Melbourne-ised.
Or turn on the AFL finals and watch the game paused in real time (or streamed, if you can wait) for the real estate side to hand dollars to the media side through advertising for an advertising company. How meta! Or turn on The Block where, Nine brags, “Domain’s in-program integration was celebrated across the entire Block journey.”
Despite advertisers having deserted print publications, real estate has remained one of the few advertising-rich sectors for old media. But it’s no longer the tight link of printing and distribution that once tied real estate ads and newspapers together. It’s the weakest of all links: shared corporate ownership. And as we’re seeing abroad, advertising wants out.
Scandinavia’s Schibsted newspaper publisher was once the global poster child for successfully transitioning its dominance of print classifieds into the internet age. It was so successful that it’s now decided to keep the advertising and sell the mastheads. This year, it spun off its newspapers — including Norway’s Aftenposten and Sweden’s Aftonbladet and Svenska Dagbladet — into an independent trust committed to protect and advance its editorial integrity.
Last week, the Springer Group — owner of Germany’s Bild and Die Welt, as well as Business Insider and Politico in the US — announced it was taking a similar break-up path. Private equity fund KKR will take the group’s profitable classified business, while the news media will head to a new company controlled by CEO Mathias Döpfner and Friede Springer, the 82-year-old widow of founder Axel Springer.
Döpfner is talking up expansion and could be a buyer, of say, The Wall Street Journal, if the Murdoch family turns to a News Corp break-up to resolve its disagreements. But first, the Murdochs have to handle their own major classifieds business, REA Group, which is bidding to takeover its British equivalent, Rightmove, for $11.5 billion in cash and shares. The AFR estimates the deal would reduce News Corp’s ownership of REA down to 50% from its current 61.4%.
Real estate advertising is where the sharemarket reckons News Corp’s value truly lies, pricing the Murdoch’s share of REA at about two-thirds of News Corp’s total market capitalisation of US$15.25 billion. (Most of the value of the remaining third is in its US businesses, The Wall Street Journal and HarperCollins.)
In the US, activist investor Starboard Value wants to break the link and force the Murdochs to spin REA out of News Corp. Early last year, it led a successful revolt against Rupert and Lachlan’s plan to remerge News and Fox, and tried to broker a sell-off of REA’s US subsidiary, Move Inc. Now the hedge fund is challenging the voting/non-voting share split that gives the Murdochs control of News Corp despite the family’s minority share-holding.
Meanwhile, Nine’s Domain is struggling as the lagging number-two player in the small digital Australian market that rewards monopoly. The sharemarket values Nine’s 60% holding of Domain as worth about 60% of Nine’s market value. But while REA Group boosts News Corp’s shares, Domain is probably holding Nine back.
Looks like it’s past time for Australia’s news media to let real estate advertising go — and lose the advertorial with it.
