Reporting season approaches for the country’s listed media companies, so what message did the performance of their share prices tell us in the year to June 30? APN, Fairfax Media and News Corp stood out with strong gains – for differing reasons, none of which will do anything to ease the feelings of doom and gloom about their future. The laggard among the listed media companies was Southern Cross because of personnel changes at its key Sydney radio station and its affiliation with the weak Ten Network.
In fact many readers might be surprised to learn that Ten wasn’t basket case of the financial year in terms of share price performance – it is however in terms of prospects. Not even the talk of a possible suitor or three in the last 10 days of the financial year could boost the share price which ended the year 3.6% down on its start in July of 2013. Southern Cross took the prize among the analogue operators, Wotif among the digital wannabees (which explained the demise of the Global Mail which was backed by Wotif’s Graeme Wood, who switched his money to the Guardian Australia).
Based on the ASX data, APN News and Media with a 300% rise in the share price, was the star (25 cents to 78 cents). But that’s misleading, the rise reflects a change of control of its Irish parent (and the departure of the O’Reilly family from the management suite and boardroom) and the realisation that APN wasn’t going to go broke (and some asset deals).
Fairfax Media saw its share price surge 82.8% over the year – mostly since the company reported encouraging news in February about the performance of its Domain property division, and relief that the move to tabloidise the Age in Melbourne and the Sydney Morning Herald hadn’t gone bad – like so many things Fairfax have tried have done (such as buying into print/radio station companies and TV production companies). It was a ‘relief rally’ to some, a ‘dead cat bounce’ to others.
News Corp shares rose 12.4% over the 12 months to June 30. That reflects the time since the split in the Murdoch family companies on June 28, 2013.
Factors driving the rise had little to do with its Australian print and electronic interests (despite claims to the contrary from Holt Street HQ in Sydney), or with events in London and the US where the downward pressures on the company seem to be easing.
In Australia these circulation and ad pressures are not going away and News faces a 14% slide in advertising (apart from classifieds) and like Fairfax, nasty falls in newspaper sales over the 12 months. The growth in paywall subscriptions and digital advertising revenues aren’t keeping up with the leakage.
No, it was REA Group, 61% owned by News which saved Rupert Murdoch’s bacon (or rather the Murdoch family) its share price jump 55% in the financial year. Its market value of $5.3 billion now accounts for more than half the News Corp market cap of $10.6 billion. No wonder News Corp papers, especially the tabloids, are property spruikers, especially on weekends.
Kerry Stokes’ empire had a mixed year – Seven West Media (owners of the Seven Network, and the West Australian) saw its share price 1.1% lower at June 30 than at the start of the financial year, but Seven Group Holdings saw a 7.7% rise in the price of its shares – despite the slowdown in China and in the Australian resources sector which are its major areas of business.
Prime Media, 11% owned by Seven, saw its shares rise by around 5%. Its attracting some interest as a possible takeover target if the national TV audience restrictions are lifted.
That speculation initially helped Southern Cross, but then the loss of Kyle Sandilands and Jackie from the key 2DayFM station in Sydney helped trash the share price, along with the ratings slide from the Ten Network.
Seek shares outperformed REA Group in the year with a near 75% gain, while another media/investor darling, Wotif outperformed Southern Cross with a fall of 46.4%.
Looking to the next 12 months, we can be sure of a couple of things – the share price of APN shares won’t be up more than 300%, again and the price of Fairfax shares won’t see another 80% gain (not even if someone is silly enough to takeover both companies).
As well, with the heat going out of property means the price of REA Group shares will be under pressure (and Fairfax Media as well), especially if prices continue to mark time and demand for new and existing houses slackens, which seems to be happening at the moment (that’s why it pays to track building approvals and housing finance figures from the Bureau of Statistics).
And the big question for the media sector is the future of the Ten network. News that they have a Sydney law firm advising on solvency issues means the board is well aware that Ten’s future is looking grim, hence the almost frenetic attempts to get some sort of buying interest/ contest underway.
