Australia's largest stock trading and investment forum Australia's #1 stock forum

FXJ

Click for more information

0.00%

66.0¢ fairfax media limited

Judging by this morning's rumour file contribution on 3AW, it...

First 9 Last

Share
Profile

Follow
Grant62

4,941 Posts.

147

17/02/17

09:12

Post #: 22689407
Share

Originally posted by JCoure ↑

The FOOL:

Why Fairfax Media Limited is the subject of takeover speculation

Tom Richardson | February 8, 2017 | More on: FXJ MEA

Multiple news sources are reporting that Fairfax Media Limited (ASX: FXJ) could be a takeover target for U.S. private equity group TPG Capital. According to Fairfax itself the powerful private equity and venture capital operator is interested in Fairfax in part due to TPG’s past success in growing online property listings businesses.
The digital past has not been kind to Fairfax and its main hope to prosper in the digital future is its fast-growing online property listings business domain.com. Currently Fairfax shares trade for 88 cents which means the market ascribes the business a value around $2 billion, with nearly all of this valuation reflecting Domain’s long-term cash-generating potential.
This despite the fact that domain.com delivered just 42% of group EBITDA in FY 2016, with the key rider being that Domain’s revenues are growing strongly, while revenues across the traditional media businesses look to be in a long-term bear market.
In response management has resorted to savage cost cutting to support earnings, but the problem for Fairfax’s management is that by underinvesting in its publishing businesses it may lose the funnel through which it filters traffic to its domain.com website.
Unfortunately, any private equity buyer of Fairfax would likely have even more radical cost-cutting or divestment plans that would make staff even unhappier about the decline in working conditions and ongoing redundancies across the group.
Still, Domain has growth potential given it’s yet to achieve the geographic reach across the national property market of rival operators and Fairfax has been investing in extending its footprint deeper into the Brisbane and wider Queensland markets for example.
However, it shocked the market at the start of November when it warned the residential property listings slump would see Domain’s H1 2017 EBITDA come in lower than the prior corresponding half. Others like Sydeny-focused estate agent McGrath Ltd (ASX: MEA) have also recently warned of the property listings slump across east coast markets.
Should you buy?
There’s no doubt that Domain looks a great asset and Fairfax stock is potentially cheap if you take the view that it’s publishing and broadcasting operations can remain sustainably profitable into the digital future.

Expand

Judging by this morning's rumour file contribution on 3AW, it seems that FXJ will formally announce the cessation of publication of its daily M-F newspapers, at least in Melbourne and quite likely also in Sydney next Wednesday. The weekend papers would still be published but not the weekday issues. The only element of doubt concerning the rumour was the reference to "broadsheet" of which there are none in the FXJ stable (both The Age and the SMH used to be but aren't anymore). Conversely, The Australian is still a broadsheet, but this is unlikely as News has already reported its results whilst FXJ is due to report its Half Year results next Wednesday. This will make it interesting depending in particular what the replacement model looks like. .

FXJ Price at posting: 88.5¢ Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

Reply

Top Stories

PYC

Scientific conference spotlights PYC's work on blindness disease treatment

BTH

Bigtincan's Board backs Investcorp offer: Why a NASDAQ listing could be game-changing

LPE

Sales growth pushes Lovisa's fortunes (and shares) upwards

WC8

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

MIN

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

DUI

Panic, paranoia, and gangland politics: HotCopper users react to Dubber's missing $26M

HotCopper Highlights: Your most watched stocks for Week 47, 2024

Week 47 Wrap: HotCopper users' most watched; Brent lifts on Putin's scary letter; RFK dents CSL

SIG

Dale Gillham's weekly wrap: Sigma-Chemist Warehouse merger creates pharma powerhouse

GRL

To make modern missiles, you need 3D Printing. And in that gold rush, Amaero is selling shovels

There are more pages in this discussion • 12 more messages in this thread...

First 9 Last

Add FXJ (ASX) to my watchlist