John Fairfax has tripped up badly in its attepmt to drive Eric Beechers Text Media out of Melbourne real estate publishing market.
STEVE Harris and The Age look like they have completely ballsed up their attempt to run Eric Beecher out of town and force him to close his profitable Melbourne Weekly giveaway.
Beecher has already complained to the ACCC about The Age’s plans to set up in competition with him by effectively offering huge incentives to real estate agents to stop advertising in Beecher’s Melbourne Weekly.
And now The Age has already admitted most of the contracts with the agents are against the law and have sort to withdraw them. That’s not a good way to attempt to reclaim your monopoly over real estate advertising in Melbourne and Steve Harris is suitably embarrassed.
FAIRFAX TRIED TO BUY MELBOURNE WEEKLY
This little saga started with reports that Fairfax wanted to buy half of the Melbourne Weekly. One Text insider suggested to Crikey events unfolded as follows:
Harris rang Beecher suggesting Fairfax buys half of the Melbourne Weekly and Beecher said the price would need to start with a one, possibly a two, suggesting he valued a half share at more than $20 million.
Harris said he’d talk to Fairfax chief executive Fred Hilmer who then rang Beecher and suggested $20 million was too high but he would talk to Fairfax chairman Brian Powers.
The Powers response was that Beecher was kidding himself and Fairfax would run him out of town.
Now we heard this tale a few weeks back and lo and behold The Age is launching a weekly real estate magazine on March 22 to be distributed throughout the bayside and leafy Melbourne suburbs where Beecher plies his trade.
BEECHER CALLS IN THE ACCC
Beecher is a hard man to get anything out of but this sequence is apparently not entirely accurate. Whatever triggered this move by The Age, Beecher was upset enough to call in the ACCC which launched an investigation.
Fairfax director Sir Rod Carnegie would have found himself in a tricky situation because his son Mark Carnegie is a shareholder in Beecher’s Text Media. Presumably Sir Rod excused himself from the room when this vote was taken.
The Age only found out about the ACCC investigation from a Herald Sun reporter and then decided to write the story itself, a day before the Herald Sun got its version in the paper. With Harris running both the business and editorial of the paper he quite clearly is able to dictate what appears in the paper.
Anyway, this is what the Age’s real estate editor Antony Catalano wrote on page four of Thursday’s paper:
COMPLAINT TO ACCC OVER AGE
A publishing business, The Text Newspaper Company, has lodged a complaint with the Australian Competition and Consumer Commission alleging anti-competitive conduct by The Age newspaper.
Text, which publishes a range of books and magazines including a suburban lifestyle publication, The Melbourne Weekly, lodged the complaint in relation to contracts offered to clients advertising in a glossy weekly real estate magazine to be launched by The Age on 22 March.
The ACCC confirmed it had received a complaint from Text, but said it “had formed no view”. Text’s publisher, Mr Eric Beecher, said last night he was not prepared to make any comment.
The Real Estate Institute of Victoria also confirmed Mr Beecher had raised his concerns with the institute. The REIV responded by writing to its members reminding them of their legal obligations to disclose advertising rebates.
Mr Beecher is believed to have lodged the complaint after obtaining an unsigned copy of a document purporting to be a contractual offer to a real estate agent.
The Age’s publisher and editor-in-chief, Mr Steve Harris, said: “The Age unequivocably rejects any imputations of secret commissions or illegal commercial activity.
“Such criticisms would seem to be commercially motivated or mischief-making by our aggressive business competitors.”
Mr Harris said The Age was complying fully with the Real Estate Agents Act, which required disclosure of commissions discounts, or rebates provided by the media.
“Each agent operates under the laws and guidelines set out under the act and we have had discussions with the REIV on the issue of agents fully complying with their legal obligations,” he said.
Mr Harris said it was common commercial practice for media organisations to offer volume discounts or rebates to major advertisers, but “like any business we don’t discuss our commercial arrangements”.
END OF AGE PROPAGANDA, BACK TO CRIKEY ANALYSIS
The Herald Sun then came out with its doozy of a story on Friday which quoted a real estate agent saying The Age was trying to close down Melbourne Weekly and win back its lucrative monopoly over real estate advertising.
The fact that the Herald Sun sells almost three times as many papers and has stuff all real estate advertising says a lot about the skill of The Age sales team in keeping the agents sweet in the suburbs. It would also suggest the Herald Sun’s advertising department is pretty useless.
Steve Harris must have been feeling pretty sheepish by Saturday morning when The Herald Sun carried the following story by Insight Editor Keith Moor.
PAPER ADMITS AGENT BONUS
The Age admits it inadvertently offered some real estate agents huge cash payments to advertise in its new weekly magazine.
It claims its intention was to offer bonus rebates – which are legal as long as they are declared to the vendor – but that some agreements sent to agents actually offered thousands of dollars in bonus payments, rather than rebates.
The Herald Sun has a copy of an Age agreement, headed Private and Confidential, which refers to a bonus of $5000 if the agents signs up to advertise in The Age’s new property magazine.
Age communications director Nigel Henham said The Age “might have erred” in the wording some advertising agreements sent out to agents.
He said The Age was attempting to get those agreements back. It had also informed the Real Estate Institute of Victoria about the incorrect wording on some agreements.
“Bonus, bonuses and bonus payments were included inadvertently,” he said. Mr Henham said inquiries by the Herald Sun had caused The Age to re-examine the agreements sent to agents and it had discovered not all of them referred to bonus rebates, as they should under the Real Estate Act.
The Herald Sun revealed to The Age on Wednesday that the Australian Competition and Consumer Commission was investigating allegations The Age was offering secret commissions.
Mr Henham said The Age still believed it was a rebate it was offering, rather than a cash inducement.
“However, we are aware that a very small number of agents may have inadvertently received documents which refer to something like a bonus or bonus payments rather than a bonus rebate,” he said.
“We are certainly going to make it clear that the current agreements that they have got are not meant in any way to imply anything other than that they are bonus rebates within the meaning of the Act.”
Advertising industry sources said the top 25 agents alone spent about $21 million a year with The Age and receive more than $3 million in rebates. The Herald Sun does not offer real estate advertising rebates.
Text Media, publisher of the Melbourne Weekly, has complained to the ACCC about what it considers is anti-competitive behaviour by The Age.
Agents allege that Age representatives have offered them huge cash incentives to entice them to switch advertising from The Melbourne Weekly to the Age magazine.
Agent Richard Jellis, of Jellis Craig and Co, confirmed he had signed an agreement to advertise in the Age magazine, but refused to give details.
“We will certainly be reducing our expenditure with The Melbourne Weekly,” he said.
WHAT IS COMPETITION CHAMPION FRED HILMER DOING
All of this makes for a rich irony indeed given that it was Fred Hilmer’s report into national competition policy back in 1993-94 that unleashed the greatest amount of competition the Australian economy has ever seen. Now he’s trying to run a small competitor out of town to reassert his real estate advertising newspaper monopoly in Melbourne. And his company has done it by offering illegal cash payments. Nice one Fred.
Fred is also deputy chairman of Westfield Holdings which is facing an embarrassing court case at the moment in which it has been revealed it paid former Nick Greiner staff member Ken Cooper to front bogus community groups to oppose rival developments. Small retailers have long complained that Westfield abuses its market power as the behemoth of the shopping centre market, but competition czar Fred Hilmer is no doubt comfortable exerting such power when it suits him.
BEECHER SHOULD BE RUNNING FAIRFAX
The other great irony in all this is that Brian Powers and the Fairfax board erred in selecting Fred Hilmer to replace Bob Muscat as its chief executive in 1998. Hilmer was backed by the coterie of Westfield directors on the Fairfax board and, ironically, Sir Rod Carnegie told him to knock it back. One of Brian’s close mates told Crikey Fairfax should have bought Text Media and installed Beecher as chief executive of the whole operation. He is certainly a talented publisher who now understands the business side of publishing very well. Maybe this is Brian’s game plan at the moment given that Text is perceived to have been weakened by the losses suffered by its new national fortnightly magazine The Eye.
THE EYE WILL SURVIVE
Incidentally, despite people like Bulletin journalist Virginia Trioli saying on Melbourne’s 3LO that The Eye had “the smell of death about it”, the last edition featuring a cover story on the Mardi Gras has been widely hailed as the strongest edition yet. Kevan Gosper said the profile on him was like “having a can of green paint tipped on me”. It was a great read by Craig Sherborne and alone justifies the $5 cover price. Beecher is not worried by John Singleton’s public criticisms of The Eye, saying that “Singo is Singo”. Clearly Singo was not happy about the prospect of seeing his $2 million investment in The Eye disappear, but maybe it will come back as Beecher says the upcoming edition with be the strongest issue yet. “We’ve got some great stuff,” he promised.
SUNDAY AGE STOPS GIVING BEECHER A LEG UP
The other irony in all this is that The Sunday Age’s Laurence Money, an old workmate of Beecher’s from the Melbourne Herald, ran an amazing series of articles last year tipping buckets on Beecher’s competitor giveaway Inside Melbourne. Money’s Spy column kept speculating about the imminent closure of Inside Melbourne which is actually backed by Vivendi, the giant French utility which is jousting with Rupert Murdoch for greater influence over BSkyB in Britain at the moment.
Inside Melbourne cut into the Melbourne Weekly’s profits last year and Beecher is desperately hoping they close down soon. When Crikey spoke to Beecher on Friday, he was reluctant to talk on the record, except when it came to Inside Melbourne. This is what he said: “I have not heard anything of Inside Melbourne for months. I didn’t even know it was still coming out. Is it still around? It is a complete non-entity.”
EVEN MORE IRONIES
Maybe Vivendi, which is worth about $50 billion, should offer to buy Text Media which is probably worth about $50 million. Afterall, Vivendi is going hammer and tongs with Rupert over pay-TV in Europe so why not step up the battle and take on Rupert in the town where he was born. I forgot to mention earlier than Rupert’s Leader Group has also set up a weekly lifestyle magazine as part of this little real estate war.
As you can see Eric Beecher is the tadpole swimming in a predatory shark pool. But the final irony is that some of his seed capital to set up Text Media apparently came from Robert Maxwell, the ultimate monster who literally got taken by sharks when he hurled himself off his boat as his media empire imploded. Maxwell gained notoriety in Australian when Paul Keating dismissed his overtures to buy The Age back in the 1980s. Now The Age is trying to wipe out the guy who carries the last Maxwell legacy in Australia, even if only in a very small way.