Kerry Packer’s PBL will land itself
another $100 million profit if the float of online jobs site Seek
proceeds as planned. But the real question is – what on earth must the
Fairfax board make of this bonanza?

Fairfax CEO Fred Hilmer told
his board in 2003 that he had the Seek situation under control, and a
stake was theirs for the taking if they wanted. Sadly for Fred, he
decided the asking price was too high and Seek went off and secured PBL
as its cornerstone shareholder for just $33 million.

forward two years and Seek is being floated in a deal that will raise
$170 million and value the expanded company at more than $500 million,
with the Packer stake worth $140 million. The Australian’s Richard Gluyas had today’s best recap of the bitter exchanges between Hilmer and James Packer over Seek:

PBL outbid John Fairfax, paying $33 million for
25 per cent of Seek in August 2003. Fairfax chief executive Fred
Hilmer, who wanted to consolidate the group’s dominance in print
classifieds with an equally strong presence online, said PBL had paid
far too much.

Asked if he was disappointed at missing out on a
slice of Seek, the Fairfax chief said he was “absolutely not
disappointed at that price”.

“I think the record of people
paying big prices for internet assets isn’t really a great record, so
we would be very careful about how rationalisation in that market
occurs,” Hilmer said.

Packer responded with both barrels the
very next day, saying he was “amazed” that Fairfax hadn’t done whatever
it took to control the nation’s largest employment recruitment website.
“It was imperative, compulsory, necessary and mandatory for them to win
online in the classified category,” he said.

Whilst the figures are less clear cut, the same can arguably be said for Fairfax being outbid by Telstra in the race to buy the Trading Post business last year. Telstra recently provided an update in which it said Trading Post was performing well ahead of budget and had been a great investment.

at least Fred can crow about News Ltd’s New Zealand operations, which
it bought for $1 billion in 2002 and then claimed had been a bonanza
because News Ltd had never properly managed the operation.

the advertising market booming, it almost seems that there’s no such
thing as a bad media investment at the moment. The real test will be
when the first downturn hits – would you then sooner be sitting on a
growth opportunity like Seek rather than having plonked $1 billion down
on a range of low-growth businesses in New Zealand? Especially when
your whole business strategy is to remain utterly dependent on
classified advertising in newspapers.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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