Some good examples of the different strategies used by the Packer empire and
everyone else in the Australian media today. As
Fairfax revealed plans to mover deeper into the
digital world (which rival News Corp is also doing) PBL revealed plans to go deeper
into the gambling business in Asia, especially Macau.

The
Trade Me deal gives Fairfax the biggest
online auction site in New
Zealand and may even be able to transfer the
business to Australia and take on
eBay. In
contrast, the Packers quit eBay Australia more than 18 months ago,
choosing to take a nice fat capital profit of around $100 million. PBL owned
half of eBay Australia and was the start up
partner for the American giant. Trade
Me has fought off
eBay in New
Zealand.

NZ’s a
much smaller market and the $A626 million is a very big price, but it’s at
least the sort of move that will help the company protect and even grow its
classified advertising business across the Tasman, and provide a platform to add
a major digital sales channel here.

The PBL
deal with a US casino group,
Wynn Group, controlled by Steve Wynn, and with its partner, Meclo (the Macau based Ho
family) sees it pumping in $322.8 million capital into the venture, which
will have an initial value of $1.2 billion in equity and
debt. It’s a
form of “sub-concession” according to the PBL statement and gives the PBL
subsidiary the right to develop and own casino resorts in Macau. Melco and PBL are already
developing a casino resort in the city and the sub-concession bought from Wynn
is next door to that.

Meanwhile the Fairfax half yearly results today provided
ample evidence why the company’s move deeper into the digital world is both
necessary and unavoidable. Pre-tax
earnings from the Australian publishing businesses fell, while they were up less than
four per cent in New
Zealand.

But the Fairfax Digital business earned $12 million on an
earnings before interest tax, depreciation and amortization basis, which is up $10.8
million on a year earlier. Seeing
how EBITDA for Fairfax only rose $8.6
million from a year earlier, without the contribution from the online business,
group earnings would have fallen. Fairfax has spent
well over $150 million building Fairfax Digital, and now another $600 million or
more is being invested.

For all
the talk by James Packer about the future of media being digital and online,
Fairfax has
suddenly put more money on the line than the Packer empire. It’s called
putting the money where your mouth is.

And by the way, with Japanese group Softbank poised to buy 23% of the
UK parent of Betfair, I wonder if PBL: 1) knew about the deal; 2)
informed the Tasmanian Government of the possible change in
shareholding and 3) cares. The British group has managed to get a foot
in the gambling door in Australia, just as eBay did before the Packer’s
took their profits and sold out.