We ran this fascinating unsubstantiated tip yesterday:

PBL is at advanced stages of launching a broad attack on the property classifieds marketby
a combo of internally developed property services and acquiring
remaining property classifieds businesses. They will merge this with
Ninemsn’s distribution network, lower prices for the agents and really
squeeze Domain and realestate.com.au etc. It will have the financial
backing to make a big dent in the market!

Apparently the assault will be launched through PBL’s 25% owned
associate Seek, which has bought large volumes of free to air
television and outdoor media to market something large in September and
October. It seems very unlikely that Seek would be planning to
extend their “lotto” campaign in a multi-million dollar FTA TV
campaign two months after launching it.

Seek’s employment classifieds business can’t get a whole
lot bigger given it dominates with almost 60%, so clearly there is a need to diversify into something else to keep the share
price rosy. PBL already has the cars in Carsales.com.au
so it’s only a matter or time before it takes on News and Fairfax
Digital in the real estate game as well.

News Ltd attempted to mop up control of realestate.com.au last
year but its $2 and $2.50-a-share offers were rejected by the
independent shareholders, who must be thanking their lucky stars as the
stock leapt 13c to $3.90 yesterday, giving it a market
capitalisation of almost $500 million. News Ltd is more than $150
million in front on its 44% stake and NineMSN must be feeling pretty
silly for selling its 3% stake to News at just $2 a share. Then
again, the opportunity cost is only about $7 million and PBL is now almost $350
million in front on its Seek stake.

It’s worth comparing the size and scale of a faltering Fairfax and a
surging Seek just to get a sense of the online revolution. Fairfax had
revenues of $977 million in the December 2005 half and reported a net
profit of $124.8 million. The lumbering newspaper giant closed on
Friday with a market capitalisation of $3.53 billion. Seek had revenues
of just $47.3 million in the December half, but managed a net profit of
$27.1 million and is now capitalised at $1.5 billion. If Seek can make
serious inroads into the property market, James Packer might yet get to
score another victory over News Ltd and Fairfax without buying into the
dinosaur world of dead tree newspaper journalism.

Peter Fray

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