Premier Media Group leads the pack. The media reporting of the Cons Media figures made mention of how it was a “new media” company because it was now more a Pay TV investor rather than a media proprietor. But they failed to show just how profitable one of its Pay TV businesses is. For the News Ltd press, that might have been a bit close to home seeing its Premier Media Group, 50% owned by Cons Media and 50% owned by News. It is now the most profitable media business in the country. More so than News!
Premier Media Group owns the three Fox Sports channels and several other channels. Look at the EBIT margins for Foxtel (Cons Media 25%) and Premier. Foxtel had revenues of $1.7 billion in the year to June and earned EBIT of $351 million (up 48% after a 17% rise in revenues). That gave an EBIT margin of 20.6%. Not as good as PBL Media!
But Premier Media Group had revenues of $384 million, up 17% and earned EBIT of $133 million, up 25%. That produced an EBIT margin of 34.6%. That continues to frustrate Telstra, which owns half of Foxtel and its lower profitability. Telstra has spent billions getting Foxtel to where it is now and it continues to see the cream skimmed by news and Cons Media (formerly PBL) through PMG.
It’s no wonder Cons Media and its partner, News Corp, want to hang on to their stakes in PMG. It is by far the best TV asset in the country and easily beats the Seven media Group’s EBIT margin in 2008 of 28%. It’s why Kerry Stokes has bought into Cons Media and is sitting there with 4.82%. It’s probably also why one of his guests at the Beijing Olympics was Mark Burrows, the confident Sydney investment banker who is close to Rupert Murdoch. Stokes’ invited Burrows because of his closeness to Murdoch. Are there “peace” overtures between News and Stokes which will bury the enmity of the C7 case? — Glenn Dyer
Retailers Awards, going cheap. Last week the Australian Retailers’ Association crowned Super Cheap Auto as 2008 Australian Retailer of the Year at a presentation in Sydney. But some retailers are asking whether the awards were akin to a beauty contest where a few of the nominees were bonking the judges. Among the nominees was non ARA member Woolworths and JB Hi-Fi who, despite a refusal to cooperate with the judging, were still listed as nominees thought the process and on the night.
In the context of a difficult retail climate, particularly for the discretionary sectors in which they trade, JB has just turned in a stellar result. However JB Chief Executive Richard Uechtritz slammed the awards process and refused to cooperate with the time consuming, complex and irrelevant form-filling required of nominees. He suggested that nominees who engaged in the process were not doing the right thing by their shareholders.
While retailing is our largest industry, with a turnover of $290bn, employing 1.2 million people -almost 15% of the workforce – industry politics are fractured. The industry is represented, and you will need to pay attention here, by three bodies: the Australian Retailers’ Association, the National Retailers’ Association and the Australian National Retailers’ Association. ARA is the oldest of the groups but is struggling for relevance as most of the big retailers have abandoned it. The questionable credibility of the awards cannot help. — Rob Lake
WA retailers keeping the sabbath free. The West Australian Premier Alan Carpenter has backflipped on the issue of deregulated shop trading hours. Earlier this year the Premier said he would take a policy of full deregulation to the people but will now run with a modified deregulation that will prevent most from opening on the Sabbath. The people of WA seem to see themselves as different from those “over east”. Indeed, when many sandgropers pronounce the words “over east”, they spit them out rather than mouth them. And different they are, continuing to stick with relic trading hours that lag twenty or thirty years behind the rest of the country.
The backflip is being described as the result of lobbying by small retailers and the shop assistants’ union. If the opponents were to visit any of the eastern capitals on a Sunday, they would see thriving retailers, busy car parks and customers – lots of customers. What this means for WA shoppers is that retailers are less likely to open stores there. Costco is coming soon to the eastern states; but WA? Factory outlet centres? Retail expansion and innovation generally? All less likely.
WA consumers will not enjoy the benefits of increased competition and with their lighter wallets and purses can be safe in the understanding that WA is indeed different. Two hours plus 20 years different. — Rob Lake
An idea for contemporary artists interested in finance. Is this the non-business board change that sums up the coming year or so in Australian business? Embattled Allco Finance Group founder and former chairman, David Coe (the man who nearly swallowed Qantas) has stepped down as chairman of Sydney’s Museum of Contemporary Art. He will be replaced by board member and Sydney accountant, sorry liquidator, Andrew Love.
So the well-connected good time charlie financial engineer in David Coe is departing (but staying to help raise money for a rebuilding program) but will be replaced by a man for miserable times; a corporate undertaker, a liquidator. Allco is dead on its feet, Babcock and Brown isn’t far behind, MFS has gone, Centro is in break up and faces certain dismemberment and at some stage in the next year or so, the likes of Mr Love will be brought in to administer the last rites to it and other basket cases. So its now official: recession time has come to Sydney’s arty and monied classes.
I know what would make a great piece of installation art for the MCA’s boring Biennale exhibition now: annual reports and ASX statements of Allco, Babcock and Brown mounted on a montage of profit and loss accounts and pretty pictures of the managements and boards of our basket case companies. — Glenn Dyer
Babcock & Brown to take a long hard look at itself. An insider may replace Phil Green as chief executive of infrastructure financier and investment bank Babcock & Brown. Michael Larkin, B&B’s chief financial officer, is the Financial Review’s tip. Peter Hofbauer, B&B’s global head of infrastructure and project finance, is The Australian’s alternative tip. The Sydney Morning Herald reported the new CEO may be either Larkin or the chief operating officer, David Ross.
The AFR newspaper reported speculation earlier this week that the firm may replace its CEO. The firm’s executive chair, Jim Babcock, is also tipped to stand down. B&B late yesterday effectively confirmed to the ASX that a management change, and perhaps board changes, may be announced tomorrow in conjunction with publication of B&B’s financial statements for the June 2008 year. An outline of a revised strategy is also likely tomorrow.
The market capitalisation of B&B and several listed infrastructure vehicles it manages have taken a hammering on the ASX this week, largely triggered by the sale of assets and write-downs in B&B Power. — The Sheet