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Jun 20, 2012

Kohler's $8m pay day: News buy ahead of staff clean-out

Alan Kohler will pocket a cool $8 million from the sale of his pioneering business journalism venture after he inked a deal with News Limited to sell the business he founded or $30 million in cash.

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ABC star Alan Kohler will pocket a cool $8 million from the sale of his pioneering business journalism venture after he inked a deal with News Limited to sell the business he founded for $30 million in cash.

Under the terms of the deal, 28% owner Kohler, who is the most recognisable face of Business Spectator and Eureka Report, will be required to stick with the stable of sites for at least the next five years.

The tie-up is a triumph for the avuncular finance oracle, who has been locked in negotiations over the sale of his Australian Independent Business Media (AIBM) with different suitors for 7 months (he remarked at one point that the process was “driving him f-cking crazy”). The ailing Fairfax Media did due diligence and then returned with a low-ball offer last month which was promptly rejected by Kohler and investment banker (and fellow shareholder) John Wylie, who was negotiating terms.

Eureka Report is the jewel in the AIBM crown, making an impressive $1.91 million in profit last year off the back of 16,000 subscribers — the majority of whom pay the full rate of $385. The other sites in the stable are Technology Spectator and Climate Spectator with the broader Spectator Group recorded a $1.67 million loss last year.

According to a leaked prospectus, the combined sites made $237,000 in 2010-11, down from $541,000 in 2009-10, suggesting News paid a massive earnings multiple of at least 50 based on updated figures.

However, Crikey understands the tie-up was more a strategic imperative to soak up potential business news competitors as it moves to nail down its paywalled digital offering, the details of which will be formerly announced by News CEO Kim Williams at 1:45pm today. A announcement from News on the AIBM acquisition is expected at around the same time.

Crikey understands that the “KGB” — Business Spectator‘s star columnists editor-in-chief Kohler, Robert Gottleibsen and Stephen Bartholomeusz — have signed employment agreements with Nationwide News and are now effectively News Limited employees providing salaried content. There were initial fears that News would promptly move to clean out or rationalise back office staff, however Crikey understands Williams is committed to the growth of the business and will not be making any cuts for the foreseeable future.

The major AIBM shareholders are Kohler on 27%, Mark Carnegie and John Wylie on 18% each and Private Media chairman Eric Beecher on 16%. The remaining 19% is split between the the G and B in Business Spectator‘s “KGB”, Robert Gottliebsen and Steve Bartholomeusz (4% each), with smaller stakes held by Karen Maley, James Kirby, Eureka Report General Manager James Leplaw and Business Spectator‘s Nicholas Gray.

While shareholders were celebrating, the tie-up leaves a hole in the Australian independent media sector as another minnow is swallowed up by Australia’s media oligopoly.

In a letter to staff this afternoon, Kohler, who began as a cadet at News at the age of 18 in 1970, said that the principals saw the sale as a “new beginning rather than the end of anything. We can all be immensely proud of what we have created here over the past seven years, and four years in the case of Business Spectator.

“Our business is going to grow under their ownership in a way that we could never have managed on our own. It was this, in the end, that sealed it for me: this transaction will provide all of us personally with fantastic new opportunities for advancement and growth in a global organisation that is, itself, changing and modernising to focus on digital publishing.

“So I’m really looking forward to the next few years – to continuing to work with you to build an even more significant media business for our audience and clients than we have built already.”

He revealed that $200,000 had been set aside from the sale to pay to long-serving AIBM staff in bonuses.

As previously reported by Crikey, Kohler will continue to present the national finance wrap on ABC News and host Inside Business. This afternoon, News CEO Kim Williams confirmed AIBM content would appear in The Australian, raising the prospect of Kohler’s popular columns appearing in the hard copy paper.

News has also pulled the trigger on two other announcements, revealing plans to buy out James Packer vehicle Consolidated Media to grab a 50% stake in Foxtel and soak up the remainder of Fox Sports. And this afternoon News staff will be dazzled internal briefing on widespread changes to the company via a Williams webcast, with job losses mooted as the giant moves to streamline its operations.

AIBM is located one floor above Crikey at Melbourne’s Swann House, and this reporter will be keeping an eye out for any Rupert Murdoch sightings in the months and years ahead.

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9 comments

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9 thoughts on “Kohler’s $8m pay day: News buy ahead of staff clean-out

  1. Clive Morton

    Well at least we still havc Alan-not muzzled we hope. Clive Morton

  2. linda domaschenz

    Good grief, what next this week!
    But Alan and a News Ltd future will not fit with his other interests aka ABC.

    I’m over these magnates taking over our lives even further. Think I’ll crawl further into my scrub. To be honest I could/can take the attitude of I’m OK Jack approach but what of all the other Aussies that don’t realize how far the tentacles reach.
    The impost on our national physch is scarey.

  3. carmichael.julia@abc.net.au

    How can you be indepedent if you work for News Limited and the ABC??

  4. CP Richmond

    So, How much for Crikey then? 16,000 daily subscribers, about the same then. But a multiple of 50 on an a 5 year earnout looks dodgy. I’d expect AK to being doing work on the ABC for some time yet, unless of course he is handcuffed.

  5. Mark Hurd

    Will Kohler continue his roles with the “very-anti News Limited” ABC?

    Someone will have to actually address the conflict if so.

  6. barfiller

    You have to be in awe of Eric Beecher. Rupert lambasted his editorship at the old Melbourne Herald as ‘reporting the best cafe latte in South Yarra’. But since then he has made many media investments that turned a good profit on being sold.

  7. FelineCyclist

    Alan Kohler a News Ltd employee – how unfortunate. It will be interesting to see if the editorial slant changes at all.

    It bodes ill for media diversity – anything decent that get sup and going will just be swallowed up by News’ cash reserves. What hope Australian democracy?

  8. Birdie

    If Crikey goes to News, I’m out of here!!!!

  9. paddy

    Rupert buying Business Spectator and The Eureka Report sounds vaguely logical.

    But Climate Spectator???

    I guess it was just part of the package.
    Can’t say I’m too hopeful of an ongoing viable future for Climate Spectator.

    (I’m guessing that Giles Parkinson saw the writing on the wall earlier and jumped ship to found Renew Economy as an alternative.)

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