Fairfax and News Limited stand on the brink of a 1990s-style newspaper war after the part-Fairfax owned Weekly Review group slapped a writ on a leading Geelong real estate agent for breach of contract.
In a dramatic $1.4 million statement of claim filed in the Victorian County Court yesterday afternoon – obtained by Crikey – The Weekly Review publisher MMP Greater Geelong alleges Danny Hayes, managing director of boutique agent Hayeswinckle, accepted rebates, secret commissions and a diamond ring from the News Limited-owned Geelong Advertiser to transfer advertising to News, despite being a major MMP shareholder.
The writ, first revealed by Crikey yesterday, alleges Hayes breached the Estate Agents Act, the Crimes Act and a shareholders’ agreement by accepting payments of up to $50,000 a year, hospitality and the ring for his wife. Hayes specifically denied the allegations yesterday, calling them untrue and “absurd”.
MMP alleges News Limited property director Tom Panos encouraged Hayes to enter into a rival deal with the Addy after he signed a previous agreement with MMP to book $470,400 worth of annual ads with The Weekly Review. Senior News executives were aware of the arrangement, the writ says. In a statement, News told Crikey that “any suggestion that we have behaved improperly is ridiculous”.
MMP – a joint venture between real estate agents and Fairfax helmed by former Age property reporter Antony Catalano – is seeking $1.398 million in damages and lost revenue. Hayes slammed the allegations this afternoon, telling Crikey that he’ll defend them vigorously in court.
“This is like something out of a Steven Spielberg movie. The bottom line is simply this … we offer both print mediums to the Geelong public … we let the public decide which medium they want to promote their property in. We just want what’s best for our vendor,” he said.
The statement of claim says that while Hayes initially complied with the terms of the deal, from late December he “actively discouraged” clients from placing ads with The Weekly Review and encouraged them to go with the Addy instead.
“Unfortunately the Advertiser is a lot cheaper than The Weekly Review. Even though I’m a shareholder of MMP I can’t force people to use their publication. I won’t be bullied by Mr Catalano,” Hayes said.
The MMP agreement also required Hayes to market and actively promote the weekly glossy to the public, clients and potential clients, however MMP says he secretly spruiked for News instead. Hayes and a related entity, Team 3216, became co-owners of MMP in October when he secured a tranche of shares as part of MMP’s co-ownership model.
House sellers typically splash between 1-2% of the sale price of their home on advertising and marketing campaigns booked by agents on their behalf. Under Victorian law, estate agents are banned from retaining a rebate or inducements from media companies – agents that fail to pass on the “benefit” to sellers and the media companies that pay them are then liable for prosecution if the “benefit” relates directly to vendor spend.
The Weekly Review Greater Geelong launched in November amid huge fanfare and ended up signed 25 local agents to its co-ownership model in addition to Hayeswinckle. Overnight, around $9 million was wiped from News’ revenue base previously generated by property ads in the Addy’s flagship Saturday edition.
In retaliation, the Advertiser slashed its page rate in half to sandbag remaining clients and Crikey understands the title is now operating at close to a loss. A circulation war has now developed between the free Weekly Review and its bitter rival, which charges $1.10 for a weekday copy and $1.70 on the weekend. The heist would have frustrated News Victoria regional director Mark Gardy, who was previously general manager of the Geelong Advertiser group.
Catalano opened fire on Hayes and News, telling Crikey his estranged business partner had questions to answer. “[It’s] interesting, when we launched Mr Hayes seemed to have the ability to move all his clients into a publication in week one even though we had no history. Then, after a couple of visits from News Limited, who in the past have paid Danny $50,000 a year in illegal kickbacks, he suddenly found his vendors wanted to go back into the Geelong Advertiser. I don’t think so, Danny. Danny might learn that in this case diamonds aren’t forever,” he said.
“Does Danny honestly expect us to believe that the vendors have all chosen the Advertiser when it has far fewer properties advertised and half the circulation of The Weekly Review? And they deduced to move after News Limited executives behaving like Santa Claus visited his office. The discount rates being offered in the second rate Geelong Advertiser real estate section were available from the time we launched last year. Why have the vendors suddenly decided to take up the offer?”
On Facebook, Hayes rigorously defended himself:
“No one will ever bully me or my business – to sell print media so they can line their own pockets.
“There is always two sides to every story – I don’t care if I’m the only agent in Geelong that takes a stand, HW Agent [Hayeswinckle] will always offer ‘all print media options to all vendors’ and let them decide. We make out commissions from selling houses period!”
He suggests he will fight the claims with serious intent:
“I’m gunna be sued by a media mogul for breaching a contract because I will not sell $500,000 of marketing a year – I say bring it on!!
“I started with nothing nine years ago, I’m ‘all in all the time’ — how big are your balls!!”