REA Group is the dominant online real estate business in Australia and it is more than 60% owned by the Murdochs’ News Corp. Lachlan Murdoch saw the potential years ago and convinced the company to take an early stake, and then support it through the tough years. So successful has been the investment that the New York gang who run News (then sole chair Rupert Murdoch and CEO Robert Thomson) bought Move, a smaller but similar real estate website business in the US for around US$1 billion. REA has a market value of around A$7.3 billion. News’ value is around A$11.3 billion, so if REA catches a cold, News freezes financially.
So successful is REA that there seems to be a revolving door between News and REA. REA directors who were once at News include Hamish McLennan, the former CEO of the Ten network (appointed by Lachlan Murdoch, a big shareholder in Ten, as is Foxtel) and Richard Freudenstein, the former CEO of Foxtel who was replaced by Peter Tonagh, a former REA Group director. News Corp Australia boss Michael Miller is another REA director. Will Lewis, the head of the Dow Jones Co in New York and formerly at News in the UK, is also a former REA director.
Directors are set to get a pay rise at the REA annual general meeting in November. The REA Group’s notice of meeting was issued this morning and reveals:
“That, in accordance with rule 7.3(a) of the Company Constitution and Listing Rule 10.17, the maximum aggregate Directors’ fees payable to Non-executive Directors per annum be increased by $550,000 from $950,000 to a maximum of $1,500,000.”
That’s a proposed increase of close to 58%. At a time when wages are growing at 2.1% at best and less in some sectors, and when News Corp itself is cutting millions of dollars of costs at the Australian newspapers this year, REA Group and News are proposing to give some of its executives and others on the board an huge increase in fees. It’s also more than 50 times the current rate of inflation. We know real estate is booming and Sydney and Melbourne house prices continue to rise, but a 58% rise?