Domain boss Antony Catalano has left the company just two months after it was split from Fairfax and listed on the ASX. And the news has hit the share price, which was down almost 12% an hour into trading this morning. It had dropped 10% since it listed at $3.58. The ASX 200 has been flat over the same period. Fairfax Media shares went south as well, off 6% at 67.7 cents.
Domain Holdings Australia formally separated from Fairfax Media (which owned 60% of Domain) on November 6, 2017. In a shock ASX announcement this morning, the company said that it and its high-profile CEO Antony Catalano have parted company for “family reasons”, and that a global search had started for a replacement.
What’s the bet that that search turns up one Greg Ellis as a prime candidate? He is, of course, a board member of Domain and for years played a major role in the rise of rival REA Group (61%-owned by rival media group News Corp) in Australia and then in Europe. Ellis has been, briefly, part of the team that US private equity group Hellman and Friedman assembled for its aborted attempt to buy Fairfax Media in mid-2017.
The statement (which was seized upon by The Australian, which is also owned by REA’s parent News Corp) revealed that Catalano’s resignation had been accepted by the board. Domain chairman Nick Falloon will act as executive chairman, and said in the statement: “Antony informed the board that over the Christmas break he had realised that the demands of his role and his absence from the lives of his family were proving more challenging than he had expected and he had decided to put his family first.”
Catalano was quoted in the statement as saying that he had made a commitment to his family when taking on the role at Fairfax in November, 2013. “It has become clear to me that doing the job of a listed company CEO the way it needs to be done means that I am not meeting that family commitment,” he said.
I understand and regret that the timing of this decision is unusually short from Domain’s listing. But having been in the role for four years, I resign knowing that Domain has a great management team in place and I have every confidence in them and the business continuing on its current stunning trajectory. Having worked with Fairfax Media and Domain for more than 26 years, I am proud of what has been achieved, most importantly seeing Domain grow into the formidable business that it is today, capable of being a stand-alone listed entity.
So to avoid any sniff of going to another job here or offshore, Catalano will have to remain on the sidelines for quite a while. What is interesting is that there was no talk of giving a board seat to keep him in the Domain tent.
In a brief trading update with the statement about Catalan’s departure, Domain gave the impression that revenue had grown strongly in the period to December 31.
“Domain will report FY18 first-half financial results on 19 February 2018. Based on preliminary, unaudited pro forma results, Domain is expected to report digital revenue growth of 22% against the same period last year and total revenue growth of 13%. This is consistent with the most recent trading update provided to the market on 22 September 2017.”
No mention of how the company has been riding out the downturn in activity in recent months in its two biggest markets: Sydney and Melbourne. Nor was there any mention though of profit performance for the six months to December. Was that the reason? Are there cuts coming if that profit performance turns out to be less than expected?
And elsewhere in real estate, shares in McGrath were down almost 10% after The Australian Financial Review reported the company had lost $1.3 million in the five months to November. That had the entire board — apart from founder John McGrath but including CEO Cameron Judson — quit. Judson resigned after less than 18 months in the role, while McGrath chair, Cass O’Connor, and current non-executive directors Elizabeth Crouch and Cath Rogers announced their intention to resign following an orderly transition period while board member Nigel Dews has already resigned. There must be an infection in the property sector.