Master of his Domain: Fairfax Media chief executive Greg Hywood. Photo: Rob HomerFairfax Media chief executive Greg Hywood has strongly rejected a report saying that the company’s real estate classified business Domain is being primed for sale.
Shares in Fairfax rose to a 27-month high on Monday after The Australian reported that Domain was ”considering joining a heady rush for floats with a $500 million listing of Domain on the local stockmarket in early 2015”.
But Mr Hywood said in an email that Fairfax had ”no plans” to float Domain, echoing comments at the company’s half-year results that he was not going to talk about an initial public offering for the business.
”We appointed Antony Catalano as CEO because we wanted to accelerate the growth of Domain. The business is gaining a strong competitive foothold,” Mr Hywood said.
Eyebrows were raised when Fairfax Media, owner of The Age and The Sydney Morning Herald, in 2013 put Domain in a separate business unit. Domain reported a 33 per cent rise in online revenue, and 50 per cent growth in digital earnings before interest, taxation, depreciation and amortisation in the six months to December 31.
Macquarie valued Domain at $974.1 million, the bulk of which comes from its digital operations.
Fairfax’s dating site RSVP was valued at $72 million. Its broadcasting arm – including Melbourne’s 3AW and 2UE in Sydney – was valued by Macquarie at $145.5 million.
In a recent note to clients, Macquarie Equities described Domain as the ”standout asset” of Fairfax and said that ”management sees upside opportunity in real estate”.
”Importantly, the Domain business is now well past a critical inflection point, with print contributing only [about] 25 per cent to group revenues and EBITDA, leaving the digital properties to drive the segment trajectory from here,” the broker said.
Both Domain and dominant rival realestate南京夜网.au, majority-owned by News Corp, are focused on selling premium advertising slots to real estate agents, rather than relying on subscriptions.
Credit Suisse said a Domain IPO ”would be a significant share price catalyst” but it did not factor this in to its 91¢ share-price target. Fairfax shares closed 2.8 per cent higher at 92.5¢ on Monday, taking its year-to-date rise to 44.5 per cent.
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