BOTW: The Brag’s curious new owner; What a Paramount merger means for Ten; The ABC sacking playbook
Welcome to Best of the Week, mostly written on Friday at sunny Sisters Beach, Tasmania, on a day when it felt like everybody else in the industry had already left their desks.
So this may prove to be our least read newsletter of the year (apart from next week’s, perhaps), which is a pity, as it was an eventful few days. We’ll be covering the local implications of the proposed merger of Paramount and Warner Bros Discovery; the sale of Brag Media to Vinyl Group (who?); and the ABC’s sacking of Antoinette Lattouf.
Happy Festivus. That’s today. Let the airing of grievances commence.
You’re just about out of time to snap up Unmade’s never-to-be-beaten end-of-year offer to become a member. The offer ends after today.
So far, we’ve been appealing to your rational side: access to Unmade’s paywalled articles; discounts on our events; a complimentary ticket to Compass.
For this final pre-Christmas pitch, we’re appealing to subversive philanthropists.
If you approve of Unmade’s existence, offering questioning analysis on the industry that can’t be found elsewhere, then why not support us through a membership?
You may wonder why that’s subversive. Here’s why: You can do it using your company credit card. You can justify your membership for excellent business reasons, but secretly, you’ll know you’re doing it to support independent journalism.
Stick it to the man and upgrade today.
The $8m+ Vinyl frontier for Luke Girgis’s Brag Media
This week saw the announcement of a media deal that gets more unusual the closer you look.
Vinyl Group, an ASX-listed music industry company you probably haven’t heard of if you don’t work in that world, has agreed to buy Brag Media, the publishers of local music mastheads including The Brag, Tone Deaf and The Music Network, and licencee of iconic global entertainment industry brands including Variety, Rolling Stone and The Hollywood Reporter.
Unmade regulars may recall I interviewed Brag Media CEO Luke Girgis towards the start of 2022 about his strategy for the company.
Unmade’s overview of the story of Brag Media:
Girgis, who came out of the music industry, was refreshingly honest in that chat about how he had cheerfully broken all the rules of publishing because he didn’t know them.
Along with co-founder Sam Benjamin (who will be leaving the business), he turned Brag Media into a much more vertically integrated business than most. Alongside publishing, there’s a talent management business, event business and of course a creative solutions team. There’s also a Brag media agency.
As we explored in the podcast, that creates a business model with the potential for more editorial conflict of interest than most, particularly if you play by the traditional rules.
Now comes the deal to sell to Vinyl Group, whose recent history makes Brag Media look positively conventional.
Vinyl Group has changed a lot in recent months. For starters, until just over a fortnight ago, it was called Jaxsta. The company ended up on the ASX back in 2018 via a reverse takeover of the already listed Mobilarm, which was previously a boat safety technology company.
Within the group are three different businesses: Jaxsta, which is a global database of official music industry credits (like IMDB, but for music); Vampr, which is a social network for musicians; and Vinyl.com which is an ecommerce site which sells, yes, vinyl records. None of them are doing particularly well commercially.
In the most recent annual report, covering the 2023 financial year, the group reported revenues of just $582,000. That’s not a lot for an ASX-listed company, but is a big improvement on the previous year’s revenues of $105,000.
The group also reported a loss of $6.2m in FY22, worsening to a loss of $10.8m in FY23. The company’s net liabilities at FY23 year end were $1.4m, mainly thanks to a $4.5m debt.
The annual report contained the caveat that the group was relying on the launch of Vinyl.com and $5.5m acquisition of Vampr to grow revenues and get to breakeven. It also promised a capital raising, which will now happen alongside the Brag deal.
The annual report included the warning that if those things didn’t happen “the Group may not be able to realise its assets and extinguish its liabilities in the ordinary course of operations” (legal speak for: it could go broke).
The report was also appended with a note from the company’s auditors Grant Thornton that “a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern” (accounting speak for: it could go broke).
That annual report isn’t exactly ancient history; it was only published nine weeks ago.
However, the case for optimism are the signs that the group is already turning around.
New CEO Josh Simons has only been in place since June. Before that he was founder and CEO of Vampr, which he sold to the group in February.
Simons succeeded Beth Appleton who lasted a year as CEO after being promoted from chief marketing officer. She had succeeded Jaxsta’s founder Jacqui Louez-Schoorl
Simons’ new vision for a tech-led local music company clearly has shareholder support. Despite being loss making, the company has a market capitalisation of just over $20m: the shareholders clearly see an underlying value.
One of the biggest supporters is Richard White, who’s a 10 X billionaire thanks to his stake in tech firm WiseTech. He already had a 10% stake of Vinyl, and is now effectively bankrolling the purchase of Brag Media by pumping another $11m into the company.
The Brag deal is due to complete on January 31. Vinyl will pay Girgis and Benjamin $8m for Brag Media, plus another $2m if it hits targets.
That’s a spicy 24 X profit multiple for Brag, which made a profit of just $335,000 in the last financial year, according to this week’s announcement. The sale price is close to one times revenue which was $8.39m in the last financial year.
According to the sale docs, Girgis is committing to drive revenues up to $12m, and get Brag Media’s profits above $2m.
Girgis will also receive Vinyl Group share options if he can get the profits up to $2.8m. That’s a big jump.
It’s still a rare thing in the Australian industry to see an independent publisher build to this kind of scale, or to make an exit on that sort of valuation – less than one a year, I reckon.
Girgis confounded conventional wisdom to take Brag Media this far. It would be silly to bet against him now.
What a $100bn Paramount merger would mean in Australia
Speaking of deals, news emerged on Thursday that global screen giants Paramount and Warner Bros Discovery are in (very) early talks for what would be one of the biggest mergers the global entertainment industry has seen.
Although I’m not sure I agree with his view of the logical necessity of a deal, I recommend fellow Substacker Dan Barrett’s overview of the issues:
There are plenty of barriers to overcome before this one becomes a reality: not least the fact that both companies have got hefty piles of debt – Warner Bros is in the hole to the tune of US$43bn, Paramount US$14bn. That gives the whole deal an enterprise value of something like US$95bn. Based on sizes, Paramount would be the junior partner.
Paramount brings to the table assets including studio output (Mission Impossible, Top Gun, Yellowstone et al); subscription streaming service Paramount+, FAST channels offering Pluto TV, and the likes of MTV and Nickelodeon. In television, Paramount owns Network Ten in Australian, CBS in the US and Channel 5 in the UK.
Warner Bros Discovery assets include HBO, CNN and streaming service Max.
A trigger for the conversation between the two bosses of Paramount and Warner Bros Discovery, Bob Bakish and David Zazlav, may be another deal already agreed but yet to be completed: early next year, Disney will buy out NBC Universal owner Comcast from its one-third ownership of US-based streaming service Hulu.
A combined Paramount – Warner Bros Discovery would likely be too big for regulators to allow NBCU to then swallow it later, so Bakish and Zazlav may view a merger as a defence against ending up in the hands of Comcast.
There are local implications of a merger, most notably for the team at Paramount ANZ and Network 10.
If it’s a merger in name only, but in reality a takeover of Paramount, there would be a whole new culture to navigate. Since Ten was sold to CBS Corporation in 2017, after going into administration, it has effectively been within the same culture – even as CBS became ViacomCBS and then Paramount.
The significant upside for the local team would be the potential of a much bigger pipeline of content to use across Ten, Paramount+ (or whatever the brand ends up being called) and its ad-supported streaming offerings. The fact that Warner Bros Discovery is yet to launch its streaming service Max in Australia would make that part of the equation far less complicated locally.
In addition, both sides of the proposed merger are deeply rooted in the traditional television industry, including bosses Bakish and Zaslav. While the Australian part of the business is only a rounding error, Ten would likely still have a place within the world view of any new management.
Meanwhile, counterintuitively, there would also be a local upside for Foxtel Group. Its HBO output deal, which is always in danger of being cancelled, yet always seem to get another extension, would finally, finally come to an end. No more Game of Thrones, Succession, White Lotus pipeline for Foxtel and Binge. But the end of the HBO deal for Foxtel was always coming, and the merger might actually help Foxtel get one more extension.
Warner Bros Discovery isn’t allowed to take any further formal moves towards another merger until after April 2024, because of restrictions placed on the company following the merger of WarnerMedia and Discovery in 2022.
If regulators get involved, completion of this merger could be two years away. That would be valuable breathing space for Foxtel, in which a local launch of Max would be likely deferred.
Welcome to the shitshow: Be on the ABC, or tell the world your views – choose one or the other
There was plenty of heat this week around the ABC’s decision to cut short the contract of its stand-in presenter Antoinette Lattouf who had been due to present the ABC Sydney morning show as a summer stand in for five days but only managed three.
Yesterday afternoon, Lattouff lodged a Fair Work application claiming she had been unlawfully terminated.
Lattouf has been posting on social media on a number of topics relating to the Middle East conflict.
Most notably, she is locked in a spat with Sky News presenter Sharri Markson over the provenance or otherwise of footage of a demonstration outside Sydney Opera House. Whether protesters chanted the offensive phrase “gas the Jews” is hotly contested.
Where Lattouf appears to be ignoring in her legal action is that the role of ABC presenters is impartiality. If you want to be on air talent for a publicly funded broadcaster like the ABC, your audience should not know where you personally stand.
That’s not the case for Sky News commentators like Markson who enjoy the luxury of being paid to prosecute a view.
There have been a couple of recent cases of on air ABC talent slamming the door on the way out, shortly before launching new ventures.
Josh Szeps noisily quit ABC Sydney’s afternoons slot in November, labelling himself as “too spicy” for the ABC and promoting his podcast.
On Thursday Latouff launched her new podcast, promising to tackle the topics people are “too afraid” to approach.
Both Szeps and Lattouf seem too intelligent not to understand the ABC impartiality obligations so it’s hard not to wonder if the their loud exits aren’t so much unfortunate, as part of the playbook.
Getting axed from the ABC gained Lattouf a lot more attention than five days on air would have done.
Unmade Index finishes with pre-Christmas flourish
The final day of pre-Christmas trading was a slow one for the Unmade Index, which nudged upwards by 0.4% on Friday, taking the index up about 4% for the week, finishing at 628.5 points.
Among the larger media stocks, Ooh Media was the best performer, up 2.17%.
Audio companies ARN Media and Southern Cross Austereo both faded by similar amounts.
Almost time to leave you to your Christmas.
Before I do, one final reminder to get your Unmade membership deal before it ends later today. When you come along to events like Compass, REmade or Humain, there’s a real sense you’re part of an emerging community. Please join us.
Have a wonderful Christmas.
Toodlepip…
Tim Burrowes
Publisher – Unmade
