Nine buys QMS, sells radio business in sweeping changes
A Nine outdoor panel as imagined in the QMS deal announcement documentation
Nine has bought out-of-home media company QMS and sold its radio business to billionaire hotel baron Arthur Laundy in sweeping changes announced before the ASX opened this morning.
The QMS deal is worth $850m, and the radio sale — for talk back stations 2GB in Sydney, 3AW in Melbourne, 6PR in Perth and 4BC in Brisbane — was for $56 million.
Nine has also converted regional station NBN from a wholly owned business to an affiliate, owned and operated by Nine’s regional partner, Win.
Nine CEO Matt Stanton made the announcements this morning before the market opened.
Not good for NEC. Has all the elements of a non-synergistic merger of a no talent fixed leased asset business merging with a content driven NEC existing operation. NEC should have brought SXL radio.
OOH in OZ is a bet on advertising futures. QMS terms for major contracts are c10 years. For general churn probably 4-5 years. Both longer than the potentially disastrous fixed price (some with CPI etc +) Sports rights that TV holds (all around 2030-31). And about 40% of TV costs in the SWM part of SXL -all fixed and an substantial leverage risk. Outdoor is worse. QMS has been smart in that historically it has had a c60-66% of fixed to variable site costs ratio. Now probably higher. I do not know. But still, it really is a NEC bet on advertising futures. It was outdoor that had the emergency equity issues during covid. Not regular content media.
Lastly Barclay Nettlefold sale represents the peak of valuation and build for QMS. He joins a long line of build, asset sale point and, after cycles for all the outdoor companies. Alan Davis, Peter Cosgrove (Bus Pack) Pierce Cody, Brendan Cook, and now Barclay exits the industry. None of these grew much faster, if at all after the founder momentum expired.
There is a question whether outdoor is over indexed in Australia at 18% of media spend. The ever-trendy inner city media buyers are in their own socio-economic geographic bubble, and only into online, and see OOH media and that is all that can get to them. Commercial tv, the Daily Telegraph/Herald Sun and Pauline Hanson, are not inputs.
If one is very bearish on Australian household post interest, after-tax real incomes, this is a very poor decision by NEC. Stanton will need to get some Clag out to wet up posters in that scenario.
The sale of the Macquarie Network solidifies the Laundy media power to defend liquor and gambling in pubs. Son Craig was my local member in Federal Parliament. With Macquarie they are back in Parliament with an opinionated media outlet for $56m on say $1.7b of assets. Peanuts cost.
I suspect there will be a lot of people shocked at the Nine Radio sale price. Not least of which, the early interested parties.
I guess $56M is just pocket lint to a Billionaire 🤷
Any journalists willing to write about how completely conflicted Nine Chair Peter Tonagh is on the radio sale? He is also employed by the owner of SEN one of the other bidders. Setting a fine example from the top!