The news on Wednesday that Newscorp had paid just under $30 million for Australian Independent Business Media (AIBM), a company majority controlled by Alan Kohler, Mark Carnegie, John Wylie and Eric Beecher was nothing short of astonishing.
AIBM’s only properties are the Business Spectator web site and the investment newsletter The Eureka Report. AIBM made only $237,000 last year (and no, I didn’t leave a zero out). In its five year existence, AIBM has only been marginally profitable. Realistically the company is probably worth $1 to $2 million. Stephen Mayne’s higher profile crikey.com sold for about $1 million a few years back.
There has been talk that Newscorp will use Business Spectator stories in The Australian and also put the site behind a pay wall. I will tell Newscorp’s Kim Williams right now that you cannot successfully put marginal “brands” behind pay walls, because when you do, 90% of your readership will evaporate. Or put another way, nothing you can find on the Business Spectator site is 1) worth paying for (or) 2) can’t be found elsewhere for free.
Alan Kohler has used his profile on the ABC television network (a public broadcaster) to create a business venture that largely exists only because of that ABC profile. Perhaps he should now be sharing some of his spoils with the ABC?
This year Kohler also changed the format of his Inside Business program on the ABC in order to give some of his co-investors in AIBM (like Stephen Bartholomeusz) a media profile which they previously didn’t have. It was all building up to a sale of AIBM.
The Business Spectator site itself is of mediocre quality. For starters, many of the stories that appear on the site are lifted straight out of the Australian Financial Review (i.e. they are not original stories). The opinion pieces written by Kohler, Gottliebsen and Bartholomeusz are of very limited value because the “spectators” are just that – spectators, not real financial market players.
As for The Eureka Report, what sort of people take financial advice from journalists (and money managers with dubious track records)? Answer: People who are very inexperienced and naïve.
If you want to see what kind of advice Kohler was giving in a December 2007 ASX publication (just prior to the full-blown effects of the GFC), read my 2008 article on this site: Old lessons to be learned from the Panic of 2008. Although I didn’t name him in that article, the respected business commentator I referred to in that article was in fact Alan Kohler. The advice he gave and opinions he expressed couldn’t have been more wrong.
As for Newscorp, Kohler had been a strident critic of both Rupert Murdoch and Newscorp. However, when enough cash was dangled in front of his face, he was willing to immediately jump into bed with the most disreputable media organization in the world. The Leveson Inquiry has clearly shown us just how unethical Newscorp has been. Enough said.
Newscorp doesn’t understand the online world and has lost vast amounts of money on previous investments such as MySpace. They will watch most of their $30 million for AIBM disappear too.
