On 9 February, the Australian Financial Review stated that Newscorp had reportedly
written down the value of Business
Spectator and the Eureka Report to
zero (page 45 of the printed edition).
When Newscorp paid close to $30 million for this
business in 2012, I made the following comments on this blog:
“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.”
“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.”
“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.”
You can see the full article I wrote at the time here:
http://thestockscribe.blogspot.com.au/2012/06/alan-kohler-takes-advantage-of.html
It now seems that what I said has come to pass.
While $30 million is a drop in the ocean for
Newscorp, the decision by Newscorp executive Kim Williams to be so cavalier
with shareholders’ funds is simply appalling. There was no valuation metric on
Earth that could have been used to justify paying anywhere remotely near $30
million for this extremely mediocre business.
One of the reasons that I have been highly
critical of Australian executives and their remuneration packages is because we
see these kind of idiotic mistakes being made continuously and the people
making the mistakes are being paid fortunes to make them.
I shouldn’t pick on Newscorp, there are so many
examples of major strategic mistakes being made (how about Grant O’Brien’s
decision to plunge Woolworths into Masters – its cost billions of dollars for
Woolworths shareholders, but O’Brien gets to keep every cent he was paid for
making such a harmful decision, a decision that has significantly damaged the
reputation of one of the country’s preeminent companies, it doesn’t sound fair,
does it?).
As for Kim Williams and Newcorp, they have been
made to look like fools by the likes of Alan Kohler, Mark Carnegie, John Wylie
and Eric Beecher.
