Signing off on a disruptive media chapter

From the intellectual battles on house prices to breaking new ground on the role of banks in Australia, writing for Business Spectator has been full of highlights, but now it's time to move on.

My media home for much of the last three and a half years, Business Spectator, was wholly acquired by News Limited yesterday. It was a tremendous outcome for the founders of the business, which includes the very profitable Eureka Report, although sad in the sense that it arguably closes a significant chapter in Australian media history.

Business Spectator and Eureka Report will no longer exist as economically independent concerns, and management will once again report to a major media organisation.

Having said that, it was a very smart and well-timed decision by the owners, which include the canny investment banking couple, John Wylie and Mark Carnegie, and the experienced media proprietor, Eric Beecher. There is a case that the business was right in the middle of its valuation 'sweet-spot' from an internal rate of return perspective. There is also the fact that venture capitalists like Carnegie and Wylie need an exit within a reasonable time-frame.

Business Spectator and Eureka Report were iconic, game-changing media startups. Of course, the success of these new entrants was entirely attributable to the people running them. I've worked with a lot of motivated, intense individuals throughout my life. On any measure, Alan Kohler, Stephen Bartholomeusz, James Kirby and Bob Gottliebsen toiled like Trojans to get their shared vision off the ground. And they deserve to reap the rewards.

Business Spectator and Eureka Report were disruptive innovations in the Australian media industry. Initially dismissed by their competitors as irrelevant non-entities, they matured to become serious commercial threats. It is no exaggeration to say that they contributed to accelerating the changes outlined by Fairfax and News Limited over the past few days.

As an instinctive anti-establishment character, I was delighted to be invited to join this band of brothers (and sisters) on their journey way back in December 2008. I think it was Bartho who originally suggested bringing me on board.

I started off blogging, and then transitioned into one of the "spectators". As the guys know, I was never backwards in coming forwards with critical advice. And notwithstanding distinct differences of opinion on the subjects about which we were writing, I found all the executives – every single one of them – to be terrific human beings. And they seemed to share that common entrepreneurial thread.

I'd like to single out Alan Kohler in particular. Alan is a wonderfully capable and compassionate man. Every time you speak with him you leave the conversation thinking: wow, that guy has grace.

There were many highlights along the way. Episodes that spring to mind include: the big intellectual battles during the global financial crisis over what would happen to the domestic economy (and house prices specifically); kick-starting the debate around the optimal cash, fixed-income, and equities allocations in super funds’ portfolios; advancing the opportunity cost critique of the NBN; the call for a "Son of Wallis” financial system inquiry; breaking the news of Malcolm Turnbull’s return to politics; pushing the dialogue on the role banks should play in our community, and helping introduce the arguments that they are quasi-public utilities, that expected future returns should be lower given the introduction of taxpayer guarantees, and the need to properly price implicit subsidies; and, finally, opening up new ground on our understanding of the conduct of, and assorted influences swirling around, central banking and monetary policy in this country.

Some time ago I informed Business Spectator's leadership that I had agreed to partner with another player. This was before the News Limited deal had been consummated. It was not an easy decision to make, and the team were very kind in working hard to persuade me to stay. So I will eventually emerge in a new place.

I want to emphasise how pleased I am for the originators of this undertaking. This is one of those new business stories that has a happy ending. Alongside the Private Media network, which encompasses Property Observer, Smart Company, and Crikey, it offers a powerful precedent for those brave souls that aspire to one day shake-up the media orthodoxy. It can be done.

And while this is in no way the current transaction's commercial intent, News Limited's acquisition of Business Spectator and Eureka Report will invariably create additional industry "space". The key strategic question is now whether the two duopolists – Fairfax and News – aggressively defend that prospective territory, and erect formidable barriers to entry, or whether history is permitted to clone itself, over and over again. The human condition would put better-than-even odds on the latter.

Christopher Joye is a leading financial economist and a director of Yellow Brick Road Funds Management and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.

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