By Paul McBeth
May 3 (BusinessDesk) - Spheria Asset Management spent A$4.8 million building up a 5.3 percent stake in NZME to become
the latest Australian fund manager to take a punt on the Kiwi media group.
The Sydney-based firm bought almost 10.4 million shares at an average price of 46.6 Australian cents to build up the
stake over the past year, according to a substantial security holder note filed with the ASX. The dual-listed shares
last traded at 55 cents on the NZX and 52 Australian cents on the ASX.
Spheria describes itself as a "fundamental-based investment manager with a bottom-up focus specialising in small and
microcap companies". In its March update, the investment house included media among more cyclical sectors where share
prices had retraced.
"We are finding sectors which are exposed to the housing market (retailers, building materials), the auto sector (auto
retail and specialty auto suppliers) and other cyclical areas (discretionary retail and media) are potentially
interesting," it said.
Spheria joins Australian fund managers Renaissance Asset Management, Auscap Asset Management, and Forager Funds as
substantial shareholders in NZME. They collectively own 43 percent of the firm.
The media company this week launched a subscription premium news service for its nzherald.co.nz website, marking the
first foray by a major New Zealand media firm into charging for online news.
The publishing duopoly of NZME and its rival Stuff mean the two groups dominate the news agenda. Both have been
reluctant to proceed with a direct charge for fear of losing digital audience to their rival.
Both count Auckland as their largest online audience, although NZME has the edge in the country's biggest city where the
New Zealand Herald newspaper has been published since 1863. Its Radio Network's NewstalkZB station also dominates the
airwaves there.
The media company hopes to secure 10,000 paid digital subscribers from its 1.7 million digital audience within the first
year. If successful, NZME would have twice as many paying digital customers as niche publication the National Business
Review did in its latest figures, released last year. NBR has been a frontrunner in New Zealand in charging for online
news.
NZME expects to spend $1.2 million in calendar 2019 on its digital subscriptions service, including the cost of globally
syndicated content, the launch, and ongoing support.
Another leg to drive growth is in developing NZME's digital classifieds - especially its OneRoof property portal. The
media group generated $700,000 of revenue from OneRoof in calendar 2018, of which $500,000 came in the final three
months of the year.
With the country's biggest city accounting for about a quarter of all residential house sales, NZME counts real estate
as its biggest revenue vertical, with print listings still popular despite the structural decline in hard-copy
advertising.
Property sales have cooled in Auckland during the past year or so due to tighter lending criteria and the threat of a
capital gains tax. Auckland values have been contracting at a 1.5 percent annual pace in recent months, but demand
remains supported by the prospect of another interest rate cut, and the government's decision to rule out a tax on
capital gains.
(BusinessDesk)
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