Leading Sydney estate agents considering a digital listing website, as Domain IPO hopes fade

Fairfax Media has yet to convince analysts and strategic investors on the likely worth in acquiring its digital Domain real estate interests.

The Australian Financial Review says private equity remains unconvinvced on whether Domain "could stand on its own two feet before selling to REA Group or a large offshore player."

The company recently split out Domain’s numbers for the first time.

With digital ad revenue growth of 16% to $77 million, Domain digital is a strong earner within Fairfax Media.

Its got to be as Domain print revenues fell 32% to $50 million. Overall revenues for all the group’s continuing businesses were down 5.9%.

Last financial year Domain's revenues were $74 million print and $66 million digital. 

The shift to digital was further highlighted in today's results showing 31% digital EBITDA growth and -45% for print EBITDA.

 

                           FY13

                       FY12

                     %

                            A$m

                       A$m

                  change

Advertising - Print

50.1

74.3

(32.6%)

Advertising - Digital

77.2

66.4

16.3%

Total Revenue

127.3

140.7

(9.5%)

Costs

(85.8)

(96.1)

(10.7%)

EBITDA

41.5

44.6

(7.0%)

EBITDA - Print

12.1

22.1

(45.2%)

EBITDA - Digital

29.4

22.5

30.7%

Margin - Print

24.2%

29.7%

(18.8%)

Margin - Digital

38.1%

33.9%

12.4%

But it appears the ever-present doubt surrounds Domain’s intellectual property which will force a dampening of IPO expectation.

Especially "what would stop Fairfax or another player setting up a new business in the wake of any sale," the AFR's Street Talk column noted.

Domain apparently says its relationship with estate agents represented a sufficient barrier to entry, along with its existing website and mobile infrastructure. 

Domain has 7,729 agent subscribers, growth of 21% versus prior year.

It claims 78% market penetration.

However Property Observer is aware that leading Sydney estate agents - some associated with the early 1990s Eastern Express community newspaper publishing venture - are quietly considering a digital renaissance.

*Jonathan Chancellor was property editor of the SMH between 1986 and 2011.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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