Australia's realty revival has Wall Street wooing a newspaper

Wall Street has started a bidding war for Fairfax Media, an Australian company best known for the dowdy business of publishing newspapers. 

To understand why, look no further than Deanna McMath, the owner of a small business specialising in print and design, is trying to determine the value of the fixer-upper house she bought in 2009 in the Sydney suburb of Stanmore, and whether to sell it and cash in on the area’s wild property boom. Where she once would turn to the real estate pages of The Sydney Morning Herald, a Fairfax paper, she now scours two online real estate portals: realestate.com.au, which is part of Rupert Murdoch’s media empire, under News Corporation, and Domain, which has quietly become Fairfax’s most lucrative business.

“They’re the only two sites I go to,” she said. “There’s nothing in the papers. You don’t pick up The Herald anymore.”

Australia’s two biggest cities; Sydney and Melbourne, are having an extended, how long can it last surge in property prices, and for global investors, Fairfax’s Domain offers a piece of the action. Two large American private equity firms, TPG Capital and Hellman & Friedman, are bidding to buy Fairfax, valuing the company at nearly $3 billion. That isn’t bad for a company that, just weeks ago, said it would have to sharply reduce staffing at many of its newspapers to contain costs.

Australia’s remarkable and unbalanced property boom appears to be the driver behind the bids.

“They’ve formed an investment thesis that real estate’s just got a lot of value in it,” Damien Tampling, a partner in Deloitte Australia’s technology and media practice, said of the bidders for Fairfax.

That has raised concerns that the intense focus on a real estate market that may or may not keep growing will put at risk Fairfax’s most visible assets: major newspapers including The Sydney Morning Herald and The Age, based in Melbourne. Staff members at those papers went on a weeklong strike this month over imminent job cuts, and they fear that both Fairfax bidders would further shrink print operations in order to invest in the company’s digital real estate advertising arm.

The bidding war also sets up another battle, between News Corporation, one of Australia’s biggest media companies, and well-funded Wall Street investors bent on making money from Australians’ fascination with property prices.


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