Best of the Week: The cat comes back (and The Cat comes back); GrowthOps’ fall; Bosses called Chris

[View web version]( BEST OF THE WEEK And another thing... Welcome to Best of the Week, kicked off in the Mumbrella offices in Chippendale on Wednesday, continued in a quiet(ish) corner during Thursday’s Mumbrella Audioland conference, and polished off early this morning, with the Milky Way fading into sunrise at beautiful Sisters Beach. Today’s writing soundtrack: ABC Tasmania, live from Agfest. Welcome to Boomtown. Population: me. This week: Antony Catalano’s big newspaper deal, falling into a new funnel and TGO’s market woes. Return of the cat (Spoiler alert: This one has a happy ending.) Want to know an unwelcome message to receive when you turn off flight mode? Try an apologetic update from the person who’s been pet sitting for you, reporting a 50% success rate. We’d gone away with two cats in the house and on Monday we were returning to one. Which made for a stressful Uber ride as we prepared the kids for the fact that they’d only be seeing one of their pets when they got home from our Easter holiday in Fiji. So we were about to enter a whole new marketing funnel. Just before taking the (fantastic) break we’d moved house. Following our vet’s advice we planned on keeping the cats indoors for the first few weeks, until they could gradually get familiar with their new territory. Sophia, however, had other ideas. In another life, she’d have been a good hacker, exploiting vulnerabilities. After the cat sitter left for the night, Sophia was able to nudge the kitchen door open. Giving her freedom to roam the rest of the house would not have been the end of the world, although she is yet meet a nice item of furniture she doesn’t want to test her claws on. However, she made it to the attic, which if Dodo gets its NBN act together, will eventually become my study. Before going on holiday, I’d made the mistake of opening the study’s balcony doors, only to find that the wood had swelled and I couldn’t bolt them again. I didn’t think it mattered. There was no risk of a burglar getting that high. Sophia, however, had other ideas. Either the wind blew the doors open, or she pushed them open too. As Jeff Goldblum points out in Jurassic Park: Life finds a way. From there she made a Colditz-style roofline escape along the block of townhouses and down a convenient tree. A great escape route for a naughty cat, but impossible to get back up again. Unfortunately her landing spot was far from our front door, which she’d not yet seen from the outside anyway. And thus her adventure as a Cremorne street cat began. Once we were home perhaps 36 hours after the escape, we walked the nearby streets, introduced ourselves to our new neighbours (a lost pet is a great ice breaker) and began to realise how unlikely it was that we would find her. There were just too many hiding places and… try not to think about it… too many busy roads. We were also a consumer at the top of an accelerated marketing funnel, in a product category we’d never previously considered. It’s a category where research and consideration take place in minutes, not weeks. And one that may well start with zero product awareness. Yes, we were brand new consumers in the (I suspect, lucrative) lost pet category. I’d never noticed the business model until I was in it. It is (perhaps uniquely) a category entered unexpectedly, and it requires speedy decisions if the participants are going to have a happy outcome.. If you need to post lost pet messages online, how do you reach a local, relevant audience, fast? First, there’s out of home advertising, of course. Cat posters are still a thing. Only now there are all sorts of handy online templates to create your poster. Update a photo, fill out the details, input your number and email address, and various sites will spit out a printable PDF poster for you, while harvesting your data. And social media is the non-traditional battleground. For those seeking to make a business from it, the name of the game isn’t long term brand building, it’s winning the search war. In our case, those searches took place on Facebook and Google. Particularly on Google, the “lost cat” search term is a hotly contested AdWords category, throwing up three or four sponsored links above the organic results. (I’d be fascinated to know the bid price.) At this point, the naive new segment consumer quickly learns that many of the most prominent pages and groups on Facebook aren’t in it purely for the love of animals. And certainly not the ones who are buying keywords. With the clock ticking on a missing pet, decisions need to be made on whether to pay one of those lost pet sites to amplify their Facebook post. The site we settled upon included various endorsements, purporting to be from happy owners, reunited with beloved pets. They sounded convincing, although on-site endorsements always do. But it was not the time for Google-fu to figure out if they were real or fake. For $24.90 the site would amplify our message on Facebook to the local area. Knowing it was possibly money going straight down the plughole, we paid it anyway. The credit for the happy ending goes to Facebook nonetheless. Not the commercial bit, but the cosy, real people connections that would warm Mark Zuckerberg’s heart. Before going to bed, I put some posters up outside and posted an image of the poster on Facebook, with one word: “feck”. I happened to wake up at about 3.30am, and looked at my iPad. There were already a string of sympathetic responses from friends around the world. And the first message I saw on my post was from a former colleague in the UK who I’d have last seen face to face more than 15 years ago. Thanks, Facebook. “Exactly the same happened to us, wait till it’s dark and quiet and go out and call her, she won’t be far away, probably just hiding because it’s unfamiliar territory. We found ours hidden under bushes in the neighbours garden.” Which is what I did. Creeping through Cremorne, trying to balance being loud enough for Sophia to hear me calling her, with not waking the neighbours. At one point, realising that I must have made a strange sight in my old Qantas pyjamas, I found myself hiding behind a tree as a car passed. Thankfully it was a taxi, not the cops. I tried the next couple of apartment blocks up the road, then a couple down. Nothing. Then, just as I turned to go back to bed, a scared miaow from behind some dustbins. Sophia scrambled over a fence towards me, and let me pick her up. I’m slightly embarrassed to share the degree of joy and relief I felt at that moment for a silly thing like a cat. I’ve a number of friends who’ve lost family recently - in the scheme of things, a lost pet is nothing. And yet... I’d love to pretend that I was only happy because it meant that kids wouldn’t be upset. But the truth is that I think I’ll always remember the feeling as I carried her home. The cat was back. Catalano’s new venture The next morning, The Cat was back. [The bid led by Antony Catalano to buy Nine’s regional newspaper operation was accepted](. Catalano will lead the deal while his partner Thorney Investment Group will presumably put up most of the $115m. This is the portfolio of Australian Community Media, which Nine inherited when it bought Fairfax. The main prize for Nine in the Fairfax deal was the other half of streaming service Stan, and Fairfax’s majority stake in the ASX-listed real estate company Domain. All along, the signals from Nine were that it also planned to hold onto The Age, The Sydney Morning Herald and the Australian Financial Review. But the ACM titles would go. So there was no surprise about the coming transaction. There are about 160 of the news mastheads, varying from nationally significant papers like the Newcastle Herald and Canberra Times, to crucial regional dailies papers like The Advocate, The Bendigo Advertiser, the Illawarra Mercury and the Border Mail, through to a string of local weeklies. Agricultural titles including The Land also come in the package, along with printing presses (and in some cases the land on which they sit). From Nine’s point of view, it makes sense - almost at any price. The potential for distraction in getting to grips with a declining print sector was too great. The Nine management team has plenty on its plate already. Investors certainly seem to back the strategy. This week the Nine share price was as high as it’s been all year. It was probably also boosted by Hugh Marks being able to tell the week’s Macquarie conference that costs are down and TV revenue share is up. I’m sure the conference also made a good moment for a deal announcement The same sale strategy goes for the old Fairfax events division (City To Surf etc), which is also on the block and likely to be moved on shortly. And it’s the same rationale behind the decision of APN News & Media (now known as HT&E) to sell its regional titles to News Corp three years ago. While integration of the regional regional papers didn’t make sense for a busy Nine (at another time, they could have contributed to the portfolio), it wasn’t just sales spin the right new owner stood to make a lot of money. You can still make money from a declining asset. The advertising market is beginning to wake up to the fact that ad dollars spent on regional dollars go further. [The new Boomtown initiative]( by most of the big regional players apart from News Corp (which may yet join in) is well timed. (“Welcome to Boomtown. Population: 9 million,” is persuasive copywriting.) One media agency boss explained it to me this week: “I can spend 400 bucks acquiring an insurance customer in Sydney, or 150 if i look outside.” It’s not beyond the realms of possibility that this could be the start of a bigger regional rollup. The market cap of regional TV operation Prime Media is currently a bargain $97m, for instance. Plus there are a couple of insurance policies. The deal includes the print works, including the big one at Richmond at the far reaches of Western Sydney. That land will have an inherent value. And there might yet be subsequent transactions. I bet the likes of Agribriefing, headquartered in the UK and owner of titles like the 175-year-old Farmers Guardian, would love to get its hands on the farming titles if The Cat wants to move them on. But what might just make the biggest difference is the involvement of Catalano himself. It makes me think of the first episode of the excellent StartUp podcast, telling the inside story of the launch of US podcasting company Gimlet Media. Billionaire investor Chris Sacca tells founder Alex Blumberg that what he looks for in a founder is their “unfair advantage”. In Blumberg’s case it was his years working on the This American Life radio show, which had given him the skills to tell audio stories at the moment podcasting had its second coming. Catalano’s unfair advantage over any other bidder for those regional assets is that he understands better than anybody else in Australia the ecosystem of media and real estate advertising, and has deep contacts inside that world. A rival bidder - particularly a private equity bidder - would have relied on achieving a successful exit down the track by hacking out costs to squeeze enough profits to eventually cover the purchase price. Which seems tough. It’s already a lean operation. Long time boss Allen Williams is seen as somebody who has run the division well in the face of a fading business model. There’s no easy win to be had in running the division a little bit better. But Catalano has that extra card to play: Real estate. Catalano came to The Age as a journo, before moving to covering real estate. But nearly a decade ago, he lost out in one of Fairfax’s regular power battles and was made redundant. It was a disastrous move on Fairfax’s part. Soon after, in 2010, Catalano started The Weekly Review, a glossy lifestyle magazine, in Melbourne. Cleverly, he gave key real estate companies a stake in it. They switched their advertising from Fairfax to Catalano. Not much more than a year later, Fairfax surrendered, buying a $35m stake in The Weekly Review and making Catalano a wealthy man. Catalano came on board and turned Fairfax’s Domain into a commercially thriving pirate ship. In 2017 Domain floated on the ASX for a $2bn+ valuation, making Catalano (and all the Fairfax shareholders) even richer. But then he fell out with chairman Nick Falloon over (legitimate) concerns about his management style, and left Domain in early 2018. Since then he’s taken a stake in real estate media buying operation (and perhaps Domain’s biggest customer) The Tomorrow Agency. And according to The Australian’s Margin Call column this week, he’s also on the board of a mysterious new company called The Today Business Pty. Others associated with the company are previous members of The Cat’s Domain team, along with media agency fire power too. It all adds up to a bigger play around real estate. Which in turn raises the question: Could the ACM titles provide the backbone of another rival to Domain (and of course to the News Corp aligned REA Media)? If so, it won’t necessarily happen immediately. There’s a three year transition deal in place covering printing and the like, so Nine and Catalano will at least initially be partners. There will be incentives to play nicely. But after that? Maybe history will repeat itself. Trimantium troubles There were more twists for Trimanitum GrowthOps, aka TGO, aka Growthops, this week. I last wrote about the company, which is listed on the ASX as TGO, back on March 9. As I flagged then, the founders of the businesses bought by TGO to create its rollup - including Melbourne based creative agency AJF, were about to hit the date when they would be allowed to sell their shares. This came against the backdrop of a declining share price. From a peak of $1.35 this time last year, it had fallen to 50c. What would happen, I wondered, when the vendors of the agencies were allowed to sell? When there are more sellers than buyers, the price goes down. A few days later, the company announced it was launching a share buy back program. It told the market it would start on March 29 and run for a year. Such an approach is one way of supporting a flagging share price. If a company has the cash, then it buys any loose shares that come on the market. That way, in theory, the share price is less likely to fall. Cynics see buybacks as companies falling off a cliff trying to fly by holding up their own shoelaces. Supporters of the strategy see it as an efficient way of releasing unused equity to shareholders. But the buyback seemed an unusual strategy for a year-old company that had talked a big game about its growth potential through acquisitions. But it had now decided, it told the market, that it no longer thought it could find a cloud integration partner to buy. So that freedup $5m to spend on its own shares instead. Perhaps as a result of the buyback, the decline in the share price steadied during April. But this week, there was a flurry of ASX announcements from TGO. Tuesday saw the company’s official quarterly update. Having started the quarter with $15.5m in the bank, it finished the quarter with $6.8m. Which seems a helluva trend. And that’s before the $5m share buyback even began. Plus, that’s with the company already having drawn down $12.2m of its two-year, $14m loan facility. The share price dropped to 45 cents. At 9.44am the next morning, there was another announcement. The company wanted the market to know that revenues for the year will be somewhere between 9% and 16% lower than previously indicated. TGO had previously said revenues for the financial year could be as high as $87m. Now they could be as low as $73m. There was no word in the announcement of what this might do to profits, or whether this means it will make a full year loss. Remember that one-year share buyback program? It’s suspended after just a month. “The board, in consultation with management, has concluded a higher operational cash buffer is required.” Indeed. Meanwhile, two minutes after the bad news announcement, another document, with much higher production values, was also posted, titled “Business update”. The “business update” contained no further actual business updates. It was more about what a great model and strategy TGO has. The final quote in the presentation was, to my surprise and annoyance, a paragraph written by me in a previous edition of this email. Discussing Droga5’s acquisition by Accenture last month I’d written in Best of the Week: “Finding ways of combining consultancy, deep understanding of customer experience, and the ability to execute, rather than merely advise, is what clients want.” Locally, I was talking about the example of Clemenger Group’s CHEP. Certainly not TGO. I’m not persuaded they are successfully delivering on that ambition. There’s a big difference between stating an ambition and executing it. If I had to select a single company on the ASX I’d least like to see my words used to justify an investment in, it would be TGO. Yesterday the share price closed at a new low of 40c, giving it a market capitalisation of just $55m. I’m certain the TGO story has more to come. Chris is risen Friday saw us unveil [this year’s Mumbrella Awards shortlist](. It’s a strong year, and it’s good to see media agencies back in the frame after their year out from industry awards. However, one shortlist perhaps stands out for the wrong reasons. There are five worthy contenders for industry leader of the year. It is perhaps though something of an indictment of the diversity of the industry’s senior ranks that there are more men called Chris shortllisted, than there are women altogether. Networking reminder Which brings me almost to the end for this week. If you want more, we recorded [our first live audience podcast at Audioland on Thursday](. Ciaran Davis from HT&E was our guest, and it was a good one. We talked Catalano, ratings and Game of Thrones. And if you’re thinking of buying a networking ticket for next month’s Mumbrella360, [this weekend is the time to get one](. If you’ve never been to the m360 networking, there’s nothing else like it in the industry. A room full of hundreds of people having intense 15 minute networking meetings. Big deals get done. Bigwigs you wouldn’t otherwise get to, available for a chat. It’s a pretty intense afternoon. But you’ve got to make an appointment beforehand. And the appointments system opened yesterday afternoon. Meanwhile, I’ve got a little less than 48 hours to spend here in my favourite corner of NW Tasmania. The sun’s now up and I’ve already got a log on the fire. It’s been a couple of months, and the shack needs some love. The gate’s fallen down since I was last here, and the lawn is covered in wallaby crap. Welcome to Boomtown. Population: me. And Monday will sees me hop onto QF 2052 out of Devonport and onwards to Singapore for our Mumbrella Asia Travel Marketing Summit. As ever, I welcome your emails to tim@mumbrella.com.au. And as ever, I apologise for my slow replies. Our news editor Paul Wallbank - paul@mumbrella.com.au - is on the weekend newsdesk. Have a splendid weekend. Toodlepip... Tim Burrowes Content director - Mumbrella Mumbrella | 46-48 Balfour Street Chippendale NSW 2008 Australia This email was sent to {EMAIL}. If you would rather not receive Mumbrella's Best of the Week email you can [unsubscribe]( or [manage subscriptions](. [Facebook]( [LinkedIn]( [Twitter](