You normally see Alan Kohler on the news. He has been a staple on the ABC’s 7pm bulletin for years, giving over 1m Australian’s their finance and business info every weeknight. He’s also on Inside Business every Sunday and has been the pre-eminent business journalist in Australia for the better part of the last 4 decades – via the AFR, The Age, SMH and on his own Business Spectator publication.
Lately, Kohler has been making the news. Reports of Fairfax and News jostling for acquisition of the Kohler led AIBM have been coming thick and fast. This week, it’s News that’s being reported to be in the lead at a rumoured $30m+ valuation.
When considering people to be part of this Q&A series Alan was one of the first on my hitlist. Business Spectator is a business I have great respect for – I have helped clients advertise on the brand when I was media agency side, and I have contributed over the past 3 years to the publication. I met Alan over 4 years ago and since he has been a huge help for me not only in becoming a better writer, but also learning more about finance and the markets and also having someone to bounce ideas off when it comes to working in an emerging media business.
AIBM and Sound Alliance may not seem similar from the outside, but at their core they’re extremely similar. Both are disruptive, both generate their value from excellent knowledge about their audience, both take content and content creation very seriously, and both face the same commercial challenges operating within the current Australian advertising and media climate.
Alan sat down to answer a few questions.
Talking Digital: As a finance analyst and also a media owner, what is your take on some of the valuations placed on digital media companies, especially in the US? I’m referring to the Facebook IPO price, Instagram acquisition price, Groupon IPO price, Twitter current $8.4b valuation, Spotify trying to raise at $4b+ val, Salesforce acquiring Buddy for approx. 34-40x revenue etc. What is fueling this and how long can it last?
Alan Kohler: I think what’s fuelling it is a lack of understanding by investors. Many haven’t yet figured out that these are just businesses that happen to be online. It happened in spades in the 90s, and to some extent is still happening. Of course the fact that Google and Apple really are getting monopoly rents encourages that thinking. There is some sense to the Facebook price, by the way, in that it is collecting a lot of data that might be valuable one day. But it’s a big risk.
TD: In Australia there doesn’t appear to be an appetite to invest in content companies – generally the money is going towards intermediaries or low touch tech plays they hope will scale without a huge labour requirement, or transactional businesses (in 2009-2010 it was dating, 2010-2011 it was group buying etc). However – the consumer web is still driven by content. As a content creator and content company owner, do you feel there is a reluctance to invest in content?
AK: It’s not yet clear what the model for content will be, so the reluctance is understandable, especially when it comes to expensive original content. User-generated content is exciting because it is so cheap, which is why Facebook sold at such a high price. I just hope we are not heading to a world of user-generated content.
TD: How did Business Spectator come about? What are the five most valuable lessons you have learnt since establishing the business?
AK: We wanted to create a publication that was web only and used the internet properly (deep, fast, 24 hours), rather than simply as a place to dump newspaper stories once a day. We learned:
- That a lot of people glance, but not many read, and those that do are gold
- even fewer watch videos
- That publishing online is so much better, and allows such a deep relationship with and knowledge of the reader, that there is no doubt whatsoever that it will take over and newspapers won’t last
- That a new web-surfing and reading “peak” has opened up in the evening because of home wi-fi, as people use their iPads and laptops while watching TV
- Despite point 2, online video is the future because there will soon be no distinction between online and offline. It will all be online.
TD: Many of us get our info from Alan Kohler … where does someone like Alan Kohler get their information?
AK: Market data from Iress, and knowledge from a huge range of websites and blogs, as well talking to people. Lots of that.
TD: You seem to be someone who just loves writing – how do you keep that energy over such a long period in such a demanding, fast moving area? I get the feeling you revel in waking up early and covering the markets and the industry.
AK: I still get a lot of satisfaction from producing a good article. The Article is my unit of production – 500-800 words. I have spent 40 years trying to be good at it, honing and perfecting it, and now I can do it. It’s like someone who is good at cooking French food or growing roses. It’s nice to do something you’re good at. I also enjoy doing TV. At my 60th birthday recently I said it’s a good idea to work at something you love because then you don’t have to muck around with hobbies. I’m lucky to be doing something I love.
TD: OK, let’s get serious … can the Bombers win it all in 2012? 8-3 at the break with a 1 pt loss to Collingwood and a freak loss to Melb (and a loss to Sydney after these answers were compiled). Injuries not bad, strong midfield, solid backline and legitimate big forward target in Crameri. What could make a Bombers premiership a reality and what could stop it?
AK: Look the Bombers winning a Premiership this year would be great, but unexpected. I’m looking for consistency and improvement over time. 8th last year; in the 4 this year would be great. When Hird took over I thought a flag in 3-4 years would be a good ride, followed by a few years of being thereabouts before the inevitable rebuild, and I still do.