News Corp (ASX: NWS) (NASDAQ: NWS) and Fairfax Media Limited (ASX: FXJ) are old enemies who have been battling to expand their digital businesses to impress investors and grow revenues in recent years. First in the market for digital subscriptions to their flagship newspapers, and now through a proxy war to promote their ownership interests in real estate advertising websites REA Group Limited (ASX: REA) and Fairfax's Domain.com.
Indeed for both businesses gains in the digital real estate services segments are helping offset declines in other segments. For example News Corp saw Australian newspaper revenues decline 21% in the prior quarter (13% of which was related to foreign currency). Its 61.6% ownership interest in the successful and fast-growing REA Group of key strategic importance therefore in the battle to grow future revenues. Notably the Fairfax press is today reporting stories of REA Group employees using "threatening tactics" on poor real estate agents to further serve REA Group's own business interests. It's not just a battle in the real estate space either, with Fairfax's automobile advertising space, Drive.com.au, also looking to compete against the dominance of Carsales.Com Ltd (ASX: CRZ).
Fairfax has taken a more aggressive approach to competition recently and this should be music to investors' ears as it attempts to align itself to a digital future driven by video content and the migration of advertising revenues online.
At 91 cents it's selling at 14.7 times forecast earnings and if able to shape up then it may be offering medium-term value and a long-term bargain at today's prices.
