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Hope, panic, but then it all settled down

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THE week started optimistically. But then panic gripped. And confusion reigned. By the end of it all, the market managed to close higher, but not by much.
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For the week, the benchmark S&P/ASX 200 Index rose 12.8 points, or 0.3 per cent, to 4325.8.

Things were sent spinning by the falling price of iron ore. Slipping below $90 a tonne last week, it continued to fall this week and after months spent watching it lose value, it seemed Australia’s miners had had enough.

Fortescue Metals said it was deferring some development work in response to the uncertainty created by falling prices, before sacking staff across the country.

The company’s shares plummeted and its owners held quick meetings with creditors. The news raised fears that more mining projects could be junked and so resource stocks got whacked. Fortescue was down 23¢ to $3.31

But by yesterday, resource stocks were somewhat back in favour – particularly after Chinese authorities moved to stimulate their economy with several big infrastructure projects – and it was the turn of companies with an exposure to the Australian dollar to cop a beating.

After the European Central Bank announced a new bond-buying program on Thursday, in a bid to help struggling European countries with troubled bonds, the Australian dollar jumped nearly one US cent yesterday.

Healthcare stocks fell heavily, with CSL losing $1.08, or 2.4 per cent, to $44.01.

The local market did not rally as much as those in Europe and the US after the ECB announcement.

Frankfurt (up 2.9 per cent), Paris (up 3.1), and London (up 2.1) all jumped higher, as did US stocks.

Analysts said the rising dollar had something to do with it.

”In this era when commodity prices are lower than they were, the Australian dollar needs to be lower,” NAB’s Peter Jolly said.

”But the fact that it’s not, and the fact that it rallied today, cuts a little bit into growth prospects.”

For the week, Billabong International rose 6.5¢, at $1.42, after the surfwear retailer said it would formally consider a takeover after a second offer in six weeks.

BHP Billiton rose 19¢ to $31.98 after it said it would push ahead with its $US1 billion Eagle Ford petroleum expansion in Texas. It aims to boost worldwide production by 8 per cent.

Coca-Cola Amatil rose 7¢ to $13.76 after it completed its $58 million takeover of the maker of Fiji Bitter.

Consolidated Media Holdings lost 3¢ to $3.42, while News Corp rose $1.09, to $23.86, after a formal offer for James Packer’s company.

Caltex Australia rose 55¢ to $16.17 after it raised $550 million from investors.

Lynas Corporation rose 18¢ to 82¢ when the rare-earths miner was granted a temporary licence for its controversial $US800 million refinery in Malaysia. Qantas rose 11¢ to $1.26. With AGENCIES

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Night net

Family tosses a lifeline as gloss wears off ACP

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STAFF at Australia’s largest magazine publisher, Australian Consolidated Press, were not the only ones sighing with relief this week when their private equity paymasters, CVC, announced that the business would be sold to the Hamburg-based, family-owned publishers, Bauer Media Group.
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”I think they’re very relieved that it is in the hands of someone who knows the business, and not somebody who is only intent on buying into the company to make money,” says the legendary magazine publisher who will forever be associated with ACP, Ita Buttrose.

”They’re regarded as a good company,” she says of Bauer ”and they’re a family company, and in a way that’s not unlike the Packers when it was at its heyday. It was very much a family company.”

The magazines division featured prominently in the popular ABC production Paper Giants, which focused on the launch of Cleo magazine by Buttrose as its founding editor, and publisher Kerry Packer.

The appeal of family control was not just a sentimental view from a former employee.

Steve Allen, the head of Essence Media & Fusion Strategy, also says ”it is fantastic to go back to family ownership because that’s a very good model that ACP thrived under”.

His point is that ACP will now need to shed the cost-cutting mentality foisted on the company by CVC and rejuvenate its publishing culture at senior levels.

”CVC have been managing costs, people that are in charge now are cost managers, they are not visionaries, they are not dyed-in-the wool magazine people,” Allen says.

With a pedigree in magazine publishing extending back to the 19th century, the Bauer family’s credentials are not in question, but they represent a very different kettle of fish to the Packer family who owned the business until James Packer sold out to CVC five years ago.

Bauer, a tightly family-controlled publishing house, made its name in Germany in the ’60s and ’70s with its stable of TV guides, mass-market women’s and gossip rags, and erotic men’s mags, but struggled to break into the quality end of its home market.

With a reputation for unhappy working conditions at some of its publications, there was an adage in German media that ”people don’t go to Bauer, they come from Bauer”.

But a better test of what’s in store for venerable ACP titles such as The Australian Women’s Weekly might be provided by Bauer’s record with its overseas acquisitions. The company has built a global portfolio of quality titles, and revenues of more than €2 billion.

Bauer acquired the UK consumer magazine business from Emap in 2007, which included premium titles such as Zoo, FHM, and Grazia, around the time ACP acquired many of the same titles from Emap in Australia.

On the cusp of the worst financial crisis since the Great Depression, there were already misgivings about what changes would be made to the British publisher, which had been highly successful with the launch of the above-mentioned titles over the preceding seven years.

Pioneering UK men’s monthly Arena was closed in 2009 and jobs were cut in other divisions, but Bauer’s UK chief executive, Paul Keenan, said this was a result of the structural change and the economic climate that was forcing ”huge change” in the media industry.

Keenan had remained head of the UK publications after Bauer acquired Emap, and in an interview with The Guardian last year – something in which the deeply private Bauer family almost never indulge – said ”going into a private, long-term, cash-rich [group]” was ”a fantastic place to be”. It may be telling that the former Emap business has not produced a blockbuster publication since the takeover, but it has not been through lack of effort.

An attempt to re-enter the quality men’s market following the closure of Arena, with Gaz7etta, failed to gain traction last year.

And Keenan’s comment on the family? ”They’re just interested in us producing the best product we can.”

Keenan made reference to the ”Bauer personality”, talking of obsessional attention to detail and being operationally excellent. Bauer is ”quietly and confidently trying to produce world-class product day-in and day-out”, he says.

But private control also comes with the idiosyncrasies of the Bauer family, who are very much in charge.

This includes marathon boardroom grillings by the fifth generation of Bauers who run the publisher and remain largely unknown.

Heinz Bauer led the family business for more than four decades before handing the reins to his 35-year-old daughter Yvonne two years ago. Despite his intense privacy, stories did seep out about Bauer’s notorious frugality.

This includes staff having to hide the true cost of his accommodation in New York while he is there on business trips to his US operations. They would arrange in advance with hotel management to change the room tariffs on the back of his door.

In a rare media interview in 2009, the notoriously media-shy patriarch dismissed his public image of a penny-pincher ”as a cliche to talk down our success”.

Publishers had to make products that would entertain and sell, rather than seek to improve the world. ”We don’t want to educate our readers, but distract them.” While publishing houses relied on the editorial input of journalists, it was hard to include journalists in management decisions as they ”don’t like to surrender to the constraints of economic logic”, he said.

Yvonne Bauer has control, with 85 per cent of the limited partnership that owns the business. The remainder is split among her three sisters who also work in the business.

At the traditional annual press conference in December 2010, her first in the publisher’s role, Ms Bauer reaffirmed the company’s commitment to the magazine medium despite its strong forays into digital and cross-platform business.

”Bauer is print and Bauer shall remain print,” she said at what is the family’s only communication with the outside world. A statement released with this week’s announcement of the ACP deal did offer more of a nod to the future.

”ACP fits our strategy of developing the Bauer Media Group globally, we believe in print, and ACP’s strong brands in Australia and New Zealand are strong platforms to extend into digital areas.”

This is expected to be one of the challenges for Bauer once the transaction passes hurdles that include a review by the Foreign Investment Review Board and approval by Nine Entertainment’s creditors, who have waged a campaign to take control of the debt-laden media business.

Bauer needs to extract ACP from Nine Entertainment without damaging the value derived from Nine’s cross-platform sales and promotion between its web, TV operations, and the magazines that will soon be owned by Bauer.

According to Allen, Bauer does not have any experience managing an integrated media empire like Nine Entertainment. As ”much as they have an appreciation for this, they’ve never done it, as far as we can see”.

The details of the deal they work out over the coming months will be crucial to how successful the investment is, and at a reported $500 million, it is a major bet for the family company.

According to Fusion, Australia is set to represent Bauer’s second-largest territory by revenue once the deal is done.

And while the impact of the global downturn has been felt in Bauer’s magazine markets globally, turning around the Australian operation – which is currently generating about a third of the earnings it did prior to CVC’s takeover – will not be easy.

With the vast majority of Australian magazine sales conducted over the counter, rather than through subscription, the market is especially sensitive to the consumer malaise and its impact on discretionary spending.

Theoretically, it means that most of the reader sales lost in recent years should return when confidence returns to the hip pocket.

But that depends how much of the issue is structural, that is readers moving away to the internet, or cyclical, a temporary effect of the economic cycle.

It also depends on how much it represents market share that ACP may have lost while under the control of bean counters.

Fusion points out that Seven’s magazine business, Pacific Magazines, claims that it has increased its market share over each of the past five years.

The impending sale of ACP to Bauer has extended a lifeline to its parent, Nine Entertainment, and owners CVC, who effectively paid James Packer about $5 billion for the business.

Most of the payment was in the form of debt, which was strangling the media empire, and necessitated the sale of ACP by a reluctant Nine chief, David Gyngell.

”The decision to sell the magazine business is not one we have made lightly,” he said this week.

The deal will help Nine avoid breaching debt covenants that would leave it at the mercy of its lenders.

The company still faces pressure from hedge funds Apollo and Oaktree, which have acquired $1 billion of Nine’s senior debt in an attempt to force CVC to relinquish control of the company if it cannot refinance Nine’s debt next year.

CVC must repay $2.8 billion of debt by February and $1 billion a year later, but a breach of its quarterly debt covenants could trigger immediate payment of all the debt, according to Nine’s financial accounts from last year.

”In those circumstances the assets of the group may not be realised and liabilities may not be discharged in the normal course of business,” the accounts said.

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Night net

Des’s ‘underdogs’ had us barking up wrong team

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dWERE we really so silly? The Bulldogs had won 13 of their past 14, yet Manly were favoured. Des Hasler, who guided Manly under the radar for so long, couldn’t have asked for more; his minor premiers were the underdogs.
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Perhaps no longer. The Bulldogs, now with Hasler in charge, held their nerve while the Sea Eagles faltered. Neither side was at their best; that will be ominous for the other teams in the finals. Both teams have so much more to give but still produced a tough, torrid thriller.

Now the questions are how will the Bulldogs respond to an easier ride through the finals, and how will the Sea Eagles respond to adversity? Both teams are clearly good enough to be back at the same ground on September 30.

Ultimately, the Bulldogs’ ability to score from anywhere last night outweighed Manly’s inability to score from close range. Manly had as many opportunities as the Bulldogs did but their opponents made them count.

Rugby league is a game of possession, yet there are exceptions, especially at this time of year. What can be more important than possession is being able to take advantage of possession.

The Bulldogs did so early on, while Manly did not. The Sea Eagles enjoyed the better of the opening quarter, yet they could not find a way over the line, through a combination of a solid Bulldogs defensive line as well as a Manly attack that was off its game; only slightly, but enough to ensure the final pass went behind the man more than it did in front of him.

The Bulldogs spent little time in Manly’s quarter yet centre Josh Morris was still able to conjure something out of nothing, showing remarkable speed to set up winger Jonathan Wright for the first try of the contest. In doing so, Morris proved that fluorescent boots, as worn by Dean Whare, could still feel like they have concrete in them when faced with blinding pace.

At that point, the beauty of finals football was replaced by the brutality of it. Manly co-captain Jason King was placed on report for a high tackle on Aiden Tolman, and he was quickly followed by centre Steve Matai, who clipped winger Sam Perrett high.

Then in quick succession, both teams lost leaders. First, Manly co-captain Jamie Lyon limped off with a calf injury, then two minutes later, the Bulldogs’ skipper Michael Ennis left the field with a rib problem, albeit briefly. Yet through all the commotion, and the Bulldogs’ early lead, the Sea Eagles refused to panic. And with Ennis still walking gingerly up the tunnel, winger Jorge Taufua scored.

Their refusal to panic was emphasised by second-rower Tony Williams’s efforts. In the opening half hour, he had displayed the hands of an infant trying to grasp a cup of milk, losing possession on two occasions, but busted the Bulldogs open and then sent a perfectly timed inside ball to fullback Brett Stewart, who scored to give Manly the lead.

There were some telling statistics. The Bulldogs missed 21 tackles in the first half, while the Sea Eagles’ completion rate was 63 per cent. Both sides were playing tough but neither was doing enough to dominate. Predictably, the Bulldogs hit back early in the second half; Kris Keating spotted Brett Stewart out of position, and grubbered for himself to score.

The difference was the Bulldogs’ ability to create opportunities from anywhere. The Sea Eagles were caught off guard to such an extent that Morris found himself only having to out-pace King on the flank. He did so with ease, before sending Ben Barba over.

The Sea Eagles had their chances late, but – again – could not make them count.

BULLDOGS 16 (B Barba K Keating J Wright tries K Inu 2 goals) bt MANLY 10 (B Stewart J Taufua tries D Cherry-Evans goal) at ANZ Stadium. Referees: Ben Cummins, Ashley Klein. Crowd: 36,420

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Night net

Facility vital for the community

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CARERS of people with a disability have greater access to vital respite services with yesterday’s official opening of Challenge Disability Service’s new facility in Tamworth.
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The former St Nicholas’ Dominican Convent in Hill St has been transformed into Dominic House, which provides temporary care for people with disabilities and a break for their carers.

NSW Disability Services Minister Andrew Constance yesterday said 80 families across the state were forced to relinquish the care of loved ones to the state last year alone.

This could have been avoided if there were better respite services available, he said, which made Dominic House such a vital facility for the community.

The $1.1 million facility opened to clients in April and has 15 bedrooms – up from five at the former facility, Allawah House – a high-support wing, modified bathrooms, Liko rails and widened doorways.

Challenge finance general manager Carl Learson said the development of Dominic House was prompted by greater demand for respite care, which had grown about 30 per cent a year in the past few years. Allawah House had been operating at full capacity for some years.

“There are too many folk in the community who provide 24-hour, seven-day-a-week care, and never get the opportunity to recharge,” Mr Learson said.

“This means they can remain carers for their loved ones, without breaking up families.”

Dominic House has been operating at capacity most weekends since it began operating.

It is expected the centre will support about 90 families from Tamworth and the wider region each year.

Dominican Sister Anne Ryan said the sisters were delighted their old home would be used to support the community.

Allawah House has become a group home for people needing high support.

ESSENTIAL: From left, NSW Disability Services Minister Andrew Constance and Challenge Disability Services board chairman Ted Wilkinson open the new respite facility, Dominic House. Photo: Geoff O’Neill 070912GOB02

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Kings rule in Cup thriller

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The Sydney Kings won a thrilling opening Schweppes Drury’s Cup match at the Tamworth Sports Dome last night.
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The game was pushed into extra time after the Kings missed the basket on fulltime to leave the scores at 85-all.

They had led at every break and hit the front with just under two minutes to go in extra time and held on to win 98-93.

US import Corin Henry was great for the Kings, topscoring with 33 points while Darnell Lazare supported with 20.

Likewise, Taipans new signing Cameron Tragardh had a great impact, finishing with 26 points.

For the Kings it was the first major hit-out of the pre-season and a chance for new and old players to gel.

There has been a big turnover during the off-season with a number of new faces in the Sydney side.

But the same could be said of both teams and there are also a few Kings who were here last year, like Kevin White and Jarrad Weeks.

“It’s a chance to play games against a side like Cairns who we’ll be playing later on in the year,” White said.

“I think we’ve got more players returning than they do.

“It’s just that they have kept their point guard and a couple of others.

“We’ve got some experienced players but also some young guys too.”

Both players said the two-game series in Tamworth was about building for the new season.

Weeks acknowledges the Kings won’t be among the favourites for the NBL title but hopes the pre-season will help to whip the team into shape and they can cause some upsets.

“We want to get better as a team,” Weeks said.

“Hopefully we’ll build as a team and go all the way to the NBL championship.

“A lot of people have us as an underdog team but we’ll be getting better as a squad.”

In addition to some new players, the Kings also have a new coach in Shane Heal.

The former Australian rep brings a wealth of experience and knowledge.

“He’s good,” Weeks said.

“He’s been at a lot of different clubs in different leagues and he knows his stuff.

“He’s brought with him some new systems.”

Another big crowd will pack the Sports Dome tonight for game two.

White said he hoped the visit to Tamworth would show off the excitement of the sport and encourage people from the north west to take a closer interest in the Kings and maybe even get to some home games in Sydney.

“We’re promoting the game to an area that doesn’t get many opportunities to see us play,” White said.

“If they want to come to Sydney to watch us they’re more than welcome.

“We think we’ve got one of the best entertainment products and the best sport.”

Tonight’s second game tips off at 7.30pm and will decide the Schweppes Drury’s Cup.

Cairns Taipans’ Brad Hill finds a way though the defence of Sydney Kings’ Aaron Bruce (left) and Tommy Garlepp in last night’s opening Schweppes Drury’s Cup match at Tamworth Sports Dome. Photo: Barry Smith 070912BSC30

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Baa Baas set to make history

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THEY’VE taken a lot of hark knocks along the way but UNE Barbarians sit on the cusp of an historic premiership today.
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The script couldn’t have been written a lot better.

Not only are they making their first grand final appearance and aiming to win their first title but they’ll have to beat the defending champions to do it, and a side they have strong links to.

Around half of the side taking the field have worn St Albert’s colours.

Even coach Dan Dooner coached Albies – and to a premiership.

That was back in 2007.

But Dooner knows how fickle grand finals can be. It doesn’t matter what you’ve done through the season, as was the case for him and Albies in 2008.

“I think we were undefeated that year,” Dooner said.

He has been reminding his players about that.

“As I said to the guys this week, ‘don’t think we’re going to win’,” he said.

“It’s grand final football. It’s got nothing to do with the season.”

“It’s a totally different game and Albies are coming in in good form.”

They are wary of the students, knowing what they are capable of.

“They’ve found their structure now and they will be very difficult to beat,” Dooner said.

Robb found that out last week.

“Albies countered well at the breakdown,” he said.

“We need to be very good at thebreakdown.”

“And we need to play with the structure we play with and have got to be very good with our one-on-one defence.

“Albies are very dangerous in the backs.”

They have dropped only the one game this season and have played some great football.

But Dooner believes they’ve still got more in them.

“We still haven’t played that 80 minutes of football,” he said.

“It’d be lovely to see 80 minutes of football played by us, which you need to do in a grand final.”

He said they’ve probably played about 60 minutes.

“The win against Robb was basically 40 minutes in the second half,” he said.

They had to fight hard for it and it probably was a bit of a wake-up call for them.

“The good thing for us was we turned it around in the second half and won the second half, which was great for us mentally,” Dooner said.

They have had Albies’ measure all season, the key to which has been putting them on the back foot.

“We’ve always been on the front foot and put pressure on them in the forwards,” Dooner said.

“A lot of the games we’ve had the majority of the ball.”

“We just need to get on the front foot from the start.”

It will be a big day for the club regardless, with third grade also reaching the grand final.

They are the only club to have two grades qualify.

UNE Barbarians winger Ethan McAllister confronts the Tamworth defence earlier in the year. McAllister and his Baa Baas team-mates are eying off a first ever first grade premiership. Photo: Grant Robertson 310312GRC03

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