Spheria Asset Management spent A$4.8 million building up a 5.3 per cent stake in NZME to become the latest Australian fund manager to take a punt on the Kiwi media group.

The Sydney-based firm bought almost 10.4 million shares at an average price of 46.6 Australian cents to build up the stake over the past year, according to a substantial security holder note filed with the ASX. The dual-listed shares last traded at 55 cents on the NZX and 52 Australian cents on the ASX.

Spheria describes itself as a "fundamental-based investment manager with a bottom-up focus specialising in small and microcap companies". In its March update, the investment house included media among more cyclical sectors where share prices had retraced.

"We are finding sectors which are exposed to the housing market (retailers, building materials), the auto sector (auto retail and speciality auto suppliers) and other cyclical areas (discretionary retail and media) are potentially interesting," it said.

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Spheria joins Australian fund managers Renaissance Asset Management, Auscap Asset Management, and Forager Funds as substantial shareholders in NZME. They collectively own 43 per cent of the firm.

The media company this week launched a subscription premium news service for its nzherald.co.nz website, marking the first foray by a major New Zealand media firm into charging for online news.

The publishing duopoly of NZME and its rival Stuff mean the two groups dominate the news agenda. Both have been reluctant to proceed with a direct charge for fear of losing digital audience to their rival.

Both count Auckland as their largest online audience, although NZME has the edge in the country's biggest city where the New Zealand Herald newspaper has been published since 1863. Its Radio Network's NewstalkZB station also dominates the airwaves there.

The media company hopes to secure 10,000 paid digital subscribers from its 1.7 million digital audience within the first year.

NZME expects to spend $1.2 million in calendar 2019 on its digital subscriptions service, including the cost of globally syndicated content, the launch, and ongoing support.

Another leg to drive growth is in developing NZME's digital classifieds - especially its OneRoof property portal. The media group generated $700,000 of revenue from OneRoof in calendar 2018, of which $500,000 came in the final three months of the year.

With the country's biggest city accounting for about a quarter of all residential house sales, NZME counts real estate as its biggest revenue vertical, with print listings still popular despite the structural decline in hard-copy advertising.

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Property sales have cooled in Auckland during the past year or so due to tighter lending criteria and the threat of a capital gains tax. Auckland values have been contracting at a 1.5 per cent annual pace in recent months, but demand remains supported by the prospect of another interest rate cut, and the government's decision to rule out a tax on capital gains.

- BusinessDesk