oOh!Media is edging closer to offloading its youth publication Junkee Media, with a handful of potential buyers still in the running in a sale process that is expected to fall short of initial expectations.

ASX-listed billboard advertising company oOh!Media announced the sale of Junkee, which also runs publications Punkee and AWOL, in July, with plans to complete a transaction before the end of the year. But it was originally unclear whether a deal would go ahead after several interested buyers such as Rollingstone publisher Brag Media and The Latch publisher Val Morgan withdrew.

Industry sources, who spoke on the condition of anonymity, said several outlets, including the UK-owned Guardian, remain in talks to buy the company. Val Morgan and Brag Media were also looking at buying the company and conducted due diligence, but have since walked. There was also speculation that Mamamia, the website owned by Mia Freedom and her husband Jason Lavigne may also be in the mix. oOh!Media declined to comment.

The sources suggest a transaction could be done before the end of the year if oOh!Media and its advisor Jacanda Capital are willing to compromise on price. oOh!Media wanted the deal done by October 29, but the process has been delayed by negotiations over its value. The Australian Financial Review said last month oOh!Media was expecting $20 million for the publication.

Previous bidders believe the business is overpriced because its most profitable part - the content marketing studio - is not included in the sale. There are also concerns about a fall in Junkee’s advertising revenue in a year when other media companies outperformed expectations. Media companies including Nine Entertainment Co (owner of this masthead) and Seven West Media have experienced a major bounceback in advertising spend as the economy recovers from COVID-19.

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The other concern, according to people familiar with the matter, are strict clauses that could lie in the deals signed with Facebook and Google. Large media companies such as Nine Entertainment Co (owner of this masthead) and News Corp Australia managed to remove restrictive termination clauses from their contracts, but smaller outlets did not. Junkee’s multi-year platform deals were a key focus of its investor presentation.

Bringing Junkee into the hands of Guardian Australia could be a way for it to expand younger audiences. If Guardian Australia succeeds it would be the first local transaction for the company, which is owned by Guardian Media Group (itself owned by a private trust).

oOh!Media bought 85 per cent of the publication from its founders Neil Ackland and Tim Duggan in 2016 for $11.1 million, before buying the remaining 15 per cent several years later. The acquisition was part of a digital strategy that aimed to link mobile, social media and billboard advertising.

Junkee was announced for sale in July, a decision which oOh!Media CEO Cath O’Connor based on a shift in strategy to focus on the company’s traditional assets. Junkee expects to make $6.7 million in revenue in 2022. But due to sharp falls in advertising spend caused by the COVID-19 pandemic, revenue for FY21 was just $4.4 million, a decrease on the previous financial year.

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