Special report: The APN exit

Special report: The APN exit

The decision by APN News and Media shareholders to demerge its New Zealand business and APN’s decision to sell its Australian regional newspapers marks not only the prospective exit of the company from print but completely changes the dynamics of the industry in both countries.

The future make-up of the industry now rests largely with rulings to come from regulators on both side of the Tasman.

News Corp Australia announced on Tuesday an agreement to purchase APN’s Australian Regional Media for $36.6 million, pending regulatory and shareholder approval.

The regional network across Queensland and northern NSW includes The Sunshine Coast Daily, The Gympie Times, Toowoomba’s The Chronicle and Grafton-based The Daily Examiner. The 12 daily newspaper and 60 smaller publications reach 1.6 million people across print, online and mobile.

The agreement, which also includes print facilities, marks the largest consolidation in print media in Australia since the purchase of the Herald and Weekly Times group by News Limited in 1986.

Outside of a few independents, the deal essentially breaks down the metropolitan, regional and community markets in the eastern states to print and digital assets owned by News and Fairfax Media.

Western Australia – always the odd man out – would come even more under the sway of Seven West Media with the anticipated sale of News’ The Sunday Times and the perthnow.com.au website to the free-to-air broadcaster and publisher of The West Australian.

Competition issues surrounding the proposed Sunday Times sale are under review by the Australian Competition and Consumer Commission, but there is a strong argument in favour. The cost of producing a newspaper only once a week in WA has weighed against the bottom line of the News Sunday title for some time in a diminishing print market. The sale to Seven West, as part of a seven-day a week newspaper operation, would increase its profitability.

Likewise, the APN sale to News of its regional publications allows it to exit print in Australia, which was more cost intensive for the company than its outdoor and radio businesses. For News, the agreed sale adds scale to its regional offerings, plus cost efficiencies.

Bryce Johns, editorial director of Australian Regional Media talks digital subscriptions and why print efficiencies are needed to ensure digital growth.

News already has an existing stable of regional daily mastheads – the NT News, Townsville Bulletin, Cairns Post, Gold Coast Bulletin, Geelong Advertiser and Mercury in Hobart – which were recently consolidated into a new publishing division.

Taken in isolation there is little, if any, significant crossover between regional mastheads of the two groups – but it depends on how ACCC chairman Rod Sims assesses the agreement.

If Mr Sims takes a wider industry view, he may be more inclined to see a reduction of competition as the number of owners decrease.

The ACCC will call for submissions after a News shareholder vote on the agreement.  The regulator is due to rule or release a statement of issues on The Sunday Times sale on Thursday, July 28.  

An almost unanimous vote by APN shareholders last week to demerge the company’s New Zealand business, NZME, paved the way for a separate listing on the New Zealand Securities Exchange and a possible merger with Fairfax Media’ New Zealand assets later this year.

The merger is under review by the New Zealand Commerce Commission, but again there are strong arguments to allow the proposal to give scale to New Zealand media to better compete against the likes of Facebook and Google.

In a piece written for NewsMediaWorks, Auckland-based media researcher and former editor-in-chief of the New Zealand Herald Dr Gavin Ellis says the New Zealand assets of Fairfax and APN will pass largely unnoticed by most consumers into the new entity. “Within the media, there will an air of resigned acceptance and the monopoly watchdog Commerce Commission will be persuaded that it is the only available survival strategy,” he writes.

“Within the media, there will an air of resigned acceptance and the monopoly watchdog Commerce Commission will be persuaded that it is the only available survival strategy” – Gavin Ellis

“The merger will take place as both parent companies are determined to exit the New Zealand market. However, the failure of APN to either float or sell NZME at the right price has been a reality check for both groups.

“Significant rationalisation plus the creation of a near monopoly in print and a significant digital platform provide the only prospect of leaving two slowly sinking ships with some realisation of value.”

Dr Ellis says the success of the new enterprise will, in part, depend on how much debt the combined New Zealand enterprise assumes.

New Zealand Media and Entertainment's new Auckland facility, NZME Central.

New Zealand Media and Entertainment’s new Auckland facility, NZME Central.

NZME owns eight daily and two weekly newspapers, 24 community publications, six magazine titles, 10 radio stations and 38 websites, including nzherald.co.nz. As well as websites related to its print and radio offerings, NZME owns a number of individual websites such as Grabone, Shop Green and Adhub.

Fairfax operates the largest print media network in New Zealand, featuring nine daily and three weekly newspapers, 61 community publications, 10 magazine titles and six websites, including stuff.co.nz. It also has a minority shareholding in social media site Neighbourly.

The Commerce Commission is look to complete its review by Monday, August 22.

“We will be a more nimble media company purely focused on growing our media assets of radio and outdoor” – APN chairman, Peter Cosgrove

APN News & Media chief executive Ciaran Davis said the company’s management team was executing on a clear strategy to own and invest in its highly successful radio business and growing outdoor division.

“Radio and Outdoor are terrific mediums for advertisers.  The sectors are growing, they are complementary, and they have both led innovation in the media industry across the digital sector,” Mr Davis said.

APN chairman Peter Cosgrove said after the ARM divestment that the future of APN looked bright.  “On the back of the NZME demerger that was overwhelmingly supported by our shareholders last week, we will be a more nimble media company purely focused on growing our media assets of radio and outdoor,” Mr Cosgrove said.

For more news from NewsMediaWorks, click here.

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