APN News & Media has sold its regional newspaper business to its largest shareholder, News Corp, for $36.6 million, completing the company’s exit from print after last week’s demerger of its NZ print and radio assets.
APN shares closed at $4.75, down more than 3% (the one for seven consolidation took effect from Monday) after jumping to a day’s high of $4.91. That was after a bit of a run up on Monday as news of the impending deal spread.
The regional assets involved in the News purchase include 12 daily newspaper, 60 community newspapers and dozens of news websites, mostly in Queensland and parts of northern NSW.
News Corp already owns a 14.9% stake in APN, which will be left with its Australian radio networks and the AdShel divisions in Australia and NZ.
The deal still requires shareholder and regulatory approval. The deal will close in August if they are forthcoming.
"The divestment of ARM is an historic day for the company as AON has been the custodian of some wonderful newspapers whose community roots go back over 150 years. We are now passing that ownership onto another media group with deep publishing experience across regional Australia,” APN chairman Peter Cosgrove said in a statement to the ASX yesterday.
Chief executive Ciaran Davis said the remaining radio and outdoor mediums were terrific for advertisers.
“The sectors are growing, they are complementary, and they have both led innovation in the media industry across the digital sector,” he said in yesterday’s statement.
For News Corp it’s a lurch back into the past. News has made much of its recent push into online property via REA Group in Australia and interest in Asia, and Move.com in the US (which cost News $US1 billion more than a year ago).
As well it is looking to restructure its Australian pay TV interests – 100% of Fox Sports and 50% of Foxtel – by injecting Fox Sports into Foxtel and buying some of Telstra’s 50% stake.
But now it’s gone back to its roots by expanding deeper into print – at a time when the company believes print has no future, except as a monopoly or oligopoly.
The APN titles it will be buying include Mackay’s Daily Mercury, Rockhampton’s The Morning Bulletin and The Chronicle in Toowoomba which are all are housed in APN”s Australian Regional Media unit.
Their purchase will give News Corp a near monopoly of print journalism in Queensland. It already owns the Courier and Sunday Mails in Brisbane, the Townsville Bulletin, the Gold Coast Bulletin and the Cairns Post.
The arguments APN and Fairfax are using in NZ for approval of the merger will be used in part by News Corp in Australia which will need ACCC approval for the proposed APN deal.
The core of that argument is that the print business is facing increased competition from digital rivals such as Google, Facebook, etc for ad revenues, while more and more people are using online as primary news sources (especially Facebook) and not print (ignoring that the papers have their own websites, such as News.com.au).
News will ignore the sluggish and poor online services across regional Australia, and the prospect that Malcolm Turnbull’s NBN (which News and The Australian strongly support) will still be vastly inferior to what will be on offer in urban areas of the country.
