APN in trading halt as largest shareholder calls for boss Chenoweth to be sacked
The management of APN News & Media was this weekend locked in high level talks over the future of boss Brett Chenoweth after the company’s biggest shareholder said it had lost confidence in him.
Shares in APN – Australia’s third biggest newspaper publisher after News Limited and Fairfax – are set to be suspended on the ASX until Tuesday after the company asked for a trading halt “pending the release of an announcement”.
The move comes after shareholder Independent News & Media – which owns just under a third of APN – called for APN boss Brett Chenoweth to be sacked. INM issued a statement saying:
“Independent News & Media PLC (‘INM’) today announces that it is seeking the removal of Mr Brett Chenoweth as Director and CEO of APN News & Media (‘APN’), in which INM holds a 28.95% shareholding.
“INM has lost confidence in Mr Chenoweth’s ability to implement the strategic initiatives necessary to reposition APN for the more challenged media landscape that has emerged in Australasia. Notwithstanding its market leading positions APN has underperformed as evidenced by a near halving of APN’s interim profits in the period from H1 2010 to H1 2012 (most recent earnings report).
“INM has formally advised APN of its views and it is seeking an Extraordinary General Meeting to facilitate all APN shareholders in expressing their views on this important matter.”
Last December’s earnings report said that the company’s revenues for the second half of 2012 were going to be down about 10% year-on-year, blaming weaker ad markets. It said it expected profits of about $150m, well down on expectations.
APN’s businesses include regional newspapers in Australia and the New Zealand Herald. It also owns half of APN Outdoor, Adshel and Australian Radio Network. The market-beating performance of Adshel and ARN (both co-owned wiht US company Clear Channel) were bright spots in the otherwise downbeat update.
The market capitalisation of APN is currently less than $200m, with shares priced about 10% of what they were five years ago.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Seven West Media should buyout APN.
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Out Chenoweth/Bright & co. Enter McCarthy.
APN are in serious trouble. Q1 revenue is down 20% in key mastheads and will not return. APN mastheads experienced with the worst circulation decline of all publishers in Dec audit with major titles down 13-14%.
Debt crippling, market cap a penny dreadful and earnings falling of a cliff.
SWM is smarter than that. There is no way out for APN.
Happy to be proven wrong!
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The more APN has grown, the more out of touch its management has become with the company’s key strength. APN’s point of difference is providing news on the ground in local communities in the way that nobody else, with the exception of the ABC, is doing. It needs to find ways to reengage at the local level. Here’s a wacky idea: make the titles franchises, with owner-managers in the outposts who are motivated to make a go of their titles.
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APN has a stable of niche publications in key industries like health and education (for example, Campus Review) which it doesn’t seem to understand the value of.
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Lots of rationalisation to be done here.
Reality is some potentialy good product is being starved .
Some are just too small and shld be divested
Digital strategy like News is pretty weak except in NZ
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I wonder if APN shareholders have been told of the elaborate spending of late? This year already, APN National Sales team took almost 50 people (including many staff) to Las Vegas for a week as a reward for their work/spending. Given this was likely to cost in the vacinity of $500k I’m not suprised managemnet are in trouble. How do you make staff redundant from an office where their collegues are in Las Vegas celebrating on an all expenses paid holiday? APN was once a powerful force in regional media, now they are driving themselves into the ground. Sad to watch…
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Mr Hunt and Mr Chenoweth are nice people. But they are dealing with a problem that requires serious knowledge of the nuts and the bolts.
In fact APN is not alone in having invested heavily in theory at a time when the market demanded knowledge of fact. Pound for pound, Fairfax is in far worse state.
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Steve
Steve you are very wrong about the Vegas trip, I don’t believe any company in today’s markets would spend $500K on a trip.
I organised the trip and we spent considerably less.
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A wise man once said that if you keep doing what you have always done, you’ll get what you always got. This was a great business which did well by promoting and rewarding from within. Now it’s just a shell, with most of the talent replaced by also-rans, imported from more prestigious media organisations, talking it up with their empty promises and moving on. Not enough knowledge of life at the coal face and too much talk about ‘going forward’ by people who couldn’t tell you how they actually got to their present location. I think there’s a lesson in that for all of us.
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the share price slide should have set off alarms.
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Neil Tavender
Hope you enjoyed the trip.
Are Q1 sales up? These types of initiatives rarely work for established companies. Don’t think McCarthy will let you do that next year if you are still there…Or APN for that matter.
APN IS TOAST! Sold off for scrap inside 9 months.
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How sad to watch a community based company reach this stage of its life. It was founded with passion and a culture of regional communities. Such a loss. I grieve for what we had. Greyman you are spot on,makes you wonder what a bunch of passionate true Apn people could have achieved if given the chance.
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Neil,
If you spent considerably less than $10k a head for flights, accomodation, meals, beverages, entertainment etc for a week in Vegas I salute you. But lets say that cost $6k a head – still $300k.
What is the value of such a trip in today’s market? I hope the ONLY clients on teh trip were the actual decision makers, not media buyers who just tick a box. How many company CEO’s or Directors were on the trip?
Regardless of the cost, this trip seems bizarre to say the least given teh redundancies going on at APN at the moment.
This once great company has been digging its own grave for years, looks like the hole is finally deep enough for everyone to jump on in now…
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Steve
Your two comments are not linked, the trip was a very worthwhile and the cost was considerably less than you mention, but lets not dwell on that.
APN ARM is a cracking business unfortunately it has some captains who steered it in the wrong direction, we now have a really good captain/CEO of this ship, we are making huge changes and with that comes tough decisions, it sounds like you may of been one of them. We are Regional Queensland and if you want to reach this valuable market then we are the number one choice, that is why we outperform News & Fairfax with National advertisers, local retailers value us immensely to get their message to this unique huge audience.
We will win the fight in this media changing landscape; we have to change for the better and I believe we are becoming better every day, no graves……………….
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Neil,
Thankfully I have not had the experience of working with APN in the past, usually if I want a roller coaster ride I just go to Dreamworld, however I do monitor them closely, own some shares, and the agency I work for spends plenty of $ each year in APN products.
Each time APN appears in the press in a negative light, I cringe, knowing your products at a local level can only be worse off when the dust settles.
The Vegas trip in particular got my goat up, as I know many of the people who went were not in senior roles, Brisbane is a small market after all. Knowing APN are making redundacies while at the same time APN staff are in Vegas, it just doesn’t look good to your clients (unless they were lucky enough to make the trip!).
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I agree with Jarod, the Vegas trip was a bit of a gamble and unlikely to pay dividends. On the other hand, if Steve’s agency is spending a shedload of money with APN, his boss should have at least got a guernsey. Maybe APN ARM need to do some good old fashioned relationship building with clients instead of regurgitating statements from their media guide and emailing fantastical last minute rate deals.
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APN stuck their head in the sand when it came to digital, with an arrogant, old-school attitude of “Print is King in regional areas”. Not true anymore. They then had a string of poorly executed online offerings: search4, finda (no-one knew what it was), Friendorse (started cannibalising their own revenue when people realised they could advertise for free), Brands Exclusive (media & retail company?), and now they are also a web design company (currently advertised on their news websites)?
News and Fairfax are hardly in a better position but you don’t see them making these questionable moves. It’s a shame that they didn’t integrate properly across print, outdoor, radio and online, as it was a true point of difference that the big two don’t have.
I’ve also heard they liked to party like they were Channel 9 in the ’80s, another sign of not moving with the times.
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Hey Neil,
Your quote ” we are regional QLD” is interesting…
I’m pretty sure you have newspapers in NSW as well… Or have you forgotten about them?
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5 times earnings , irish in debt trouble and fairfax selling off trade me . McCarthy on the scene smells like a group winning horses name to me
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I was wondering about NSW too…I think it may be an edgy sounding statement from their media guide along the lines of “We own this town” but came out sounding like….. “we’re a cowboy outfit”.
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A sales jolly may or may not have paid dividends. But it’s neither the tipping point nor the root. Far from.
What is entirely on message is the comment about exec teams being out of touch with the value proposition and guts of the business. They have a stable of papers that were born from passion. They could have transitioned into digital as the community was invested but the corporate number crunchers run the show and only have line of sight to the balance sheet and the share value.
Unfortunately the captains have no grasp on the true value drivers. So when the market changed around them they missed all the signals. Now they’re irrelevant
That comment about franchising could be valid. It could bring back passion. But they’re being run by a debt laden Irish magnate who won’t give two shits. Break up imminent for pennies on the dollar. Local journos sold out. Rue the loss
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@Steve RE: “The Vegas trip in particular got my goat up, as I know many of the people who went were not in senior roles,”
Why do people have to be in senior roles to go on a sales jaunt? If staff are performing for the business, why can’t they be rewarded, regardless of seniority?
Btw: I have no affiliation whatsoever with APN.
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Can’t find a few dollars to give your staff training in the systems and processes they need to do their jobs properly, but you can send them to Las Vegas for a week?
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Erm,
Apolagies, I worded that poorly. I was not refering to APN staff on the trip not being senior (I agree sales staff should be rewarded) – I was refering to the actual clients who went along to Vegas. They were not all senior staff, or decision makers, so my point was why take non decision makers half way around the world? What could APN possibly benefit from taking this level of client to Vegas? It’s like Toyota flying car detailers to Japan for a sales conference.
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Really sad stuff. It seems like a monumental “misdirection” of efforts at executive level, with wasteful spending on international junket’s that increase the number of redundancies being handed out. I fear that the next thing we will hear is that APN are sending Aussie jobs offshore to further reduce costs.
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I worked with APN for 19 years, leaving 3 years ago. In the past couple of days I’ve been contacted by people still with APN, and some in greener fields…wondering if I’m the “Steve” posting on here.
I’m not…But his posts are interesting.
And now that I’ve read it all, I did LMAO seeing Neil Tavender do his best “Josh Lyman” and take to the blogosphere with that sort of stuff. Tut, tut.
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I’d spend less time justifying your sales initiative on an industry blog and get back to the coal face Neil. Sell sell sell.
With the current drop in Q1 revenue you guys will have Williams Street breaching its banking covenants by April.
With EBITDA at $151 million and your banking covenants rumoured to be between 3-4 times, you guys are running on fumes. At best you can borrow $604m, at worst $453m.
If EBITDA drops 15%, which is extremely likely given the revenue drops, you will be around $125m EBITDA and your borrowings maxed out at $375-500m.
Better do a blitz day and flog some ads. If only you could sell 15% larger ads, for 15% more and to 15% more people, you’d be rich! What a strategy….muppets!
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Let me provide the essence to what APN community titles/brands stood for locally and to many I believe still do. They connect and engage the communities they serve. Here is a crazy thought – digital TV has fragmented the advertiser message, most regional area radio frequencies fall in and out as you pass over the crest of a hill, online advertising to a town of 40 or 50 thousand, by its very definition of world wide web, has an element of wastage – so where does that leave the community or “shire” newspaper title, delivered to every ratepayer’s letter box – in a pretty good place for both the reader and the advertiser, I would suggest.
So I raise my glass and toast – here is to retaining the essence of the community brand, paid or free, that has served their ‘town’ for many decades, and to those community souls that steered/steer those ships. I hear ,APN remains in the blood of many, they just need to be given the helm.
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APN have been trading with uncertainty and Chenworth has placed a few people around him and in turn they employ their mates and then if you look at the staff churn then you would know the business is not performing from a financial and a morale situation.
Brian McCarthy is a good solution and you can ensure, if he takes he reins you will see a difference. APN in recent times has purchased businesses and attempted to sell a couple of silos which have given staff some feeling of uncertainty
I really hope that this business can survive but it will need to be turned inside out and quickly
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Somebody just told me APN also sent people to Vegas last year on the same sort sales junket?
Haha no way that can be true! Surely they couldn’t get away with this sort of thing two yesars in a row? Can somebody confirm if this was in fact the same trip as last year, and with the same clients I’m told?
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I just heard off somebody that this is in fact the second year in a row APN has sent the same group of people off to Vegas!
Can anyone confirm if this is true? Sounds a bit far fetched to me.
But if it is true, who on earth approved the trip for a second time!!
Fancy making DOZENS of good staff redundant and then flying their work mates to Sin City!
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When it rains it pours…..is this why they needed to rush the capital raising??
Looks like they will lose $72m+ interest in unpaid taxes. They only have $20m cash at bank.
Said it before…..APN is toast. Give them 3 months before break up.
APN News & Media Limited ABN 95 008 637 643 Level 4, 100 William Street Sydney NSW 2011 Australia M A R K E T A N N O U N C E M E N T APN update on tax dispute SYDNEY, 22 February 2013 APN News & Media [ASX, NZX: APN] today announced an update in
relation to a tax dispute following a report received today from the Adjudication Unit of the New
Zealand Inland Revenue Department (`IRD’). s stated in the Company’s 2011 Annual Report and the 2012 Preliminary Final Report lodged yesterday, the Company is involved in a dispute with the IRD regarding certain financing transactions. The Company is satisfied that its treatment of the financing transactions is consistent with all relevant
legislation and that no tax will become payable. The dispute involves tax of NZ$48 million for the period up to 31 December 2012. The IRD is seeking to
impose penalties of 50% of the tax in dispute and interest in addition to the tax claimed. In the event
the Company is unsuccessful in the dispute the Company has tax losses available to offset any amount of
tax payable to the extent of NZ$32 million. The Adjudication Unit of the IRD has today advised that it agrees with the position taken by the IRD.
Accordingly the Company will be issued shortly with Notices of Assessment denying deductions in
relation to interest claimed on certain financing transactions. In response to this step the Company will
commence litigation in the High Court of New Zealand to defend its position in relation to this matter. — ENDS — For Further Information: Peter Brookes, Citadel +61 407 911 389
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Level head, Such kind words, but the cynics will say that your noble sentiments sound too much like the APN media guide. Community titles do have some cred, delivered free to every letterbox, but it’s a bit of a stretch to mention paid regional dailies in the same breath. Different value proposition, six days to choose from. Perhaps APN remains in the blood of many. Unfortunately, they can’t take the helm. They took to the lifeboats years ago, when those directionally challenged captains mentioned by Neil took over the good ship APN and set sail for uncharted waters.
Stand by for some Ad bargains Jarod, ‘Mad March’ is just around the corner!
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