What does News Corp see in APN News & Media’s regional division?

News Corp is set to hand over $36m for APN News & Media's regional media assets, including more than 70 newspapers. Miranda Ward looks at what the publishing giant sees in a company so heavily invested in print.

Rupert Murdoch’s News Corp has handed over $36.6m for APN News & Media’s regional division, which will give it full ownership of another 12 daily newspapers and 60 community newspapers once approval comes from the competition watchdog and shareholders.

News Corp already held a 14.9% stake in APN, but full control of the Australian Regional Media assets will give it a monopoly on the newspaper industry in Queensland, with the only regional daily paper outside its control being Mt Isa’s North West Star which is owned by Fairfax Media. Fairfax Media does operate some agricultural titles in Queensland including Queensland Country Life and North Queensland Register.

ARM newspapers

But given the massive declines in print advertising, and the well-documented struggles of regional media as national and global players encroach on its turf via the internet, has the publisher of national broadsheet The Australian and tabloids including The Daily Telegraph and Herald Sun just bought these assets to be the last man standing in print in Australia?

Not according to Steve Allen, principal of media analysis firm Fusion Strategy, who told Mumbrella News Corp had scored themselves a “bargain”.

“News Corp has bought a bargain because it’s on a very low multiple of their last profit,” he says. “Sure, the profit has been falling in that division but still, relatively speaking, it was a bargain for News Corp.”


According to APN News & Media’s financial full-year results announced in February, ARM posted a revenue decline of 7%, down from $202.1m to $188.5m.

ARM reported an earnings before interest, taxes, depreciation and amortization (EBITDA) of $18.4m, down 27% on the year before, making the purchase a multiple of just below two when the normal is around seven to eight times the earnings.

“It’s at the low end of the estimate that APN and analysts in the marketplace were expecting. They were looking for $40-$60m,” Allen said.

News’ interest in the ARM business did not come as any surprise, it was a logical buyer for the business and had already flagged interest in regional publishing with the launch of its dedicated regional publishing division in January.

Led by executive general manager of North Queensland Nick Trompf, the division houses Hobart’s The Mercury, NT News, The Cairns Post, Townsville Bulletin, Gold Coast Bulletin, Geelong Advertiser and associated community publications and it can be expected the ARM mastheads will move into that division once the sale is approved.

But what else will News Corp do with the ARM business once the transaction is approved?

Streamlining a struggling business 

Michael Miller is a known entity to those working at APN, after all up until August last year he ran the business. That means he would already have a good idea of the shape of the business and where costs could be saved.


“Michael Miller used to be the boss of all this, they know what extra centralisation and back office rationalisation they do can do with these and that will enable them to hold profitability up and get a very quick return over the next two years,” says Allen.

“This is a very good transaction even though its assets that are no longer considered attractive”.

The most obvious cost savings will be the back office side of the ARM division – News Corp do not necessarily need separate marketing, subscriptions and importantly sales teams for these new assets, and will likely merge them.

On the editorial front it’s likely News Corp will tread a little more carefully, however the publisher has already shown it is not afraid of making difficult decisions and closing mastheads – earlier this month the publisher closed seven titles in its Victorian Leader Community Newspapers group.

The closure of those titles suggests consolidation of newsrooms, and potentially closure of some mastheads, will be on the cards following the approval of the sale.

Potential areas for News Corp to examine in which savings could be made include:

  • The Ipswich Advertiser/The Queensland Times
  • Mackay’s The Daily Mercury/The Midweek
  • The Whitsunday Coast Guardian/ The Whitsunday Times
  • Rockhampton’s Morning Bulletin/The Capricorn Coast Mirror
  • Bundaberg’s NewsMail/The Guardian
  • Childers’ Isis Town & Country/Maryborough’s Fraser Coast Chronicle/Maryborough Herald
  • Hervey Bay Observer/The Hervey Bay Independent
  • The Gympie Times/The Cooloola Advertiser
  • Noosa News/Caloundra Weekly/Kawana Weekly/The Sunshine Coast Daily
  • Southern Downs Weekly/The Warwick Daily News
  • Toowoomba Life/The Chronicle
  • Lismore’s Northern Star/The Lismore Echo
  • Grafton’s The Daily Examiner/Coastal Views

Allen said he expects News Corp to shutter some mastheads as their first move.

“They will rationalise and take out any duplication,” he says.


In areas where a daily and a community newspaper are based, such as Rockhampton, Allen said: “You wouldn’t close one or the other unless it was losing money. Most likely you would keep the paid cover price daily open, but they serve different purposes.

“Community newspapers are over the fence, they’re free. They’ve got much wider circulation and many of the higher volume retailers find those attractive because of their reach.

“Whereas with the paid-for circulation you don’t get wastage and you know every copy is getting bought and read and national advertisers find that more attractive.”

Roger Delaney, managing director of national advertising agency Q Advertising founded on the Sunshine Coast, says the community papers are largely for local businesses in that area.

“Community papers are beneficial to some businesses in distinct areas. I live in the Coolum area and that community papers has all the small businesses,” he saysx.

“When we’re talking about the larger businesses – be they national or Sunshine Coast businesses or Cairns businesses – they tend to be just in the dailies.”

On top of potential mergers, and shuttering of some mastheads, it is a possibility that News Corp will downgrade the 12 ARM dailies to a two or three times per week publishing schedule.

The titles most likely facing a downgrade of publication times include The Gympie Times, The Daily Examiner and Warwick Daily News – all of which post Monday to Friday circulations of less than 4,000.

The Gympie Times

The Warwick Daily News is struggling the most with a Monday to Friday circulation of 2,480 and a Saturday circulation of 2,355.

Mastheads most likely to convince News Corp of remaining daily include Toowoomba’s The Chronicle which boasts a Monday to Friday circulation of 15,529 and a Saturday circulation of 20,056 and The Sunshine Coast Daily which has a Monday to Friday circulation of 11,309.

The Saturday edition of the paper has a circulation of 15,248, while its sister Sunday title Sunshine Coast Sunday has a circulation of 8,882. News Corp may see efficiencies in creating one weekend edition for the Sunshine coast as opposed to the current two editions.

Q Advertising’s Delaney says he is not sure if News Corp will shutter some of the community newspapers, but added it is a possibility in areas like the Sunshine Coast where there are multiple community papers.

“On the Sunshine Coast we have a lot of community newspapers some that APN do and others such as My Weekly paper which is very strong. Whether those community papers shut down or not I’m not sure,” he says.

“It may happen eventually as there are so many of them and the concentration may go into the daily paper.”

This isn’t necessarily a negative according to Delaney.

“If regional centres can have a really strong daily paper some of the individual ones in Kawana, Coolum etc may not be as needed.”

Job cuts

Any move to combine newsrooms, shutter mastheads and cut jobs by News Corp won’t be taken lightly given the outcry from locals over recent regional newspaper cuts by them and Fairfax Media in recent months.

The initial proposal by APN to seek a buyer for the struggling ARM was condemned by the union representing journalists which said at the time it was concerned that APN was failing to appreciate the importance of the regional mastheads to local communities.

Following the news of News Corp buying the division, the Media Entertainment and Arts Alliance (MEAA) has says it will be seeking commitment from management that all employee entitlements will be unaffected by the change of ownership.

MEAA wants a commitment from News that ARM employee entitlements will be unaffected

“MEAA notes the proposed sale of APN properties to News Corp as another chapter in the rationalisation of media ownership in Australia,” a union spokesperson told Mumbrella.

“These mastheads have long had a crucial role in their communities, providing much-needed news and information to their readers.

“MEAA will be urgently seeking commitments from management that the transfer of these mastheads to a new owner will not mean job losses and all existing employee entitlements and conditions remain in place.”

Allen doesn’t expect job losses to come into effect immediately.

“They will start to slim down the operations but I don’t think they’re going to a slash and burn,” he says. “Over time there will be a very sensible rationalisation of the assets they’ve bought.”

However if ARM continues to underperform masthead closures and job losses are likely.

What else will News Corp get with the acquisition?

Buying ARM will give News Corp almost a monopoly across printed newspapers in Queensland – although given the huge drops in print advertising revenues there must be more to News’ decision than just that.

It could well be down to some of the assets included within ARM: printing presses and Finda.

finda logo

The ARM acquisition could see News substantially slash the cost of its distribution of The Australian and Courier Mail thanks to the four new presses at Yandina, Warwick, Toowomba and Rockhampton. It currently prints and distributes the titles from presses in Brisbane and Townsville.

The other asset that comes with ARM is Finda, an online classifieds company akin to Gumtree which features real estate, jobs, motoring and trades and services amongst its sections.

News Corp Australia is already immersed in the online classifieds business with a majority stake in realestate.com.au, careers website CareerOne and cars classified site CarsGuide. The company took a 25% state in Hipages, a website for finding and hiring tradespeople, in December last year.

Adding Finda to its classified businesses portfolio seems like a logical step – what remains to be seen is if News Corp keeps the operation or directs its resources towards its existing classifieds properties.


News Corp isn’t afraid of slapping a paywall across its websites and in May last year helped APN roll out its paywall strategy across its regional titles which saw subscribers gain access to a number of News Corp properties including its rewards program, Fox Sports and Presto.

the chronicle subscription

It would be a surprise if News Corp changed the subscription push which according to APN was contributing increased revenues for the company.

ARM’s total online audience was up by 22%, the company’s financial results revealed in February, with the company’s launch of a metered paywall seeing a conversion of trial subscribers to regular of a massive 86%.

According to APN chief executive Ciaran Davis, what the division’s digital strategy needed was “further investment, particularly in fast-tracking the digitisation and monetisation of its loyal and local audiences”.

However what we can expect to see is News Corp draw on the subscription skills of ARM to boost their own capabilities whilst also extending subscription marketing campaigns, such as the successful Mr Men campaign, to the ARM mastheads.

Concentration of ownership

If the sale of ARM to News Corp is approved, News Corp will almost have a monopoly in the Queensland market, and by extension a large sway over the news and potentially the political agenda in that state.

It comes as questions are raised around the concentration of ownership in Western Australia with the impending sale of News Corp’s Sunday Times to the owner of the only other major proprietor in the state Seven West Media.

ARM editorial director Bryce Johns has already moved to reassure readers that the sale of the division to News Corp is a positive, telling ARM readers via a news story in The Sunshine Coast Daily that “for the reader, this change will mean nothing – particularly in the short term”.

Bryce Johns

Johns argues there will be some “upside in the medium term” with the sale to News Corp giving ARM access to a “far wider range of writers, photographs and content options”.

“If readers get access to those people in real time, it can only make our offering more robust,” Johns states.

“And make no mistake, anyone who bought this company was doing so because of its history, its community ties – and its money making potential.

“Selling to News also has to help the longevity of print. They do the same thing same thing we do – provide compelling newspapers and websites to local communities.”

Managing director of media agency Carat Brisbane Gabriela Merrick is in agreement, suggesting the sale can only be positive for Queensland.

“It’s a good thing from a purely logistical perspective, as it will give agencies a single point of contact for press across the entire state. When it was a little more fragmented, it obviously made it more challenging for buyers,” she says.

“Queensland is a slightly different market because it’s such a vast state and such a large proportion of the population still live regionally. When you’re looking at targeting that population, you have to rely on a number of points of contact to reach all the corners of the state. This will make it more efficient.”

Gab Merrick

Merrick adds she is not concerned that News Corp could be looking to cut down on the publishing frequency of the daily mastheads.

“It wouldn’t be wise to do that.Within the APN ARM brands, you have newspapers like The Sunshine Coast Daily. The Sunshine Coast is a vibrant area that’s still growing; there is a significant population there. I don’t think that would be News Corp’s intent, as it doesn’t much sense from a business perspective. Those are the assets within ARM that are most valuable,” she says.

Q Advertising’s Delaney adds the daily newspapers are the key.

“There may be some things that fall away like the weekly newspapers but the dailies are the key. They can have a strong paper if they can stop the slide – it’s had a 10% year-on-year circulation drop for close on 10 years now and if that keeps going on, there’s no paper at all,” he says.

“Hopefully News Corp can stop that”.

Merrick expects News Corp looked to buy the division due to ARM’s strength in digital.

“ARM properties locally have quite a good digital presence. This particular acquisition has been done with an eye on the digital assets, as you can then roll that content into a local premise within the metro mastheads or News.com.au,” she says.

The sale of the division to News Corp, Merrick argues, is a positive as it is more aligned with News’ interests.

“It’s positive, because what we want is a viable news and information services in the regional areas,” she adds.

“This particular deal will be good. APN haven’t necessarily had the scope to focus on the ARM division, because their attention has been largely on their primary outdoor and radio assets (Adshel and Australian Radio Network).

“It was one part of their business that didn’t quite fit into the wider APN portfolio, so to sell it to a business that is focused on a news product – both print and digital – is a real positive for both the market and ARM’s current readers.”

Delaney was in agreement, saying News Corp has continued to “adapt and evolve as digital has become more prevalent and newspapers have gone backwards a little bit”.

“They’ve continued to find new ways of getting news and content out and be creative within their papers. They’re a little bit ahead of APN in getting the evolving world.

“Clients will look forward to it to get a strong newspaper because we need one and secondly, the community still wants it, it’s just lacked real substance. I hope News Corp can start to build that back up,” he adds.

The APN/News deal is still subject to ACCC approval, and News Corp are unable to comment on the sale until then.

Once approved it will be up to the publishing giant to make clear that they stand by the importance of regional publishing, journalism jobs and the communities they have bought into.

News Corp owned mastheads in red, Australian Regional Media owned daily mastheads in blue and Fairfax Media mastheads in green.


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