The Newsagents Association of NSW and ACT has responded to News Australia’s proposal to restructure its distribution and retail contracts with Newsagents. Changes will first take place in South Brisbane followed by the rest of Queensland and other states.
After 2 years of discussions and reviews, News Australia (aka News Limited) has announced how they intend to fundamentally restructure future distribution and retail contracts with Newsagents.
News Australia will start with Newsagents in South Brisbane, followed by the rest of Queensland, New South Wales, the Australian Capital Territory and Victoria in early 2013.
The priority in South Brisbane is due to the fact that over the last 5 years, over 20% of Queensland Newsagents have terminated their distribution contracts with News Queensland. Those Queensland Newsagents ultimately were unable to conduct their daily distribution of News Queensland’s newspapers due to the lack of commercial viability.
News Australia will consolidate 56 Newsagent territories in South Brisbane into 3. With such consolidated territories, leveraging on economies of scale, News Australia hopes to restore profitability and longer term sustainability for Newsagents for the distribution of News Australia newspapers.
In NSW/ACT, based on current circulation volumes, about 900 current distribution territories could in theory be consolidated to under 40 larger territories, even though that is grossly unlikely to occur due to the population, demography and geography.
“The Newsagents Association of NSW & ACT (NANA) agrees in principle that the broad outline of News Australia’s proposals can introduce profitability and longer term sustainability for the Newsagents who are willing and able to participate. However, we also recognise that there will be a number of Newsagents who may become casualties of change,” said Chiang Lim, NANA’s CEO.
NANA and its peer Associations are continuing discussions with News Australia to answer a growing number of issues and questions on behalf of Newsagents following the proposals to restructure Newsagents.
“Instead of delivering as few as 19 or typically 500 or even up to 1,000 newspapers every day, Newsagents will now be invited to apply to News Australia for new contracts to distribute on average 10,000 copies per day on a contracted service fee basis,” said Mr Lim.
Australians generally consider their local Newsagents as the quintessential small business. Starting their work as early as 1 am and finishing after 6 pm, Australian Newsagents are recognised as some of the hardest working businesses and people.
“Virtually all NSW and ACT Newsagents are making financial losses under the existing distribution contracts. So while these fundamental structural and contractual changes proposed by News Australia are long overdue, Newsagents will need a lot of assistance to transition to this unfamiliar new world,” said Mr Lim.
Even when in groups or as merged entities, Newsagents will now need to engage and negotiate with vastly larger businesses than themselves who can unintentionally exhibit monopolistic behaviours. The market capitalisation of News Corporation is $53b, and Fairfax Media is $1.3b.
“Newsagents need fair contracts, fair negotiation processes, fair dispute resolution processes, full disclosures, commonsense harmonisation with other suppliers, a level playing field and a decent chance of building and maintaining businesses that produce positive value and goodwill for the sake of their families, their employees and their customers,” said Mr Lim.