Stokes moves to bolster WA online news coverage as print revenues plunge

Kerry Stokes is to combine the resources of the West Australian and Yahoo!7 in a bid to provide a serious contender in online news for WA.   The move was revealed in the half-year report from West Australian Newspaper Holdings, which was released this afternoon.

A combined editorial resource would potentially provide a significant challenge in Western Australia for News Ltd’s Perth Now and Fairfax Digital’s WA Today. According to data from Hitwise prepared for Mumbrella, Perth Now is top dog with 0.68% of internet visits. The West gets 0.42% and WA Today 0.29%.

The figures show that despite the downturn, Stokes now has control of a highly profitable asset. However, although the group, which Stokes took effective control of in December, posted a headline increase in profit of 32% to $58.5m, the detailed figures paint a more worrying picture for The West and for the wider Australian newspaper market.

Advertising and circulation revenue both fell by around 6% each, leading to an 8% drop in the newspaper’s profits. Advertising volume was down 8%, with jobs display ad revenue down an alarming 26.4%. Classifieds were down nearly 11%.

Circulation revenue fell by 6.1%, which the report said was partly because of “the introduction of a new distributor compensation arrangement”. Copy sales were down 2.4%.

However, one saving from the smaller ad volumes was thinner editions, contributing to a 14% reduction in newsprint costs.

Community Newspapers saw a decline in profits of 14.6%. And the group’s digital arm made a loss of $2.9m, which was a result, said the report, of continued investment in the digital strategy.

Bright spots were online classified site Quokka, which recorded a 42% increase in profit to $1.9m, and The West Magazines group, with a profit  increase of 19%.

Citing effective management of costs as being behind the profit, newly installed WAN CEO Chris Wharton said: “This is a commendable result in difficult market conditions.”

But he warned that January saw “a continued softening of adverttising revenue, particularly in local display, real estate and employment classifieds.”

He predicted a full year profit of just over $100m “provided market conditions do not deteriorate further”.

As well as his 49% of WA Newspaper Holdings, Stokes holds around 43% of the Seven Network, which also includes Yahoo!7, a joint venture with Yahoo!.

Update: The Australian’s take on the story is here. The SMH analysis is here.


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