tag:theconversation.com,2011:/us/topics/apn-12201/articlesAPN – The Conversation2016-09-05T20:16:28Ztag:theconversation.com,2011:article/633942016-09-05T20:16:28Z2016-09-05T20:16:28ZCompany results wrap: news publishers are transforming, but into what?<p><em>Companies have finished reporting results for the financial year so it’s time to take stock of how the different business sectors of Australia are fairing. In our <a href="https://theconversation.com/au/topics/company-results-2016-30905">company results wrap series</a> we take a step back from the short-term focus of quarterly profit and loss statements and examine what big picture factors are at play.</em></p>
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<p><a href="https://aut.researchgateway.ac.nz/bitstream/handle/10292/9894/MyllylahtiM.pdf?sequence=3&isAllowed=y">New research</a> on the business models of Fairfax and APN from 2004 to 2013 confirms the two companies have failed to transform their revenue structures from print to digital. However, Fairfax CEO <a href="http://www.fairfaxmedia.com.au/ArticleDocuments/193/2016-08-10_%20Full%20Year%20Results%20-%20Media%20Release.pdf.aspx?Embed=Y">Greg Hywood</a> argues that the company’s 2016 full year result is “proof that the [digital] transformation of Fairfax Media over recent years has succeeded”. </p>
<p>Recently, American billionaire <a href="http://www.politico.com/story/2016/08/the-playbook-interview-warren-buffett-226892">Warren Buffet</a> said that for most American newspapers “the transition to the internet so far hasn’t worked in digital. The revenues don’t come in”. He added that “local newspapers continue to decline at a very significant rate”. </p>
<p>Despite the gloomy outlook, News Corporation is expanding its regional newspaper portfolio in Australia. The company is buying APN’s regional papers including 12 daily newspapers and 60 smaller publications. </p>
<p>In New Zealand, Fairfax Media and New Zealand Media Entertainment (NZME) are currently seeking merger approval from Commerce Commission. If the merger is cleared, the new company <a href="http://www.comcom.govt.nz/business-competition/mergers-and-acquisitions/authorisations/merger-authorisation-register/nzme-limited-and-fairfax-new-zealand-limited/">will have 89% market share</a> in New Zealand’s print newspaper market. Fairfax is expected to own 51% of the merged company’s shares (currently, News Corp owns 14.99% of NZME shares).</p>
<p>Why the sudden interest in the sinking ship, print? Is it because the assets are cheap? In 2016 Fairfax made a heavy loss as it wrote down almost a billion dollars of its publishing assets. </p>
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<p>A closer look at News Corp’s and Fairfax’s revenue structures may shed some light on this interest in print. </p>
<p>In 2016, Fairfax’s Metro Media, Australian community media, and New Zealand media contributed 75% <a href="http://www.fairfaxmedia.com.au/ArticleDocuments/193/2016-08-10_%20Full%20Year%20Results%20-%20Media%20Release.pdf.aspx?">of the company’s total revenue</a>. Domain Group delivered 16% of its total revenue.</p>
<p>This simply shows that the company’s revenue, if not profit, is still reliant on the traditional revenue streams. Similarly, in the 2016 financial year, 64% of News Corp’s revenue came from news and information services and 9.9% from digital real estate services.</p>
<h2>Digital revenue covers a fraction of expenses</h2>
<p>Both Fairfax and News Corp argue they are turning into truly digital media companies, and clearly, something is changing. Both companies seem confident that their digital future lies in real estate and listing services. Commenting on the 2016 results, News Corp chief executive <a href="https://newscorpcom.files.wordpress.com/2016/08/q4-2016-press-release_final_08082016.pdf">Robert Thomson</a> said: </p>
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<p>“Since the advent of the new News three years ago, revenue at Digital Real Estate Services has more than doubled, and it is expected to become the biggest contributor to [earnings] in the future.”</p>
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<p>Similarly, Fairfax’s chief executive <a href="http://www.fairfaxmedia.com.au/ArticleDocuments/193/2016-08-10_%20Full%20Year%20Results%20-%20Media%20Release.pdf.aspx?">Greg Hywood says</a> digital and non-print earnings now make up more than 40% of Fairfax’s earnings before interest, taxes, depreciation and amortisation (EBITDA). If this trend continues, he says, next year it will be closer to 60%.</p>
<p>Both companies make a decent profit on their digital real estate services (and the share of profit is growing), but Fairfax’s digital revenue currently covers only 14% of the companies’ total expenses. So the company’s bright digital future clearly requires more cost cutting. </p>
<p><a href="https://www.researchgate.net/publication/305387958_How_digital_are_the_news_publishers_A_study_of_newspaper_publishers%27_evolving_revenues_and_how_they_may_support_journalism_and_future_newsrooms">Recent research </a>
shows that both Fairfax and News Corp have some work to do before they are “truly digital”, meaning the majority of their revenue comes from digital sources. For example, <a href="https://www.academia.edu/27050041/How_digital_are_they_really_A_study_of_newspaper_publishers_evolving_revenues_and_how_they_may_support_journalism_and_future_newsrooms">in 2015 digital revenue made</a> 62% of media groups Norwegian Schibsted’s and German Axel Springer’s total revenue. For Fairfax, the same number was 16.4% and for News Corp 8%.</p>
<p>According to Fairfax, in 2016 its paid digital subscriptions grew 17% to 209,000. The revenue from these was $38 million, representing two percent of the company’s total revenue. News Corp’s digital subscriptions continue to grow and “account for approximately 45% of the subscriber base”. </p>
<p>The <a href="http://www.fairfaxmedia.com.au/ArticleDocuments/193/2016-08-10_%20Full%20Year%20Results%20-%20Media%20Release.pdf.aspx?">company states</a> that “digital revenues represented 23% of news and information segment revenue”. Based on this percentage, the digital revenue delivered by its news and information services made 1.2% of the company’s total revenue.</p>
<h2>Convergences across telcos and media</h2>
<p>A short-term outlook for the traditional television broadcasters in Australia and New Zealand is weak. For example, in August <a href="http://www.sevenwestmedia.com.au/docs/default-source/financial-results/presentation-of-results16C200EF9473.pdf?sfvrsn=4">Seven West Media</a> gave a profit warning and is expecting its profit to fall 15-20% in the coming year due to the flat advertising market. Its 2016 pre-tax profit was $207 million of which Channel Seven contributed 82%.</p>
<p>Clearly, digital transformation is proving challenging for television broadcasters as well as newspapers, and more consolidation can be expected across the sector. This will also occur across the media, telecom and internet service providers. In April, it was <a href="http://www.stuff.co.nz/business/world/79326452/APN-and-Nine-mull-A-1-6b-television-radio-and-outdoor-merger">rumoured</a> that APN and Nine Entertainment were considering a mega merger, but this is yet to materialise. </p>
<p>In New Zealand, the pay television provider Sky TV is seeking merger approval with Vodafone NZ. <a href="http://www.comcom.govt.nz/business-competition/mergers-and-acquisitions/clearances/clearances-register/vodafone-europe-b.v.-and-sky-network-television-limited/">Sky TV says</a> the merger is necessary because, “the change in how video content is delivered to consumers is transforming traditional television and content markets”. The company is facing increasing competition from companies such as Netflix, Quickflix and Apple TV. </p>
<p>Interestingly, Fairfax Media is also branching out in New Zealand by launching a new internet service provider – Stuff Fibre. The new service will offer uncapped ultra-fast broadband, unlimited data, and no fixed term contracts. </p>
<p>Fairfax is clearly seeking to expand and to control its online content and video delivery. In New Zealand, the company already has an agreement with Radio New Zealand and TVNZ for content delivery.</p>
<p>Yes, media companies are transforming, and they have to, as the financial results demonstrate. On Friday, APN announced that it is now an “outdoors media and radio” company, as opposed to a news publisher or news corporation. Fairfax and News Corp are starting to look more like digital real estate providers. This strategy makes business sense, but one has to wonder if there is still room for journalism within it.</p><img src="https://counter.theconversation.com/content/63394/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Media companies say their results are an indicator of a transformation taking place from traditional business to newer profitable digital platforms, but it seems the proof is still missing.Merja Myllylahti, Project manager and author for Journalism, Media and Democracy (JMAD) Research Center, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/592322016-05-12T00:11:21Z2016-05-12T00:11:21ZFairfax-APN merger more bad news for media diversity<p>In the past five years, APN News and Media and Fairfax Media have laid off masses of editorial workers as a part of their “digital first” strategies. They have integrated their newsrooms, cut down print editions, and diversified their advertising income streams to sponsored content and listing services. Despite such efforts, their digital business models have not quite worked. </p>
<p>In this context it is not surprising that APN News and Media and Fairfax Media are <a href="http://www.businessinsider.com.au/apn-and-fairfax-want-to-create-a-massive-new-zealand-media-business-2016-5">planning to spin-off their New Zealand businesses</a> by merging them. The companies are not alone. The newspaper industry is consolidating and converging outside Australasia. In the United States, Gannett is currently trying to buy Tribune Publishing for US$815 million. <a href="http://www.theguardian.com/media/2016/mar/02/two-of-italys-leading-newspapers-to-merge">In Italy</a>, La Repubblica and La Stampa newspapers are merging to create “a leading European group in the daily and digital information industry”. This, according to the companies, is the most significant merger in Italy’s newspaper industry “since the digital revolution”. </p>
<p><a href="http://www.stuff.co.nz/business/79848214/Fairfax-Media-APN-confirm-merger-talks-for-Fairfax-NZ-NZME">New Zealand Broadcasting Minister Amy Adams</a> considers the proposed merger between AP and Fairfax as natural evolution, brought upon by convergence in the telecommunication and media sectors. She says:</p>
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<p>“The distinctions between print, radio, television and online news are fading. Generally, digital convergence is giving New Zealanders a greater access to content than ever before.” </p>
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<h2>Mergers make business sense</h2>
<p>There is a certain business logic to media mergers and takeovers. They are primarily done to cut cost, boost revenue and to satisfy long suffering shareholders. On Wednesday, Fairfax chief executive officer Greg Hywood said the proposed merger was “an important opportunity for all of our shareholders”. Similarly, APN chief executive officer Ciaran Davis commented that “the merger of NZME and Fairfax’s NZ business provides an exciting opportunity for our shareholders”.</p>
<p>Under the plan, APN would first demerge NZME (New Zealand Media and Entertainment) and then list the company on the New Zealand and Australian stock exchanges. After that, Fairfax’s New Zealand businesses would be folded into the new company. NZME’s main media assets include the NZ Herald and Radio Network, which runs multiple commercial radio stations in the country. Fairfax owns newspapers such as The Dominion Post (Wellington) and The Press (Christchurch) as well as the online news outlet Stuff.</p>
<p>Both companies have seen their New Zealand revenues and profit dropping. <a href="http://investorcentre.apn.com.au/phoenix.zhtml?c=144006&p=irol-news&nyo=0">APN’s investor statement</a> notes that the “New Zealand market conditions have been challenging and revenues were down 10%” on the first quarter of 2016. Similarly, in the first six months of 2016, <a href="http://www.fairfaxmedia.com.au/ArticleDocuments/193/2016-02-19_FY16%20Half-Year%20Results%20-%20ASX%20Statement.pdf.aspx?Embed=Y">Fairfax’s revenue</a> in New Zealand declined 9% in local currency terms, and its profit was down 12%. </p>
<p>By merging their New Zealand businesses, APN and Fairfax hope to boost their revenue and profit, but this can only happen by cutting more costs. The companies are bound to achieve some savings by shedding jobs from their combined workforce of 3,000 even when redundancies are not inexpensive. The former NZ Herald editor-in-chief <a href="http://www.radionz.co.nz/news/business/303589/journalists-fear-for-their-jobs-as-media-merger-looms">Tim Murphy</a> estimates that combining the two businesses might cost 750 jobs.</p>
<h2>Defensive against the global players</h2>
<p>Fairfax’s and APN’s proposed deal is a defensive move as they compete for the local and global advertising dollar. The merger is all about audience reach and advertising money. Larger audience means potentially more clicks and views, and that is what matters to advertisers. Or so they say. </p>
<p><a href="http://www.stuff.co.nz/business/79848214/fairfax-media-apn-confirm-merger-talks-for-fairfax-nz-nzme">Simon Tong,</a> the Managing Director of Fairfax NZ says that “the depth and breadth of the combined business would be a win for audiences, and also enable us to create innovative solutions for advertisers based on the best of both of us”.</p>
<p>News publishers are increasingly joining forces against search engines such as Google and social media companies such as Facebook to defend their advertising revenues. In New Zealand, Fairfax Media, MediaWorks, NZME and TVNZ have already formed a local advertising exchange service KPEX to defend their advertising share in the local market. </p>
<p>More recently, four large American newspaper groups including Gannet and Tribune Publishing have created a new national advertising network which is focusing on digital platforms. In Europe, The Guardian, CNN International, Financial Times, Reuters and The Economist have formed <a href="http://www.pangaeaalliance.com/">The Pangea Alliance</a>, a joint sales effort, to boost and protect their advertising income. </p>
<h2>What is local, and what is global?</h2>
<p>According to <a href="http://www.aut.ac.nz/__data/assets/pdf_file/0011/608366/JMAD-2015-Report.pdf">JMAD New Zealand Media Ownership Report 2015,</a> Fairfax and APN have a duopoly in the New Zealand print newspaper market, and they dominate in online news. Additionally, APN has a duopoly in commercial radio with MediaWorks. As the new company would have a near monopoly in the newspaper market, it is not surprising that the deal requires approval from the Commerce Commission.</p>
<p>APN and Fairfax believe there is nothing anti-competitive in their deal, because they operate in the global media environment, and therefore the merger would not limit readers’ access to news. This is where their logic fails. What about the access to local news?</p>
<p>Taking one media company out of market clearly limits the readers’ choice, and if the merged company puts up paywalls, readers will be left with even more restricted access to local news content. The duopoly structure of the two companies has so far limited the introduction of digital subscriptions to New Zealand readers, but they are more than likely to launch paywalls if the merger gets a clearance. </p>
<p><a href="http://www.scoop.co.nz/stories/BU1605/S00312/a-fairfax-nzme-merger-would-be-bad-news-for-all-of-us.htm">The Coalition for Better Broadcasting,</a> which advocates public interest journalism in New Zealand, has warned the proposed merger “would effectively create a monopoly with too much market power in the newspaper sector”. According to the coalition, the new media company would “have no incentive to maintain competing publications” in the same regions and cities “probably leading to closures of smaller titles and reducing diversity, local representation and consumer choice”.</p><img src="https://counter.theconversation.com/content/59232/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>If a New Zealand-focused deal between Fairfax and APN gets approval readers can expect less access to local news content.Merja Myllylahti, Project manager and author for Journalism, Media and Democracy (JMAD) Research Center, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/553822016-02-25T23:47:27Z2016-02-25T23:47:27ZEnd of an era in regional publishing as APN puts papers up for sale<figure><img src="https://images.theconversation.com/files/112987/original/image-20160225-15160-9se4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">APN's regional arm includes 12 daily newspapers.</span> <span class="attribution"><span class="source">Twitter</span></span></figcaption></figure><p>This week <a href="http://mumbrella.com.au/apn-news-media-australian-regional-media-sell-revenues-348949">APN News & Media announced</a> it planned to sell off its regional newspaper business. </p>
<p>It signals the end of an era. Regional publishing has been at the heart of APN since <a href="http://www.irishtimes.com/life-and-style/people/collapse-the-fall-of-tony-o-reilly-1.2348585">Tony O’Reilly</a> bought the Queensland newspapers from Rupert Murdoch in the late 1980s.</p>
<p>The sale paves the way for Murdoch’s News Corp to buy them back. As well as being a 14.9% shareholder of APN, News Corp already has dailies in <a href="http://www.cairnspost.com.au/">Cairns</a>, <a href="http://www.townsvillebulletin.com.au/">Townsville</a> and the <a href="http://www.goldcoastbulletin.com.au/">Gold Coast</a> so the additional Queensland papers could complement those. APN also has a <a href="http://mumbrella.com.au/apn-bolsters-its-new-regional-paywalls-offering-readers-access-to-a-slew-of-news-corp-assets-313385">bundling arrangement</a> with News to give paid regional newspaper subscribers access to News Corp titles. Added to that News Corp’s Executive Chairman, Michael Miller, is a former CEO of APN News & Media. It’s clear they would know how to value the business for a purchase.</p>
<p>APN’s newspapers comprise twelve daily papers and more than 30 community papers and specialist publications. They cover an area from <a href="http://www.coffscoastadvocate.com.au/">Coffs Harbour</a> in Northern NSW to <a href="http://www.dailymercury.com.au/">Mackay</a> in North Queensland. </p>
<p>Most of the papers were originally founded as family or local concerns, often with their own printing press. But under the management of APN in recent years a lot of the production was centralised to the offices of the “flagship” <a href="http://www.sunshinecoastdaily.com.au/">Sunshine Coast Daily</a>.</p>
<p>That proved to be a hard sell, as editors in North Queensland or New South Wales felt their pages were losing the local touch readers demanded.</p>
<p>For city dwellers it’s difficult to register the sheer size of the geography APN’s regional publishing covers. And from a commercial perspective it seems the logistics and costs of running a collection of small newspapers across such a spread has just become too painful.</p>
<p>The inside joke about APN has always been that it is the biggest media company no one has ever heard of. That might have been true before the company rebranded its outdoor business and highly visible billboards in Melbourne and Sydney suddenly appeared bearing the APN name.</p>
<p>But in regional Queensland and Northern New South Wales it has been well known for years, a vital part of the local economies and a key training ground for young journalists.</p>
<p>Some of the titles are over 150 years old. <a href="http://www.dailyexaminer.com.au/">The Daily Examiner</a> in Grafton and <a href="http://www.qt.com.au/">The Queensland Times</a> in Ipswich were both founded in 1859. Five of the other dailies are more than 140 years old. That represents an enormous amount of history and an incredibly valuable connection to regions such as Rockhampton, Mackay, the Fraser Coast and Lismore.</p>
<p>But the web has well and truly arrived in these places, and despite holding out until 2006, APN did eventually join the digital race. </p>
<p>With such a long print tradition it was inevitable that a digital transition would not be smooth. In addition to the same challenges that metro publishers face in becoming digitally focused, APN also had to deal with a unique set of issues such as local advertiser expectations.</p>
<p>From this week’s news it appears perhaps the corner has been turned. The company reported consistent digital audience growth and, after introducing paywalls, 86% conversion to subscriptions of those who trialled the offer. </p>
<p>But it seems the effort has been too much and it’s time to get out.</p>
<h2>Potential buyers</h2>
<p>So who might the buyers be for a network of newspapers with shrinking print sales and some digital growth, where costs have been stripped to the bone, but where the footprint covers a potent mix of rural, mining and tourism based regional economies?</p>
<p>The two obvious starters are News Corp and Fairfax Media. Either company could roll its digital technology into the APN network and bolster the sales teams for network advertising sales. </p>
<p>Fairfax might be interested, to help support its Domain business. Domain struck a resell deal with APN in 2009 which gave it reach into northern property markets it otherwise couldn’t get to. At a very low price it might be interested. But it’s hard to see Fairfax getting involved in the slog of local publishing in those regions.</p>
<p>A dark horse might be The West Australian. It showed some interest a few years ago because of the Queensland mining jobs boom and the chance of joining east coast mining job ads to its west coast listings. But mining is on the wane and The West’s digital platforms are now all sourced from Yahoo. So a purchase like this is probably unlikely. </p>
<p>That leaves a possible break up and a series of smaller sales to independents and local groups. In the long run that might be best for local markets, but it would be a slow and difficult process for APN unless there was a conglomerate of small groups ready to go and with a network ad sales plan to execute.</p>
<p>So while Fairfax probably has the cleanest balance sheet of the big players, my bet would be on News Corp picking up a bargain by buying back the papers it sold in 1988.</p>
<p>Under that scenario the winners - apart from News - would be readers and their communities. It might seem counter-intuitive that further reduction in the number of news providers through a purchase by News Corp would be a good thing for readers, but in this case the alternative might be that the papers actually cease publishing in any form. News Corp would offer welcome stability, publishing expertise in all formats and a solid commitment to the regions. </p>
<p>There might, however, be some consolidation of titles particularly around the Sunshine Coast, where The Sunshine Coast Daily and the Noosa News compete directly with existing News Corp publications.</p><img src="https://counter.theconversation.com/content/55382/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hugh Martin was General Manager of APN Online from 2007-2010.</span></em></p>The sale of APN’s regional newspaper arm could see Rupert Murdoch’s News Corp buy back the papers it sold in the ‘80s.Hugh Martin, Lecturer in Journalism, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/312182014-09-04T01:47:47Z2014-09-04T01:47:47ZAPN’s kiwi float talk signals media shakeup<figure><img src="https://images.theconversation.com/files/58193/original/wggsbdyw-1409792687.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Print assets are losing their appeal.</span> <span class="attribution"><span class="source">Remon Rijper/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>APN News & Media is <a href="http://www.smh.com.au/business/media-and-marketing/apn-news-and-media-considers-kiwi-spinoff-20140901-10as27.html">mulling a float</a> of its New Zealand media assets including its masthead The NZ Herald, The Radio Network (TRN) and group buying site GrabOne. The company is potentially selling 60% of its New Zealand operations maintaining a minority stake in the company. If the float goes ahead, the dual-listed APN would more or less be an Australian media company as most of its assets would be in Australia, not New Zealand.</p>
<p>Why now? The company just raised A$132 million to buy full control of its Australian Radio Network (ARN) and TRN. </p>
<p>APN has made it very clear radio is a key strategic asset for the company. APN CEO Michael Miller said in the company’s <a href="http://investorcentre.apn.com.au/phoenix.zhtml?c=144006&p=irol-news&nyo=0">half-year results statement</a> that “radio continues to grow as a medium in both countries,” claiming the success of the networks was proof the management team had made the right decision to back radio as a segment.</p>
<p>In the first half of the year, the combined revenue of ARN and TRN was A$138 million, representing 34% of APN’s total revenue. At the same time income from APN’s Australian and New Zealand publishing was A$234.6 million representing 57.7% of its total revenue.</p>
<p>Why not just separate the print and broadcasting assets, given print newspapers are in decline and radio still seems to offer income growth. This is exactly what American media corporation Gannet did in August. <a href="http://www.usatoday.com/story/money/business/2014/08/05/gannett-carscom-deal/13611915/">Gannet followed</a> News Corporation, Tribune and Time Warner in splitting its publishing and broadcasting and digital businesses into two publicly traded companies. </p>
<p>One logic behind the float naturally is that it is cheaper for any company to fund their operations in equity markets rather than with debt as the company can always decide not to pay any dividends. </p>
<h2>What will Fairfax do?</h2>
<p><a href="http://www.stuff.co.nz/business/industries/10446087/APN-mulls-NZX-float">Miller</a> has pointed out that floating APN’s New Zealand assets is “just a consideration”, and the company is open to other options, such as a trade sale. </p>
<p>In a trans-Tasman context it’s difficult to guess who would buy print newspaper assets. Investors certainly seem to have more appetite for broadcasting businesses. <a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11318017">The value</a> of a possible APN float could depend on the income derived from the NZ Herald paywall, according to one fund manager. But a paywall is hardly likely to boost the NZ Herald revenues as <a href="https://theconversation.com/numbers-tell-it-all-fairfax-is-still-a-digital-wannabe-30512">Fairfax’s paywalls</a> are contributing only about 2% of the company’s total revenue.</p>
<p>APN is planning to implement a paywall for the NZ Herald in the second half of this year, but it seems oddly reluctant to do so. Fairfax is not charging for its digital content in New Zealand either, so it seems the two companies are playing ‘wait and see’ in this regard. It seems likely that the nzherald.co.nz will launch its paywall prior to its possible float.</p>
<p>If APN puts its New Zealand assets up for sale, it is hard to see Fairfax getting interested in buying APN’s print assets, even though Fairfax lacks exposure to Auckland and the North Island newspaper market. Fairfax owns the leading newspapers in Christchurch and Wellington, while APN’s NZ Herald controls the Auckland newspaper market. It’s also questionable whether the company would be allowed to buy APN’s assets as New Zealand media ownership is already heavily concentrated, as the <a href="http://www.aut.ac.nz/__data/assets/pdf_file/0010/427681/JMAD-2013-Report.pdf">JMAD New Zealand ownership</a> report shows. APN and Fairfax dominate the newspaper markets with more than 80% combined market share. </p>
<p>However, the two companies are getting cosier in New Zealand. In July the companies signed a printing agreement meaning several Fairfax newspapers are being printed in APN’s Auckland facility. The agreement is of course a practical cost saving exercise, but it is an interesting example of closer cooperation.</p>
<p>There is another consideration. Fund manager Allan Gray holds 12.8% of APN’s shares and it has a 5.7% stake in Fairfax Media. At the moment it seems the fund manager is backing APN’s listing plans in New Zealand. However its stance could change very quickly. One should never underestimate the power of financial owners on media companies and their direction. As <a href="https://www.academia.edu/4097398/Financialisation_of_New_Zealand_media_ownership">Hope and Myllylahti</a> observe, “players such as private equity and venture capital firms have become increasingly involved in media corporations, largely because of lucrative restructuring opportunities”.</p>
<h2>No room for two floats</h2>
<p>New Zealand media corporate MediaWorks recently appointed Mark Weldon, the former CEO of New Zealand stock market operator NZX, as its new head. MediaWorks owns and operates commercial TV channels and controls half of the country’s commercial radio market.</p>
<p>Media has speculated that because of Weldon’s background in capital markets, MediaWorks will be soon floated, split or sold. I doubt that the New Zealand stock market would have room for two media companies. It is more likely MedaWorks will be sold or split. According to <a href="http://www.stuff.co.nz/business/industries/10394370/MediaWorks-held-sales-talks">Stuff</a>, the company was negotiating earlier on this year with Seven West Media about sale, but the deal was never sealed because the two parties couldn’t agree on price.</p><img src="https://counter.theconversation.com/content/31218/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>APN News & Media is mulling a float of its New Zealand media assets including its masthead The NZ Herald, The Radio Network (TRN) and group buying site GrabOne. The company is potentially selling 60…Merja Myllylahti, Lecturer, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.