27/09/2005 - 22:00

Pressure on printers in profit push

27/09/2005 - 22:00

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West Australian Newspapers is embarking on a $189 million, two-year expansion plan that includes a $31 million redundancy provision to cover 220 full-time production staff at the company’s Herdsman headquarters.

Pressure on printers in profit push

West Australian Newspapers is embarking on a $189 million, two-year expansion plan that includes a $31 million redundancy provision to cover 220 full-time production staff at the company’s Herdsman headquarters.

This follows a rash of recent acquisitions in newspapers, magazines, radio and entertainment in the pursuit of “industry and geographic diversifi-cation”, and a near record $90.6 million net profit for 2005.

Latest circulation figures show Saturday’s edition of the company’s flagship, The West Australian, up 2,240 copies to 380,417, while Monday-to-Friday editions are up from 204,625 to 207,914.

An interesting aspect of the 8.6 per cent increase in net advertising revenue to $221.8 million was that the classi-fied employment component was up 25.2 per cent, an obvious reflection of the state’s economy.

The company has earmarked $158 million to upgrade The West’s presses and publishing system, and shift and upgrade its commercial ColourPress facilities from Victoria Park to Herdsman Park.

ColourPress took a hit recently with the loss of the $3 million contract to print national newspaper, the Australian Financial Review, a loss that will be reflected in the 2005-2006 accounts and led to the loss of 16 full-time jobs.

The new $40 million publishing system is scheduled for installation between May and December next year, along with the bulk of $76 million worth of new printing presses to be operational in January 2007.

The new press lines will produce most of The West Australian and the work now done by ColourPress, which prints the company’s regional newspapers, the profitable free classifieds Quokka newspaper among them.

During this period, ColourPress will be moved to Herdsman Park and will print The West Magazine, previously produced by PMP Print at a cost of about $6 million a year.

Interestingly, advertising revenue at The West Magazine fell 5.8 per cent to $9.7 million for a static $2.6 million profit this year.

The final four printing towers will be installed at Herdsman in 2007-2008.

The new presses will give The West greater colour capacity to cope with an expected increase in colour advertising revenue. It will also give the company the ability to produce new sections in its existing publications.

The $31 million redundancy cost is expected to save the company about $22 million a year from 2007-2008.

WA Newspapers recently paid $11.8 million for Geraldton Newspapers, which publishes both paid and free newspapers, including the flagship Geraldton Guardian, and operates two FM stations in the Mid-West region.

The Guardian, published three times a week, has been around for about 76 years and in recent years has posted annual revenues of $5.18 million and $5.95 million. WA Newspapers is looking for a first year $1.7 million profit from this operation.

Redwave Media, which operates AM and FM stations in Broome, Karratha, Port Hedland and FM licences to the remote areas of WA, is performing moderately, adding $100,000 to take its 2005 profit contribution to $1 million.

Niche market publisher WA Publishing, for which WA Newspapers paid $1.7 million in October last year, returned a profit of $300,000 in its first nine months of ownership.

The West’s string of 19 regional newspapers (now 21 with the two Geraldton papers) continued to perform well, contributing a $1.3 million profit rise to $4.2 million for the 2005 year, just ahead of 49.9 per cent owned Community Newspapers’ $4.8 million, up from the previous year’s $3.6 million (see story page 12).

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