Distribution is the Achilles heel of WA Newspapers Holdings Ltd as identified by its biggest shareholder, Seven Network Ltd, which has sought to spill the publisher’s board.
Distribution is the Achilles heel of WA Newspapers Holdings Ltd as identified by its biggest shareholder, Seven Network Ltd, which has sought to spill the publisher’s board.
In a wide ranging and exclusive interview with WA Business News preceding his public speech this week, Kerry Stokes repeatedly pointed to distribution as a huge issue for the company – both in its traditional newspaper market and in the online sector.
Mr Stokes believes the circulation figures and profitability make the case that WAN, notably through its key asset The West Australian newspaper, has failed to take advantage of population and economic growth.
“It hasn’t taken advantage of its position in the state; this state has grown at an unparalleled rate,” Mr Stokes said.
Flanked by his Australian Capital Equity Pty Ltd executives Peter Gammell and John Langoulant, as well as ACE advisory board chairman Warwick Smith, Mr Stokes gave an undertaking that he had no plans to restructure the media company’s assets in the way that had been done with Seven Network.
He also said he did not intend to grow his stake in WAN by any means, even through the creep provisions legally allowed him to.
However, this came with a caveat.
“I am not going to say no, I am not going to say yes,” Mr Stokes said.
“We have no intention of creeping, but if the shares dropped to a low price we would support them.” Clearly angered by being shut out by WAN’s board despite his position as its number one shareholder, Mr Stokes said he wanted to see the publishing company grow to generate a better return for Seven Network’s investment.
He said distribution performance was critical to that, both physically and online.
“It hasn’t taken advantage of getting its newspaper into the growing areas of the south or the north,” Mr Stokes said.
“Circulation is the lifeblood of newspapers.
“Anything which doesn’t promote that effectively to its optimum has to be resolved.
“These problems that confront The West have gone on for some years.” Asked whether he was referring to newspaper delivery delays created by the installation of new presses or the way newsagents were treated generally, he said it was both.
“It goes hand in hand, it goes together; if your paper is late the agents are going to be upset, aren’t they, because they can’t do their job.
“If, in fact, it’s late and they can’t deliver, suddenly you create all these tensions you don’t need to create.
And it goes on long enough, and this has been going on since 2004 to my knowledge; this is not just a new thing.
“When you find lots of towns within Western Australia that, over a period of 10 years are selling less than half the newspapers they were selling 10 years ago, you’ve got to think something is wrong.
“And there is something wrong.
It’s called distribution.” Mr Stokes has similar things to say about WAN’s internet strategy, which he believes would have a better chance working in concert with other like the Seven Network to compete with national rivals Fairfax Ltd and News Corporation Ltd.
“There is convergence occurring; we think there’s going to be advantage in bigger units acting cooperatively,” he said.
“We don’t think there’s going to be value in being one big unit.” Mr Stokes goes further in his attempt to allay fears that what he really wants is to effectively put his media assets together, referring to a past adventure when TVW7 Perth bought radio station 6IX and ran it very badly.
“We see the internet and the news space as the front door to the next line of commerce,” he said.
“Fairfax is starting to achieve it, News (Corp) is doing it, The West has done nothing.
“And to keep dividends up it means you are going to have to get more revenue base to be able to invest in this technology.
“We need to build the paper and its profit and invest some of the additional profit in being in this space.
“People don’t worry about the geography, they worry about the brand.
“The West has missed an opportunity to build a brand in the same way that Fairfax has already done it.
On the other hand, if you want to build a brand quickly, the best way to do that is on television.” In this latter respect, Mr Stokes adds the clarification that he speaks of working in joint venture rather than paid advertising.
