News Corp. Australia has this morning released the long-awaited results of the national newsagent remuneration review. I see the changes announced as a reinforcement of commitment to newsagents from News. The headlines as I see them are:
Three year contract. This gives newsagents certainty, something they can sell. It will help newsagency sellers and buyers. But most important, the three year contract term will help banks better understand and price the value of a newsagency business. This should make borrowing to purchase a newsagency easier. The three year term also encourages newsagents to consider capital investment within the context of such a term.
Consistent fee structure. Under Kim Williams leadership News transitioned from a state and regional business with many silos each with its own approach to management and each with its own newspaper delivery fee structure to a more centrally run company. The new fee structure of essentially two fixed fee-per-copy fees – category 1 (20 cents a paper) and category 2 (25 cents a paper) – quits close to fifty fee structures. Gone is a fee that reflects a percentage of cover price. I see this as focusing attention on the distribution business as a freight business.
Fixed fee-per-copy replaces sliding scale delivery fee. Gone is the discount for second and third newspapers delivered to one address. The new approach treats each delivery as a delivery. This move to a fixed fee-per-copy approach is sensible from what I can see. This change should increase the income earned by many newsagents.
They remuneration decision shows that News is committed to the newsagency channel. Beyond the increase in fees, the more valuable changes are contract tenure and the fixed fee-per-copy. My understanding is that these moves will increase the income earned by distribution newsagents.
While newsagents will be frustrated that they have to wait for six months for the remuneration changes to take effect, the time is necessary for News deliver changes to its internal systems. The delivery pricing model is quite different to what some News systems have been used to.
I see the remuneration and contract changes as part of a broader process being undertaken at News. The company has work to do with retail newsagents to drive single copy sales. As a retail only newsagent this issue is important to me if I’m to continue to sell newspapers.
News also is yet to fully address the issues of consolidation following the suspension of the T2020 project in Queensland earlier this year. That said, the FAQ document accompanying the announcement indicates the company is supportive of voluntary territory consolidation. I’d be keen to see it go beyond this and actively encourage newsagent-driven distribution territory consolidation.
News has a website with some details. All affected newsagents will start receiving letters from today.
While these are my views, what really matters is what other newsagents think. Over to you…