Bill Express took its dispute with newsagents and their representative body, the Australian Newsagents’ Federation, public yesterday in a communication designed to paint the ANF as the bad guy. This comes on the back of the removal of a marketing subsidy of $250.00 a month from each of its 3,500 newsagents – an action which has incensed newsagents.
Yesterday’s communication takes the Bill Express / newsagent relationship to its lowest point ever. While in the past the ANF has run defence for Bill Express, that appears unlikely now. This is what, in my view, has caused Bill Express to come out fighting against the ANF and to engage in what reads like breathtaking spin.
Bill Express says it has paid the ANF $600,000 over five years. So what? The ANF endorsed Bill Express in 2003 and over the next two years, through this endorsement, facilitated Bill Express bringing on 3,500 locations. That’s $171 a location over five years. Not much.
The 3,500 newsagents took on lease liabilities to the tune of $87 million – money which flowed to Bill Express. Nice work if you can get it.
Each year, I’d estimate that newsagents process, on average, $40,000 a year through their Bill Express provided eftpos machines. Even though the merchant fees for newsagents are low, I’m confident that Bill Express makes a clip of around .3 of a cent per transaction. If I am right (and I think the .3 of a cent estimate is low), this has been worth in excess of $2.1 million over five years.
Newsagents sell massive amounts of phone recharge a year through the Bill Express / Dialtime equipment. For many products, newsagents commissions are lower than through other platforms. This suggests to me that Bill Express is making an above average clip from recharge – maybe tens of millions. What a great tollway newsagents have provided.
So, is the $600,000 demonstrative of respect for the efforts of the ANF and suypport for newsagents? No! It’s crumbs, far less than the effort and access deserved.
At some point soon, Bill Express is going to need to disclose to the ASX that it has upset its network of newsagents to the point where the network will shrink and revenues will be impacted. It is only convoluted multiple contracts which stop this happening more rapidly. Thankfully, the contracts cannot force newsagents to process bill payment or sell phone recharge through the Bill Express terminals.
Is the sharemarket informed? I’d say not. You can’t have what you claim to be your most important retail network offside and seeking legal advice on how to terminate contracts and not let the market know.
It’s through people like you, some of us investors can be (and remain) informed about BXP’s relationship with its retail networks.
Any look through their accounts show up a lot of “related party” transactions and their not making much anyway. A case of management serving their own interests, not their retailers and as a flow on effect, their shareholders.
Bill Express were never going to like the statement released by the ANF. So while i’m a little suprised that they would sink as low as this, action on their behalf was almost inevidable.
Bill Express’s reaction to the ANFs statement clearly demonstrates why industry associations should not be the veichle by which commercial agreements are negotiated and entered into. The ANF’s responsibility must lie primarily with that of their members – unfortunatly this comes to the detriment of their commercial relationship with Bill Express.
I can’t say that the statement by Bill Express is going to be effective on their part, nor can I say it isn’t designed to spin the truth – but nevertheless both Bill Express and the ANF have a lot to answer for.
We can only hope that this doesnt turn into a point scoring war between Bill Express and the ANF – if it does, newsagents wil be the ones caught in the crossfire.