EconCeleb 2008 is a one day conference in Los Angeles today about celebrity content, how old and new media can monetise this and how content is distributed. It’s the kind of conference I’d love to attend because it would provide an excellent insight into trends which are sure to impact magazine sales in coming years.
Moody’s Investor Service has downgraded Mobius ELR-01 notes. 23% of the ELR-01 pool is made up of debt associated with Bill Express equipment in newsagencies. In the announcement about the downgrade, Moody’s said
The rating action follows the appointment of liquidators of Technology Business International Pty Limited (TBI) and the appointment of administrators to a related party, Bill Express Limited. TBI is one of the originators and primary services of the receivables securitised through the transaction. Moody’s also notes the further deterioration in the performance of the underlying receivables pool as well as the residual uncertainty surrounding the servicing transfer process currently taking place.
In particular, Moody’s notes the following:
– TBI was placed into liquidation on June 30, 2008 and Bill Express into administration on July 8, 2008. Bill Express is a provider of payment and transactional services to a large number of Australian newsagents. The services are available via equipment provided and leased to the newsagent obligors by TBI, with the underlying leases representing the Mobius ELR securitised pool attributable to TBI.
– The services previously provided to the obligors by Bill Express have been discontinued, rendering the computer equipment ineffective.
– While Moody’s believes the contractual arrangements to repay the equipment leases in full continue to be legally robust, there is a significant risk of non-payment or delay in payment by the underlying obligors. Any such action may result in both temporary payment shortfalls and permanent principal loss to the Mobius ELR-01 notes.
– The AUD 15.6 million TBI-associated portfolio currently represents approximately 23% of the Mobius ELR-01 pool. The rating action incorporated Moody’s views with regard to the likelihood and extent of any potential loss suffered by the transaction as the result in turn of the situation surrounding TBI and Bill Express.
So, we now know the amount of newsagent money involved – $15.6 million. This figure, more than anything else I have published here, ought to attract attention from newsagent associations to fix such an expensive problem for newsagents.
At our Frankston newsagency, Simon and the team have gone all out to launch Grazia. They hired red carpet and created ssveral great displays. Yesterday, all team members dressed formally. Simon also created a fashion parade video which plays on a loop above the main Grazia display. There is a small clip from the Grazia TVC at the end of the video.
Walking into the shop at Frankston, there is a real sense of theatre and a great feeling of excitement. The Grazia launch has been an excellent opportunity for the team to really shine.
A meeting of creditors of Technology Business International Pty Ltd (TBI) was held on July 17, 2008 at the offices of Chartered Accountants Rogers Reidy in Queen Street Melbourne. TBI is the company with which newsagents signed for the lease of equipment needed to run Bill Express.
At the time of preparation of the notice of the creditors meeting the company had five creditors, the largest being HSBC Bank Australia Limited which was owed $3.4 million. This was secured debt. Mobius Financial was listed as a secured creditor with $1 in advised debt. Charters Paper and Dueltek were listed as being owed $72,473 and $907 respectively. The final creditor was Embedeed Technologies showing as being owed $47,755. Embedded Technologies operated from the Bill Express office in Eaglemont.
On the ASIC Summary of Affairs of a Company From 509, Sandro DiDonato, Director, declared that TBI had assets of $240,829 of which $225,629 was cash at bank and $15,200 was sundry debtors. This is extraordinary for a business which signed leases a few years earlier with 3,500 newsagents for amounts of between $26,000 and $32,000 per newsagency.
Newsagents were not notified about the meeting because they were not considered creditors by the liquidator. The liquidator’s representative with whom we spoke said that “TBI had no case to answer to newsagents”. I am sure that newsagents facing months and even years of paying the TBI lease on worthless equipment would have a different view.
One can only hope that ASIC and other authorities will invest sufficient resources to uncover what really went on with TBI, Bill Express, OnQ, ETT and all o the other businesses connected with this mess.
Go to my blog post from June 28 for more information on the TBI group. That post includes this information:
TBH and TBS remain registered with ASIC today.
The Advertiser/Sunday Mail are looking for energetic motivated individuals to join an exciting new venture preparing and delivering newspapers to home delivery and retail customers.
This text is from an ad running at CareerOne for the Adelaide Advertiser, part of News Ltd’s stable of newspapers. South Australian newsagents are naturally concerned about what this exciting new venture may be. Reading the rest of the advertisement, it sounds like the work delivery only newsagents undertake today.
Some newsagents are giving up uneconomic runs so the new venture may be around that. The rising cost of fuel along with pressure from within publishing companies for a reduction in supply chain costs means that the newspaper distribution model is in play at the moment.
It will be interesting to see what the new venture in South Australia is and what ipact, if any, it has on newsagents.
Partworks season is in full swing with several new partworks being promoted at the front of our newsagencies this week from the Spongebob Krusty Cards to Dora Dress Up and Go to The Classic Australian Movie Collection. We have displays in our regular partworks section as well as a display of the Classic Australian Movie Collection at our newspaper stand.
With the TV support for these partworks it’s essential we leverage the opportunity as much as possible.
The Newsstand Association of Philadelphia has started a blog. I like the mission statement at their blog:
The Newsstand Association of Philadelphia (NAP) was formed by newsstand owners to provide solidarity and support for each other, while providing a much needed service for the general public and business community.
I found their website because I have been researching how newsagents, newsstand owners and similar business operators organise themselves overseas. In particular, I wanted to see how their assocaitions operate, whether they are commercially active or not. One or two are, the majority are not, preferring instead to be focus on member services.
I really like their commitment to solidarity and support.
Some newsagents continue to face significant difficulties in trying to establish a new ADSL connection to their business in the wake of the collapse of the Broadband connection provided through the recently collapsed Bill Express. There are reports of ISPs refusing to establish a new ADSL connection without the permission of the previous providor. While some newsagents have been successful in jumping this hurdle, some have not, leaving their businesses without broadband access for the moment.
This is just another impact of the collapse of Bill Express on small businesses which can ill afford the business disruption.
The loss of the Bill Express network is being talked about in Apple circles. A report at Apple Source documents consumer frustration at not being able to get iTunes gift cards from the usual retailers. The report is not good news for Coles, Myer, Target and JB Hi-Fi.
Meanwhile, Woolworths are making the most of their good fortune over Coles and advertising on radio that they have mobile phone recharge including Optus and Vodafone.
Newsagents have received intimidating correspondence from Mobius Financial Services Pty Limited today outlining what Mobius considers is their obligation in relation to the rental agreements around the Bill Express equipment.
The correspondence demonstrates how completely newsagents were been conned by Bill Express, those who promoted the Bill Express offer to newsagents and those on whom newsagents relied to undertake due diligence on their behalf.
While Bill Express Directors are shareholders are walking away from debts of $250 million and probably more, newsagents are set to be chased for years to pay off equipment which is useless.
How ironic? Big business walks away and small business is left to pay millions for equipment it cannot use. No wonder newsagents are angry.
Newsagents were presented a single package of documents when they signed up for Bill Express. We were told that we had to sign all of these to get Bill Express in our businesses. While the fine print might have revealed that one agreement was with Technology Business International (TBI) and another with Bill Express and that there was no relationship between the two or no common ownership structure, mopst of us trusted the representations of Bill Express, their agents and the ANF, all of whom promoted and recommended we proceed.
TBI sold the book debt to Mobius earlier this year and called in the liquidators two weeks ago. Only then did newsagents see how much they were conned.
While Mobius will say they bought the book debt fair and square and that they are not party to the Bill Express problems, such a position is, I would hope, open to challenge.
We have created a second display to promote the launch of Grazia at Forest Hill at our counter. Unlike the display in my previous post, this display uses the colour materials provided by the publisher. This counter position is the most successful and valuable magazine display space in our shop. Last week, we increased sales for Gardening Australia by 300% by promoting it in this position. I’m expecting good things from our Grazia promotion in this location.
We are promoting the launch of ACP Magazines’ Grazia in several locations at our newsXpress Forest Hill store today. The feature is the main aisle end display:
While we received an excellent selection of posters and other materials, we went for a monochrome backrgound in an effort to make the product itself the hero. We have found this approach works well for fashion related titles.
Work started three days ago on a new Sophie Randall card and gift shop in Toorak. This will be our fourth Sophie store, the first opened in February last year.
This shop has its challenges: 60 sq metres, round in shape, 70% of all walls glass, two entrances, no back room and a column right where we don’t want it. It presents tremendous opportunities: great demographic, village shopping feel, being small, being right on the street and an opportunity to play with the Sophie model.
More newsagencies are developing plans which draw on the Sophie experience. We have a some fixtures designed specifically for us which some newsagents have installed in their businesses with our permission and they are helping develop good gift and social stationery departments. One reason we started Sophie was to gain experience which could play well in traditional newsagencies.
Office Depot, the US office supplies chain, has opened its first “green” store – in Texas. The press release from the company claims “green” status on the basis of energy and water use efficiencies built into the store and the range of “green” products it will offer customers. This is a point of difference we must expect to see in new retail offerings. Older style retail businesses like ours will need to find ways to compete for the “green” interested consumer – that should be all of us.
Connect East is the new toll road in Melbourne which opened a couple of weeks ago. On June 30, Bill Express announced that it’s merchants can accept Connect East account top ups. We heard at the Bill Express Creditors meeting on Friday that it appears the company was trading while insolvent well before this announcement was sent out. Bill Express collapsed just over a week later.
Our Forest Hill and Frankston newsagencies are well positioned to sell Connect East product. Unfortunately it is an opportunity we cannot act on. I approached Connect East two weeks ago and they advised that they will not review their top up situation for six months. I wish they would review this sooner.
Some newsagents have expressed their concern to the ANF about the contact the organisation reported last week as having had with Mobius Financial Services Pty Limited over the Bill Express related equipment lease a arrangements.
The ANF did not seek approval from newsagents prior to making contact with Mobius. The concerned newsagents want the ANF to cease such contact as it does not act on their behalf and has not sought their advice on this matter.
The key focus now of newsagents in the wash up of the collapse of Bill Express is the status of the Bill Express related equipment rental. Some newsagents have as much as four years of $495 (+GST) a month to pay. Many newsagents entered into these lease agreements with technology Business International on the recommendation and endorsement of the ANF.
Mobius, an Allco company, bought the lease book from Technology Business. I have put some questions to the liquidator of Technology Business to see whether visibility can be gained around the agreement with Mobius.
Too often we clutter our counters with offers in pursuit of impulse purchases. It starts with one item which works so we add more and more until the counter is a mess of colour and small displays. Reps from suppliers pressure us to take offers, structuring deals do they sound great.
At a good newsagency counter, less is more. If you have a great offer you want to promote, take something else off. Less noise around an offer makes it more likely to be seen.
The key is to have the right offers at our counter. In many instances this will mean removing some of what we have to only focus on what will surely work.
We have had Darrell Lea product for around eight years. I like the brand and how they manage distribution. We have achieved good success placing several Darrell Lea products at our counters, outside the traditional Darrell Lea fixturing. Liquorice Allsorts, Liquorice Bullets, and Milk Chocolate Smiles work especially well at our Tattersalls counter.
Unlike what you experience at a petrol station, we don’t have to make any pitch, our Darrell Lea selections sell themselves – because the counter is uncluttered.
We change the mix every couple of weeks and never display more than three Darrell Lea products at this counter. Less is more as they say.
The photo is of the front page of the Sun Herald which I got in
The promotion of the Brisbane Times website so boldly above the masthead of the newspaper is a reminder to newsagents of the disruption occurring to their traditional business and a reason to consider carefully all capital investment in the future.
While newspapers are important, we need to find our own Brisbane Times and invest appropriately in our shops.
The Brisbane Times is also being supported by a billboard campaign from what I could see.
Tower Systems today received calls from several newsagents saying their Bill express supplied broadband had shutdown. A publisher confirmed they had received twenty such calls from newsagents. The Tower support team is able to assist to ensure that magazine invoices and other business critical files are accessed for Monday.
It would appear that the operational pain newsagents will suffer as a result from the collapse is far from over.
Cuscal issued revised information for BOPO customers yesterday. They also issued a media release following the Bill Express creditors meeting saying that deposits were safe. If I heard correctly at the Bill Express creditors meeting yesterday, one account holding BOPO customer funds is currently frozen. The Administrator undertook to look into this.
The Queensland Newsagents’ Federation today issued a special bulletin to QLD newsagents advising that BOPO card holders should withdraw funds by August 15. The QNF bulletin included a helpful sign to be placed on the window. I know from my own shops that BOPO customers have many questions and are coming to newsagents with these.
For years the Australian Women’s Weekly cookbooks owned the cookbook segment in newsagencies. Now, they account for half the sales thanks to other titles and magazines which satisfy the interest through special themed issues. With retail space, especially in shopping centres, costing so much, we need to allocate space carefully. We have not reviewed our AWW cookbook space allocation for several years. We plan to do this in the next few weeks bu carefully analysing return by title. Ideally, I would like to reduce stock on hand to three per title and to have replacement stock ordered when I am down to one. ACP has our sales data so this ought to be easily achieved. Their supply chain can quickly ship replacement stock. It is better for me that they are the warehouse and not my shop.
We have the same space allocation for cookbooks that we have for crosswords. Crossword sales are double those for food and they are growing at four times the rate for food.
The Globe and Mail has a story about newsstands closing in Canada. Newsagents should read this. Not to get depressed but to understand the need for retail reinvention.
Sure media disruption is impacting the newsagency / newsstand business. My view is that the bigger impact is our channel’s failure to invest in our own future, our failure to create a compelling current retail offer.
While some have, the majority have not. Shofits are often the same and built to be set and forget. We let our suppliers dominate what we do and how we do it. We are not in control of what could be exciting retail reinvention.
Read the Globe and Mail story and commit that this will not be what they write about you.
Mark Hawthorne and Jesse Hogan of The Age continue their excellent coverage on Bill Express in the newspaper today with a report on yesterday’s creditors meeting. This story has a way to go yet.
We are promoting the OzLotto jackpot above our main magazine aisle again this week. not that Tattersalls would care. They only care about how we promote in their space. Smart retail is about leveraging traffic from one department to purchase from another.
If only they treated us as business people and recognised this type of additional effort. Newsagents across Victoria are going all out this week yet Tattersalls is only interested in what we do in their area and to their specific standards.
Retail is about creating theatre and good theatre is about the unexpected. Customers become store blind with the same old same old in the Tattersalls area. hence our efforts deep in the store and elsewhere around the $50 million opportunity.
