Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Are newsagents as obsessed with possible Fairfax newspaper closures as News Corp?

Mark Fletcher
November 30th, 2016 · 10 Comments

IMG_1493I have no doubt we will soon hear from Fairfax that they plan to cease daily publication of some or all of their capital city daily newspapers. The circulation numbers are such that several days a week the production and distribution costs are not covered by sales and ad revenue.

I suspect the future structure of the total Fairfax business will play a role  in the timing of any announcement. There are reports of discussions with Nine Entertainment.

Fairfax is not the only newspaper publisher in Australia or the world facing the challenge of the future of its print product.

Every newspaper is in the same boat thanks to the disruption driven by mobile technology and social media that has fundamentally altered how, when and where we consume news.

There is a new challenge to what constitutes news. Thanks to better data on what people read, news outlets are more prone today to publish fake news, junk content and puffery than they would have back when they only had the print product. Publishers are pandering to what people like rather than publishing news.

You only have to look at the US election to realise the crisis confronting news outlets. News is not valued as it once was. We are in an era of celebrity where the opinions of a few matter more than irrefutable facts. The opinions of these few are soon spread as news thanks to the megaphone of social media.

This shift has been driven by social media platforms such as Facebook, Twitter and Instagram and the opportunity for everyone to be a publisher, an immediate, unedited, unmoderated publisher.

Ad revenue is a problem for print newspapers. It has all but collapsed for print newspapers. Okay, maybe collapsed is too dramatic a term. But it has declined considerably year on year for several years. This challenges the model of the physical product.

Also, Today there is a proliferation of news outlets we did not have in Australia just a few years ago.

If the numbers don’t work, the publisher has to make the tough call. It is all about the numbers.

As is their want, News Corp. is obsessed with when Fairfax will transition from daily publishing of the print product to another model. Their latest report, in The Australian, claims a cost of $330M projected by Citi, to be faced by Fairfax of they make such a move.

The obsession by News is not unusual given the rivalry between the two publishers and that Fairfax has more respect as a trusted news publisher than News. If News was committed to news, The Australian would report on the company’s own considerations and plans. I expect there are daily newspapers in its stable that do not pay their own way today, newspapers delivering mounting financial losses to the company’s balance sheet – if only the results were reported so this could be seen.

While this is interesting to watch, newsagents need to act. These changes are coming. Soon, daily newspapers will disappear, not all, but certainly some. When that first one goes, it will be a shock to many newsagents. It should not be a shock though. Smart newsagents have new traffic strategies in place that are bringing in new customers to purchase non circulation items.

What does your business look like without newspapers?

How do you consider yourself running a business without newspapers?

Are you ready in terms of your business plan?

Are you ready for how your bank will react?

Are you ready for how your landlord will react?

Are you ready for the doom and gloom reports that will defend upon the channel when the first paper closes? Can you weather it because it will be tough with our channel more tightly aligned with newspapers than any other single retail channel in Australia.

Are you working on your business now so it is ahead of the wave of change that will follow any closure of a major daily newspaper?

Or are you waiting for it to happen before you make any moves? If this is you, that approach will be too late.

Acting today involves placing newspapers in the most cost effective location in-store and reducing the visual impact of papers to messaging for your business. It requires you to engage with multiple strategies for attracting new shoppers into the business. And it involves you re-casting the image of your business in your external marketing. These points are just the start.

Look at your business data. Understand the role newspapers play: How often are newspapers purchased alone versus with other items? This and related analysis can help you understand the impact should daily newspapers cease in your area.

The report in The Australian is not relevant to the timing as Fairfax will make the decision based on the economics of the print operation – just as they have made decisions to cut their workforce several times in recent years based on operating costs. The cost of the decision is a cost of business, to be borne over time.

16 likes

Category: Media disruption · Newsagency challenges · Newsagency management · newsagency of the future · Newsagency opportunities · Newspapers

10 responses so far ↓

  • 1 ANDREW // Nov 30, 2016 at 7:13 AM

    Hi Mark
    do you think this has anything to do with us starting to get weekly calls asking when iam going to pay my fairfax account?

    3 likes

  • 2 Mark Fletcher // Nov 30, 2016 at 7:15 AM

    No.

    1 likes

  • 3 Colin, Malvern SA // Nov 30, 2016 at 7:21 AM

    Having previously resisted being a distributor of freebie local paper. We now stock it. Adopting a `go with the flow’ stance for upcoming period of turmoil. Trying to resist making assumptions how things will pan out.

    1 likes

  • 4 Chris // Nov 30, 2016 at 7:49 AM

    Customers who only buy the papers ask me how the shop will go if papers stop printing. There is a common misconception that I will not survive if papers are not sold anymore. I tell them to their surprise that in my store 96% of paper sales are sole purchases and paper sales account for approx 5% of daily sales. This means that yes, if papers do stop printing I will have a decline in revenue by around 5% in the short term (I say short term as I will gain revenue from the space and time freed up in the long term) but as the vast majority are sole purchases it will be a minor blimp on my business.
    News Ltd will have to consider the fact that a lot of distribution agents will stop delivering and circulation will free fall.
    Not relying on papers has been part of my business process for over 5 years now.

    8 likes

  • 5 James // Nov 30, 2016 at 9:25 AM

    A good summary from John Oliver, trigger warning if crass language offends.

    https://www.youtube.com/watch?v=bq2_wSsDwkQ

    1 likes

  • 6 allan wickham // Nov 30, 2016 at 9:29 AM

    First hour in the shop this morning, Papers = $80.00, Gifts = $120.00………I know where my future lies.

    7 likes

  • 7 allan wickham // Nov 30, 2016 at 9:29 AM

    P.S. Not 1 paper sold with a gift.

    2 likes

  • 8 Jim // Nov 30, 2016 at 10:52 PM

    The balance between Fairfax papers sold on subscription versus retail will result in a minor impact on retail businesses overall (with some exceptions). The impact will be on distribution agents; where Fairfax still holds significant market share (in NSW and to a lesser extent VIC). Some distribution agents will restructure their businesses and cope when Fairfax cease print. Though they will gain customers in some areas, the big loser in this will be News Corp; particularly in NSW where the resulting distribution gaps will hurt. I don’t assume they will be budgeting to double their fees to cover the distribution revenue lost to the channel? What would that tell agents in other markets.

    1 likes

  • 9 Jonathan Wilson // Dec 4, 2016 at 3:59 PM

    I do wonder what News is doing differently that makes their print papers viable when the Fairfax papers aren’t…
    Given all the digital promotion by News, I do wonder why papers like the Australian or the Telegraph or the Courier-Mail or the Herald-Sun are viable when papers like the Sydney Morning Herald or the Age are not viable.

    0 likes

  • 10 Shayne // Dec 4, 2016 at 4:15 PM

    Jonathan, it has much to do with pricing. Regardless of content, $1.50 for 80 pages represents much better value for consumers than $2.80 for 30 pages.

    0 likes

Leave a Reply

Your email address will not be published. Required fields are marked *

Reload Image