End of an era in regional publishing as APN puts papers up for sale

This week APN News & Media announced it planned to sell off its regional newspaper business.

It signals the end of an era. Regional publishing has been at the heart of APN since Tony O’Reilly bought the Queensland newspapers from Rupert Murdoch in the late 1980s.

The sale paves the way for Murdoch’s News Corp to buy them back. As well as being a 14.9% shareholder of APN, News Corp already has dailies in Cairns, Townsville and the Gold Coast so the additional Queensland papers could complement those. APN also has a bundling arrangement with News to give paid regional newspaper subscribers access to News Corp titles. Added to that News Corp’s Executive Chairman, Michael Miller, is a former CEO of APN News & Media. It’s clear they would know how to value the business for a purchase.

APN’s newspapers comprise twelve daily papers and more than 30 community papers and specialist publications. They cover an area from Coffs Harbour in Northern NSW to Mackay in North Queensland.

Most of the papers were originally founded as family or local concerns, often with their own printing press. But under the management of APN in recent years a lot of the production was centralised to the offices of the “flagship” Sunshine Coast Daily.

That proved to be a hard sell, as editors in North Queensland or New South Wales felt their pages were losing the local touch readers demanded.

For city dwellers it’s difficult to register the sheer size of the geography APN’s regional publishing covers. And from a commercial perspective it seems the logistics and costs of running a collection of small newspapers across such a spread has just become too painful.

The inside joke about APN has always been that it is the biggest media company no one has ever heard of. That might have been true before the company rebranded its outdoor business and highly visible billboards in Melbourne and Sydney suddenly appeared bearing the APN name.

But in regional Queensland and Northern New South Wales it has been well known for years, a vital part of the local economies and a key training ground for young journalists.

Some of the titles are over 150 years old. The Daily Examiner in Grafton and The Queensland Times in Ipswich were both founded in 1859. Five of the other dailies are more than 140 years old. That represents an enormous amount of history and an incredibly valuable connection to regions such as Rockhampton, Mackay, the Fraser Coast and Lismore.

But the web has well and truly arrived in these places, and despite holding out until 2006, APN did eventually join the digital race.

With such a long print tradition it was inevitable that a digital transition would not be smooth. In addition to the same challenges that metro publishers face in becoming digitally focused, APN also had to deal with a unique set of issues such as local advertiser expectations.

From this week’s news it appears perhaps the corner has been turned. The company reported consistent digital audience growth and, after introducing paywalls, 86% conversion to subscriptions of those who trialled the offer.

But it seems the effort has been too much and it’s time to get out.

So who might the buyers be for a network of newspapers with shrinking print sales and some digital growth, where costs have been stripped to the bone, but where the footprint covers a potent mix of rural, mining and tourism based regional economies?

The two obvious starters are News Corp and Fairfax Media. Either company could roll its digital technology into the APN network and bolster the sales teams for network advertising sales.

Fairfax might be interested, to help support its Domain business. Domain struck a resell deal with APN in 2009 which gave it reach into northern property markets it otherwise couldn’t get to. At a very low price it might be interested. But it’s hard to see Fairfax getting involved in the slog of local publishing in those regions.

A dark horse might be The West Australian. It showed some interest a few years ago because of the Queensland mining jobs boom and the chance of joining east coast mining job ads to its west coast listings. But mining is on the wane and The West’s digital platforms are now all sourced from Yahoo. So a purchase like this is probably unlikely.

That leaves a possible break up and a series of smaller sales to independents and local groups. In the long run that might be best for local markets, but it would be a slow and difficult process for APN unless there was a conglomerate of small groups ready to go and with a network ad sales plan to execute.

So while Fairfax probably has the cleanest balance sheet of the big players, my bet would be on News Corp picking up a bargain by buying back the papers it sold in 1988.

Under that scenario the winners - apart from News - would be readers and their communities. It might seem counter-intuitive that further reduction in the number of news providers through a purchase by News Corp would be a good thing for readers, but in this case the alternative might be that the papers actually cease publishing in any form. News Corp would offer welcome stability, publishing expertise in all formats and a solid commitment to the regions.

There might, however, be some consolidation of titles particularly around the Sunshine Coast, where The Sunshine Coast Daily and the Noosa News compete directly with existing News Corp publications.