Exclusive to The Middle East Online
Edited by Nelly Tawil
APN has found a buyer for its Australian Regional Media (ARM) business , with News Corp agreeing to purchase the newspaper arm of the media company for $36.6 million.
ARM includes 12 regional daily newspapers in New South Wales and Queensland, 60 community newspapers and over 30 regional news websites.
“We look forward to working with ARM team to secure the purchase of these strong newspaper brands in the growing regional centres in Queensland where we currently don’t have a presence,” said News Corp Australia executive chairman, Michael Miller.
The proposed purchase includes the ARM printing facilities and should lead to “significant cost and efficiency synergies” through consolidation of production and distribution operations Miller added.
APN, which has assets in Australia, New Zealand and Hong Kong, posted a $10.2 million loss for FY 2015 earlier this year, largely due to a $50.8 million impairment of its news assets. ARM posted a revenue decline of 7%, down from $202.1m to $188.5m. The division’s local display ad revenues was the only part of the business to post growth, up 1% year-on-year from $86.2m to $87.1m.
APN chief executive Ciaran Davis said in a statement that despite some “tough headwinds” the business had delivered “positive results”.
He flagged a $40m reduction in costs for the division in the last three years, but admitted its move to a digital strategy would “require further investment, particularly in fast-tracking the digitsation and monetisation of its loyal and local audiences”.
“APN has been a long term supporter of regional publishing in Australia however, our future investments must remain focused on growth assets and opportunities,” he said.
“We have therefore commenced a process to divest ARM. New ownership should give ARM the flexibility to invest where required, to continue to providing quality news and content to its audience, without having to compete for APN’s capital.”
Last month APN raised $160 million in institutional support and $14.4 million from retail investors as part of a $180 million rights offer. The institutional shortfall bookbuild attracted strong demand at 65 cents a share, a premium of 12 cents above the offer price of 53 cents.
APN chairman Peter Cosgrove said the funds will be used to pay down existing debt as the business focusses on its radio and outdoor media assets, which include Kiis FM.
“The divestment of ARM is an historic day for the company as APN has been the custodian of some wonderful newspapers whose community roots go back over 150 years. We are now
passing that ownership onto another media group with deep publishing experience across regional Australia,” he said
“We will be a more nimble media company purely focused on growing our media assets of radio and outdoor.”
APN shares are currently sit at $0.63.