I think a dramatic change could soon appear in the newspaper industry in Australia with Fairfax.

Here is an interesting article in the Australian titled Fairfax has some trouble with the fair facts

For those who have not been following the story, Fairfax owes about 2.5 billion dollars. It has debt covenants with the banks and these are close to the limit.

The market is clearly worried. Fairfax's share price was $4.80 at the start of last year, last month it was $1.32 that is a 72% drop. Now it is 93 cents. A 30% drop in a month. Two days ago, it went into a trading hold.

Now they are looking here to make a special issue at 75c a share, a discount to market of 20 percent on what is already a cheap price to try and raise 684 million dollars.

What is troubling to the newsagency industry much of the problems are blamed on the newspaper side of the Fairfax! That is why I am concerned.

Yesterday Fairfax released some bad financial figures to the market. The problem is their metropolitan titles, The Age and Sydney Morning Herald. These were once jewels in their empire. Now it is dragging them down

However, the immediate danger to them is their debt. It is about 2.5 billion and if it gets much higher the banks could move. The immediate solution for them would be to move some of their debt to newsagents. This may be why their policy now makes newsagents responsible for some booked advertising debt if the person does not use a credit card.

The Lucky Charm Group (TLC) is an example of what a small group of committed newsagencies can do together. For TLC, this year has been terrific. What is surprizing is the benchmark figures, they released at their conference.

I can believe it as I remember a person who worked in a newsagency for years. He became an expert on newspapers and magazines. He decided to buy at a bargain price a rundown newsagency, only to see it go worse. He discovered there is more to a newsagency than newspapers and magazines. Realizing that he was not doing it alone he decided to join TLC. Some of the ideas caused positive changes to his shop almost immediately. His business turned around.

What is disturbing is their big growth was not in newsagency lines. It also was pleasing that many winners at their conference, use posbrowser.

One of my clients got this story about them. Click on the picture above for details. I was shocked so I rang Neil the newsagent up immediately. We had a talk about it.

Neil has no idea how the story got out. Although he did tell me that they have had a rough time with the bushfires there. He reported the only thing working there now is our computer system.

One part of the story they confirmed is that now they have a problem getting drivers and that is causing problems with the Age. I hope the Age is more reasonable than the story states.

In Australia, about 10% of newspaper circulation is free newspapers. This competes directly with many of our client’s newspaper products. So some good news for many of our clients is that now overseas free newspapers are reporting serious trouble.

The problem is advertising. Free newspapers rely on advertising for their revenue since that revenue is down many free newspapers are in serious trouble. Some of the big ones have closed. This has resulted in a dramatic drop in circulation.

This client of ours, Esperance Newsagency has sold five major winners, including four division one winners since 2007. They have had three major wins in the last few months.

Here are the latest figures from the Australian Audit Bureau of Circulation for the December quarter 2008 just out. South Australia has a sharp drop. The rest are as good as could be expected.

An interesting report in the Australian. It shows the same trend is continuing with newspapers that I blogged about in February 2008. Generally, the national papers are up and the state newspapers slightly down.

Overall compared with international newspapers sales overseas for example in the USA and Britain we are doing well especially considering the current economic crisis.

From what is happening, I think the newspapers have delivered as good a result as can be expected.

Newsagents should be more concerned with magazines than newspapers as the results for weekly magazines from the Audit Bureau of Circulation are just dismal, the magazine companies blame the economic times but I think it is the internet. 

{Please click on image for more detail}

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Online advertising is continuing its growth. You can see that in the newspaper advertising getting smaller.

Although the rate slowed, its growth is massive.

Much of that has to be from newspapers.

I am sure that it is worrying to some like Fairfax which had about 40 per cent of its newspaper revenue, I was told from advertising.

Well the Herald Sun have great hopes on their Monopoly promotion set for the 4th February. Previously it was one of the most successful newspaper promotions ever. Last year this promotion helped to sell about 300,000 extra copies.

So today Herald Sun are launching a massive TV, radio, press and online marketing activity to support its roll out. We hope it does well again.

I was reading this US study on the public for news sources. Although it is American, the same trend is occurring in Australia too.

To me, the most important conclusion from reading this article was this table.

Despite having an increasing variety of methods to get the news today, the proportion of people not getting the news has increased substantially over the past decade. Today’s public is less interested in the news!

This trend, I think we can expect to continue. The news industry not just our industry newspapers is in a downturn. It is ironic that newspapers are not the future in newsagencies.

The family flees Vietnam. The daughter died during the sea crossing. They set up a new life for themselves here. The son (Chinh Nguyen) has a dream to own his own business so he becomes a newsagent. Then there is a robbery for $195 in his shop during which Chinh Nguyen is killed.

A good man is killed for $195 and his murderer gets 7½ years nothing seems fair or right in this equation.

His Mum statement was so true. "Australia is a good country, so what happened to my son? He worked so hard, he did the right things and did not harm anyone. Why did this happen to my son?"

Terrible so sad, a tragedy!

John Sands have finally issued a complete stock file with categories for example anniversary, female relations, etc.

It is available here for downloading.

For this and other supplier files, please visit here

The NSW government will review whether to sell off the NSW lotteries.

So the Australian Newsagents Federation (ANF) announced that they want a "seat at the table" as part of the review. They are concerned about how these new owners would run NSW Lotteries.

But the ANF should be concerned about what the NSW government will do once it sells the lotteries.

Once sold, the NSW government to raise more revenue might allow new players like Intralot in. Then NSW newsagents like Victorian ones might have to pay extra to keep what they have now.

The Australian has an interesting article on the current situation with magazines from the distributors and publishers side as I stated, it is the weekly magazines that are in real trouble.

From my experience with Bill Express, I think newsagents have to move quickly to notify these distributors and publishers that they want to help with these efficiencies but it must not be at their expense.

Unlike Australia, US newspapers are continuing the slide down. A report states that

Combined weekday circulation of all 507 papers that reported circulation totals this year and last averaged 38,165,848 in the six months ending in September, 4.6 percent below 40,022,356 a year earlier.

To newspapers there it is a double blow as they have less circulation revenue and less advertising revenue. So to boost revenue, many papers there are increasing newspaper prices. This increase is causing only a small circulation drop. If so, a good case could be made in Australia for increasing newspaper prices.

There is an interesting article here on the start of the ACCC case against Bill Express and Mobius.

It is in the Federal Court. Unfortunately, the ACCC record in the Federal court is not brilliant and with $16.57 million a year in lease payments, I doubt the leasing company-Mobius will just go away.

I also doubt that this case will simply stop at the finance company now. Maybe that is right, that it should not stop there. Over $16 million dollars a year is a lot of money to lose for the industry! That is more than the entire IT budget for the industry. Surely the industry should not just forget about it and walk away. Maybe some should have to show that they did do the due diligence expected of them.

One of our clients won the award at the Shepparton Business Hall of Fame 2008.

Lucky Lovell's is one of the largest newsagencies in Australia and an institution in Shepparton. Also one of the most progressive.

Kerryanne and Renee from Lovell's Newsagency were awarded an award at the Shepparton Business Hall of Fame 2008 for Business and Service Excellence.

A newsagent asked that I look at Lovatts publications. He felt what the industry was saying, he was not getting. Was he doing something wrong?

According to the Wikipedia article here. {link removed}

Lovatts Publications… has developed into Australia's leading crossword and puzzle publishing company, with a range of 20 crossword and puzzle titles, 12 in the top 10% of magazines sales.

The problem I have in doing a benchmark on this section is that it is difficult for me to know which are Lovatts magazines. So I use a simple rule, if in the title it has Lovatt in it, it is one.

I then took a benchmark of all the magazines sold in newsagents from the three major suppliers YTD. Weeded out a few and got 4617 publications. So my top 10% would be 462 publications. In that list, Lovatts got 15.

So they are selling better in newsagencies, than elsewhere or they are underestimated in the industry. This maybe as this organisation is active in the newsagency industry. I know I have spoken to them a few times and it has always been positive. They run good promotions. They have their own newsagency ordering system which has bought their returns down so saving newsagents’ cash flow dramatically. Because of this, newsagents do promote Lovatts.

Looking at the percentage clearly they are in total, a minor section with 1% of the total. My concerns started when I looked at the comparison with last year YTD figure when they were 1.4% of the total. That is a huge drop in such a small section.

The trend on my observations for Lovatts does not look good

YTD...............8.40% of NDD DISTRIBUTION products and 1.03% overall.
Last YTD.....10.74% of NDD DISTRIBUTION products and 1.44% overall

Quarter..................7.41% of NDD DISTRIBUTION
Last Quarter...........8.54%

My first thought was maybe this shift from NDD doing the orders has not proved effective. Maybe we are seeing the effect of undersupply. NDD have after all access to more information than Lovatts do. Sometimes it is better to piggy back on someone else rather then do it yourself. Or maybe the internet and publications expanding their puzzle section is having a long-term affect. I cannot say. All I can report what our own benchmark figures are saying.

Still I suggest that newsagents look into their magazine sales reports and make their own conclusions how it is going.

The top three sellers in this section are

LOVATTS COLOSSUS CROSSWORDS
LOVATTS CLUEWORDS
LOVATTS MEGA!