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BusinessDesk: APN, Fairfax, PMP may share NZ printing presses to drive out costs

Posted in News

By Pam Graham

Rivalries in the New Zealand newspaper industry, dominated by APN News & Media and Fairfax Media, are being put aside as publishers start discussing whether to join a global trend of sharing printing presses to better use capital equipment.

Pacific Area Newspaper Publishers' Association chief executive Mark Hollands told BusinessDesk he wasn’t surprised when APN told analysts last month that it was in talks about sharing printing assets in New Zealand, in a move analogous to airline code-sharing arrangements.

APN, the publisher of the New Zealand Herald newspaper, didn’t name other parties, and has a large printing site at Ellerslie in Auckland.

It told analysts in a briefing that it was thinking "more strategically" and wanted to focus on editorial content, sales and marketing. The future model of publishing was "infrastructure light".

"We have had conversations. Conversations will continue. They are confidential," executives told analysts on the call.

The focus in the short-term was on New Zealand printing assets, the company said.

Options may include a joint venture printing operation could be formed by APN and rival Fairfax Media, or that Fairfax will share printing with News Ltd. in Australia, freeing up presses for relocation to New Zealand.

Magazine publisher PMP Ltd., New Zealand’s largest commercial printer, is also believed to be in the mix.

Fairfax Media's general manager investor relations Frank Sufferini said there had been "very preliminary conversations" about sharing of printing presses in New Zealand. Talks with News Ltd. in Australia had been more serious.

There were a number of scenarios. Fairfax had internal options that could free up print capacity. The company had two printing plants in Melbourne and a plant in Sydney near a News Ltd. plant.

The idea of sharing printing presses was the worst kept secret in the industry, Hollands said. "The reason why is that you have a lot of newspapers and they all go to press at 11 o clock at night."

New Zealand has 14 printing centres for newspapers. Substantial savings could be made by using printing presses throughout the day.

News International executives told an invite-only audience of print and production executives in Australia recently about how its Broxbourne Park, U.K., plant prints The Times and its arch-rival, the Daily Telegraph, every night. Chinese walls prevent scoops being shared between the rival titles.

The Chicago Tribune prints 15 daily newspapers and its clients include rival newspapers.

In Hobart, News Ltd.'s unit, Davies Brothers, prints the Australian Financial Review, which is owned by Fairfax. When it started printing The Australian, the copy price on the island dropped because there was no need for air freight charges.

In Victoria, the two rival firms have shared trucks for country deliveries.

Hollands said sharing of equipment with arch rivals was possible in this part of the world.

"It depends on whether you hate wasting money more than you hate your competitor," he said. Media fragmentation was the greatest challenge facing newspaper publishers.

"To deal with it we have to work together," he said. "I don’t think there is a competitive advantage in print but there is a competitive advantage in editorial," said Hollands.

He said idle capital equipment was a waste of money. The sharing of printing assets was a similar concept to the code sharing agreements airlines used to fill seats on their aircraft.

"It is no different. The competitive advantage is in great journalism that creates big audiences that we can monetise."

When Fairfax signaled at its earnings release that it aimed to slash more than A$85 million of cost savings over two years in Australia and New Zealand, A$30 million was to come from rationalising printing operations.

(BusinessDesk)

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