APN puts publisher Australian Regional Media up for sale

ONE of the largest regional publishing businesses in Australia, Australian Regional Media, is up for sale.

Its owner, APN, announced in its 2015 results to the sharemarket this morning that the move to divest ARM was to allow APN to concentrate on its metro businesses, while giving the newspaper publisher a chance to gain new investment for its own expansion projects.

ARM is the publisher of this website and 12 daily papers through Queensland and northern NSW, alongside more than 70 community and specialist titles.

The sale news came on the back of an EBITDA drop for ARM in 2015 of 27%, down to $18.4m on revenues back 7% to $188.5m.

The parent company APN, which announced EBITDA growth of 1% to $166.2m on revenues of $850m (also up 1%), attributed a non-cash exceptional impairment charge of $50.8m to ARM.

APN chief executive Ciaran Davis
APN chief executive Ciaran Davis

However, chief executive Ciaran Davis was upbeat on ARM's prospects.

In August, ARM launched Australia's first regional digital subscription package across its 12 daily titles. Mr Davis said that after a better than expected launch of digital subscriptions at Toowoomba's Chronicle, it fast-tracked the rollout to all of its daily mastheads in October.

Digital subscription growth was ahead of plan with conversion rates from trial to regular subscribers at 87 per cent.
ARM needed investment to fast-track this growth, but APN had metro priorities.

"ARM is operating in a challenging environment with all publishers facing the same tough headwinds,'' Mr Davis said.

''APN shareholders struggle to ascribe value to our Australian printing business ….. (but) there continue to be positive results delivered within the business.

''Against the backdrop of extensive cost cutting ($40m over the past 3 years), ARM has maintained a stable audience and grown its digital footprint through delivery of greater digital content. Digital subscriptions and the development of other new revenue streams are helping position ARM for the future. ''

It is the right strategy, and needs new partners to help it get there quicker.

''This will give ARM the opportunity to invest where required, without having to compete for APN's capital, while continuing to provide quality news and content to its audiences."

Mr Davis would not comment on potential partners, except to say there had been early discussions with a number of suitors and there was interest in ARM. Today's announcement was a clear indication APN wanted to move decisively.

News Ltd, with former APN CEO Michael Miller now ensconced in its leadership ranks, snapped up a 15% stake last year.

Australian Regional Media CEO Neil Monaghan
Australian Regional Media CEO Neil Monaghan Kevin Farmer


ARM CEO Neil Monaghan said his business was likely to be attractive to canny investors.

''Media rule changes and ability for us to further cement our dominance in regional areas through new ventures means ARM will be a sought-after asset,'' Mr Monaghan said.

He said the company's 1300 staff were running profitable businesses and had media dominance in key regional towns  and cities in two states. They should be confident in their ability to deliver strong readership and financial results under any ownership model.

''ARM operates pretty much independently on a day to day basis, so nothing really changes as a  result of this announcement.''

Elsewhere for APN, the radio and outdoor businesses continued to star.

"In Australia, Radio and Outdoor were two of the biggest growth sectors in media in 2015 with industry growth of five per cent and 16 per cent respectively,'' Mr Davis said.

"Within those sectors, both ARN and Adshel are very strong performing assets with positive outlooks and momentum.''


Former APN News & Media chief executive officer and The Newspaper Works chairman Michael Miller
Former APN News & Media chief executive officer and The Newspaper Works chairman Michael Miller



Australian Radio Network ($82.8m EBITDA, 27% up) maintained its No 1 status in metro FM radio leadership, while Adshel ($38.3m EBITDA, up 4%) was benefitting from the rapid digitisation of its advertising panels in both NZ and Australia.

The potential sale of ARM was countered by the as-expected confirmation that the Kiwi business NZME, mainly made up of publishing and radio assets, would not be subject of a sharemarket float across the Tasman.

Mr Davis said NZME had done ''strong repositioning work'' but the sharemarket there was not conducive to a media float. NZME reported EBITDA of $69.6m (down 8%) on revenues of $402.4, down 3%.

Other highlights included a group cost savings target of $25m exceeded; additional cost savings identified for 2016.

Strong cashflows of $78m reduced leverage to 2.74 times.

There was no dividend for shareholders.

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