Home' The Channel Magazine : National Newsagent September 2012 Contents NEWS
Distribution newsagents have direct
accounts with the magazine distributors
and deliver to subagents, which are
generally, delis, independent P&C’s and
independent supermarkets and their
biggest current account of Peregrine ‘BP
on the Run’ sites.
There has been a trend amongst some
delivery-only newsagents to expand
through acquiring additional territories.
These acquisitions have been made
through distress sales, leasing from
previous agents who may continue to
deliver, or through the publisher resuming
territories and allocating them to
approved operators. Sales of distribution
businesses have continued mainly through
the agents who have seen change coming
and have purchased rounds as they see fit.
Other sales have been slow and certainly
not achieved the dollar return that many
thought they would gain when they
purchased the business.
Outright Purchase Model
With regards to the purchase prices,
this has always been negotiated with
the seller until a satisfactory value was
agreed to. This varies in every situation;
it’s too hard to say there is one method. In
a couple of situations the seller has come
on board doing delivery.
• Some distributors have added to their
territory by leasing arrangements. They
formed a company and leased their
rounds to their own company. They
have now leased into their company
an additional round and they are on
track to add more through leasing
arrangements by the end of the year.
• The model allows one to come up with
a figure that works for both lessor and
lessee—they work it from the bottom
up (that is, to achieve a certain profit
each year, so what is over and above
this can be applied to lease payments)
and the lessor works from the top down
(that is, he would look at the value of his
business and want it back over a three
or five year period).
• Two like businesses form a company—
they wanted to share some costs and
move into a new depot. They may have
seven rounds and believe the publisher
(ANPL–News Ltd) would allow them to
grow by another three or four, which
would bring them in line with maximum
volumes to their depot.
• Some have decided to go down the road
of leasing, as there is no point in buying
a business where there is no firm
contract. The leasing arrangement gives
both lessor and lessee the flexibility to
get out if contracts are not maintained.
ANPL will stipulate that the contract
remains the property of the lessor and
so there is some onus on the previous
owner to maintain the contract.
Alternate Leasing Model
• A lease/purchase arrangement with
the entity that currently has the ANPL
contract for the specified territory or
region can be negotiated. Based on the
performance of the business a suitable
weekly lease payment is determined.
• In real terms they are involved in a
vendor finance arrangement; however,
the creation of a lease arrangement
allows the lessee to claim the payments
as a taxable deduction, whilst the lessor
pays income tax on earnings for the
lease payments they receive.
• At the end of a pre-determined time
frame the lessee will get the option
to buy the business for a ‘peppercorn
transaction’ (a nominal amount—say
• The amount is based upon the decrease
in earnings expected versus the
anticipated increase in costs to find
a breakeven point in the future. After
that point a lease payment no longer
Undoubtedly, this option will not suit
some vendors. Many will want a lump sum
payment. Others may want to set it up as
vendor finance so they don’t pay income
tax, but then they may have to pay capital
No distributors have walked away from
newspaper distribution in the past year but
a number may do this depending on how
they view the new model.
The expectation is that the publisher
will agree that some regional newsagents
may not be paid enough remuneration
to make it worthwhile for the agent or
publisher, so change will come.
Retail outlets are subagents for all
newspapers, but those that meet the sales
requirements may have direct supply
contracts with the magazine distributors.
Newspapers are regarded as a
loss leader at best but still seen as an
important part of a newsagency. Retailers
are now becoming dependent on the
traffic coming from other retail items.
Newspapers are losing prominence within
the retail newsagent particularly as outlets
selling newspapers have proliferated.
The better retailers are now focusing
on higher margin opportunities, reducing
their magazine footprint if required,
locating newspapers in different areas of
the store and introducing new products to
Country based newsagents are now
potentially willing to ‘walk away’ from
home delivery in the smaller country
towns; some have managed to retain
the distribution to subagents and see
some opportunities if close to other
towns where costs could be reduced by
improving delivery efficiencies.
Newspaper Distribution in
A summary of the newsagents’
After 2000, when publisher contracts
allowed newsagents to sell their
territories, a number of newsagents
began buying adjoining areas and
expanding their distribution businesses.
Many of these eventually sold their retail
businesses and became distribution-only
In 2002 there were approximately eight
distribution-only newsagents and now
in 2012 there are approximately 30. The
changing of the publishers’ requirements
of allowing the purchase of adjoining
territories has enabled expansion by
newsagents wishing to specialise in
distribution to purchase more territories.
Some ‘traditional newsagents’ have
also purchased nearby or adjoining
territories to expand their distribution and
take advantage of scale.
Different ownership models
• Retail newsagents purchasing additional
• Newsagents combined their distribution
territories and starting a new business
under a co-op model. They all retained
their retail businesses.
• Individual distribution newsagent,
concentrating on distribution-only,
building a business through territory
• Distribution newsagents combining to
form a company to purchase territories
but still retaining their individual
National Newsagent September 2012
Links Archive National Newsagent August 2012 National Newsagent October 2012 Navigation Previous Page Next Page