Annual Report to Shareholders 1997

Review of Operations

Ian Law, General Manager

The underlying economic conditions in the regional markets around Australia were not buoyant. In every State there was a noticeable lack of retail confidence which in turn affected advertising volumes and, in some instances, the paid circulations of our publications.

The lack of retail confidence stemmed from several factors. Heading them was the macro-economic issues of high unemployment and the lack of economic growth in the country areas.

Regional areas were affected by specific domestic policy issues of Federal and State Governments. For example, the cutbacks in Federal Government expenditure and the subsequent reduction in services in regional centres clearly impacted on confidence in the communities served by our newspapers. It was not helped by the other ongoing rationalisation of services within the private sector, such as the financial institutions.

This came at a time when a number of regional centres had already suffered from the lack of general investment expenditure by the farming sector, and historically low wool and beef prices. The economic environment created a very difficult trading period and a challenging time for regional newspapers.

Advertising rates held up well, however, advertising centimetre volumes declined compared with the previous year. The classified centimetre decrease was a reflection of the lower level of activity. National centimetres were impacted by limited new product launches with local centimetres affected by the low real estate activity.

Generally, circulation volumes in subscription publications held up remarkably well given the difficulties in many of our regional communities. This was a reflection of both the high standard of our publications and the efforts of staff, who showed great commitment in a difficult year.

Despite the flat economic conditions, we invested in longer term publishing initiatives which required significant capital input for technology and redundancy costs.

The projects included investments in new pre-press and printing technology at several sites, and in changing the mix of products published in the Macquarie Newspaper group.

The initiatives included rationalising several of the directories in the Heritage Publishing group on the South Coast of New South Wales. Heritage Publishing also broadened the base of its business to establish a pre-press production facility. The two paid newspapers serving the Bega market were merged. The Saturday edition of the Cooma Monaro Express was phased out and the two remaining editions were strengthened. The 126 year old daily Goulburn Post newspaper is now produced in three bigger editions a week. The Post's reduced frequency has been well received and circulation of the remaining editions is averaging 10 per cent more than before the change. The South East and Southern Tablelands magazine was merged into the Town and Country Magazine - which now has a broader distribution over most of southern, and south eastern NSW.

The printing press at Queanbeyan closed and its work transferred to the Canberra based Canweb Printery purchased in December, 1996. The printery at Bega was phased out and printing for some of the far south coast newspapers was moved to Canweb, with the balance to Leader Printery at Nowra. The Nowra printery was upgraded through the year to produce quality four colour. A major upgrade of the Tamworth printing press has been completed, including the installation of in-line four colour capacity. The new press was set up at a remote site and is well equipped to handle the future printing needs of the region. Further technology upgrades were made at the Launceston and Maitland operations.

The biggest single challenge in the regional publishing division was to integrate the newspapers and magazines of the Macquarie Group. These publications are now positioned for increased contributions after a phasing in period.

There were a number of strongly performing publications in the Regional Publishing division. In Queensland, the community based Bayside Bulletin and Redland Times recorded strong results. The Ipswich Advertiser provided a pleasing lift in performance in the last quarter.

The newspapers on the North Coast again performed solidly, with the Port Macquarie Express, Hibiscus Happynings, the Manning River Times, the Manning Great Lakes Extra, and the Great Lakes Advocate all doing well.

The New England newspapers operated in a difficult trading environment but performed solidly. The Northern Daily Leader did well in a less than positive market. Its coverage of the Atlanta Olympic Games won several awards.

The performance of the publications in the Hawkesbury and Blue Mountains region was again sound, with The Hawkesbury Gazette posting pleasing circulation growth. The Blue Mountains Gazette's result reflects its strong presence in its local community.

In the newspapers in the Hunter region a major investment was made in pre-press technology. This will bring significant longer term benefits. The daily paper, the Maitland Mercury, performed creditably in a highly competitive market.

The Newcastle Star strengthened with the release of market research data showing market leadership in terms of readership.

The Newcastle Times entrenched its position as a leading real estate product in the market.

The newspapers in the central west, southern and western parts of NSW all performed solidly.

In Bathurst, the daily Western Advocate overcame a difficult start and consolidated its position in the community. The Central Western Daily in Orange and the Daily Liberal in Dubbo both recorded strong results in terms of circulation and advertising.

The company's titles in the Southern Highlands performed well, with the Southern Highland News in Bowral undergoing a product redesign that was well received by readers.

In Nowra the tri-weekly paid South Coast Register embarked on a major quality upgrade - including a four colour real estate liftout. It faced a new competitor but continued to hold its strong position in real estate and classified advertising.

In Victoria, the Ballarat Courier produced a pleasing result with increases in advertising and circulation sales.

Our jointly-owned newspapers in Tasmania performed soundly in a difficult trading environment.

The South Australian and Western Australian newspapers also found it difficult after several years of growth.

A highlight in South Australia was the Northern Argus newspaper, acquired in the previous financial year, which made a good contribution in its first year. The newspapers serving the relatively smaller communities of Ceduna, Cleve and Kangaroo Island performed very well as did the Port Pirie Recorder and the regional free, the Flinders News.

In Western Australia, the Bunbury Mail produced its best result since its acquisition several years ago. The Mandurah Mail also continued its advertising growth in a very competitive market. A free newspaper was purchased in Busselton to give the company complete coverage of the fast developing south west coastal region.

The Perth based music and entertainment publication, X-Press Magazine, which is published through a joint venture arrangement with Columbia Press Pty Limited, had another successful year, and was involved at year's end in the purchase of a similar publication in Melbourne called Inpress Magazine.

With the acquisition of the Macquarie Group, the Regional Publishing division now includes 159 newspapers and magazines, with 104 in New South Wales.

List of regional publications