Tom and June Carter have run Glenside Newsagency in Adelaide for twenty years. It’s a strong home delivery and retail business with over 2,000 home delivery customers, 19 sub agents and two substantial retail outlets. Tom and June have been faithful agents for Advertiser Newspapers, the local arm of News Corp., actively marketing their product in an effort to grow retail and home delivery sales of the Adelaide Advertiser and the Sunday Mail.
A News representative last week advised Tom and June that the supply arrangement they had personally cultivated with Jackson Motor Inn was to be replaced by a corporate arrangement between a company called IPG and Jackson Motor Inn. The current arrangement provides Tom and June 25% of the cover price. The new arrangement will provide them with 10%. They have been told to continue delivering newspapers but for less money. To be fair the News representative said there would be less work because there would not be any returns. The few minutes saves each week do not warrant a chang to the financial arrangements.
This decision by News cuts Tom and June’s margin by 60% for that customer. Tom and June deliver to seven other motels which could be next in this move by News to cut their margin.
While I understand the obligation of News is to drive the share price, it has an obligation to its trading partners of long standing as well as to the community in which it exists. Taking money from small businesses like this, forcing them to carry the cost of a corporate deal, is poor form by News. This is not the Aussie fair go News touts in their pages. This action is unjust and socially irresponsible.
Tom and June cannot pass on the revenue cut forced on them since their costs for delivering newspapers to the motel have not changed.
Newsagencies are finely balanced businesses, relying on many small transactions everyday. Chipping away at the revenue base by publishers, such ads this move by News, devalues the channel. It will make selling newsagencies harder. It will also force newsagents to work longer hours and, as a result, put their health at greater risk.
News ought to revisit their arrangements with IPG. The money that this partnership is taking out of the newsagency channel is hurting many small businesses.
On a side issue, given that News says there will be no returns, does this mean that unused copies are treated as sales in circulation data and therefore possibly overstate circulation data? It’s a valid question given that this IPG company is responsible for similar hotel arrangements in other states.
Why would a hotel have returns? I would assume they are ordering what they need based on room occupancy or guest orders.
We used to supply a motel subagent and they had an average return turnover. They also preferred a standing order rather than changing their quantities regularly.
Hotels and motels often order based on an estimate of what guests want and are allowed to return what is not taken up.
i completely sympathise with Glenside Newsagency; it is not fair and further diminishes the relationship between industry partners (Newsagents and publishers). It further highlights that we need a strong unified body to stand up to these publishers and stop the pilferring that continues to hound our industry. One of my publishers has been trying to get it’s grubby/greedy hands on one of our major accomodation venues. We did all the hard work to set them up with large volume each week, and along come the publisher after a year and try to push their way in. Not on my watch.