Menzies Distribution experienced tough trading conditions with underlying operating profit down 23% to £23.7m, mainly as a result a rapidly changing marketplace, particularly in monthly magazines and partworks.
A quote from the preliminary results released on Tuesday by newspaper and magazine distribution business John Menzies plc. The results provide an insight into newspaper and magazine sales in the UK. Further on in the results is the following:
We are seeing structural changes in the magazine sector. As broadband penetration increases and on-line content becomes more sophisticated, consumers are spending more time on the internet and less time on printed media. We believe this contributed significantly to a 7% drop in lfl sales of monthly magazines. Partwork sales, which peaked in 2004, have now returned to 2002 sales levels. In 2006 lfl partwork sales fell
by 35%. Although gross profit from weekly magazine sales was flat, lfl sales rose by 3% as some consumers moved from monthly to weekly titles.Newspapers volumes continued their steady decline but this reduction was offset by a number of price increases, particularly on Sunday titles.
Australian newsagents are fortunate to have access to this information from the UK and similar insights from the US. The trends reflected in the results are not isolated to those countries. We will experience them here, if not in 2007 then in 2008.
Publishers and distributors cannot continue to deny to newsagents that retail sales of newspapers and magazines are challenged. I see the situation as presenting an opportunity. While publishers seem to want to address the challenge by putting their product in every possible retail outlet, my feeling is they would be better served by reducing retail outlets and supporting specialists like newsagents.
Mutual support between newsagents and publishers for newspapers and magazines could buffer the impact the Internet has on newspaper and magazine sales in Australia.
I hope that leaders representing both sides pursue this opportunity.
Mark, I agree, Newsagents care about the product & therefore manage it far better. Would there not also be a reduction in distribution, management and accounts costs. There are enough newsagencies and sub-agencies to ensure customers have easy access to the product – as they dis in the past.