But without the all good newsagents bit, since we don’t control what we get.
🆕 JUST LANDED!
The December edition of bunkered is here!
On the cover: Niall Horan (@NiallOfficial)
Available this week from all good UK newsagents and online.
Subscribe: https://t.co/hKjkYGNd1i pic.twitter.com/wNRy3pSGBE
— bunkered (@BunkeredOnline) November 13, 2023
Are Direct provided this information to newsagents late yesterday:
Due to a significant linehaul truck delay into Melbourne today, your magazine delivery tomorrow will be impacted.
We will provide further communication as soon as we have further details from our contractor but at this stage, we envisage deliveries not taking place on Thursday.
Please do not process any magazine shortages until we provide further communication.=
We apologise for this delay and can reassure you we are working to get deliveries out to you as soon as possible.
We know these Are Media titles are impacted:
Magazine publishers seem to think we are leading if we stock their title. They seem to think we have control over the titles we stock.
From Sam Prince's secret sauce to our list of Australian startups that banked the lion's share of venture capital. This is Forbes Australia Issue Seven. Secure your copy at all leading newsagents. https://t.co/3juXuGXqcr pic.twitter.com/3Qp6aNCTqz
— Forbes Australia (@forbes_au) October 9, 2023
Aussie newsagents have done a terrific job getting the popular AFL record in the hands of AFL fans. But, no more following a decision at Sports Entertainment Network, the business that publishes AFL Record.
Back to grounds only, as it was pre-COVID but all editions are available for purchase online.
That’s what they say, and, for sure, it’s their decision to make. But … our channel is a destination for AFL team merchant including calendars, decals, plush and car stickers. It’s a space in which we do well – helping AFL fans across the country stay connected to the game they love and the team they love.
It is disappointing that the folks at Sports Entertainment Network chose to not tell newsagents, leaving us to field the questions, and the frustration.
They have asked newsagents to tell their customers to go online. Hmm, no thanks.
Supermarkets have had scan-based trading for years with magazines, from back in the days on the now defunct Gordon and Gotch, then to Ovato, and now to Are Direct.
Scan-based trading is where retailers pay the magazine distributor for what is sold. That’s it.
The distributor / publisher carries the cost of shrinkage (theft, damage) etc.
The retailer makes margin from what they sell. They do not have margin ‘stolen’ by theft, or damage or failed supply … and I include damage and failed supply because the Are Direct process for handling claims by newsagents is a mess, time consuming, starting with the assumption the newsagent is wrong. Indeed, it is so bad that plenty of newsagents don’t even lodge a credit claim.
Scan-based trading is unfair in that newsagents don’t have access to it while their competitors do. This provides them an unfair advantage, facilitated by the magazine Are Direct and magazine publishers.
It’s unfortunate that Are Media spends on the old-school display competitions and similar yet fails to deal with the unfairness at the core of the magazine distribution model to newsagents.
The magazine distribution ‘experts’ at Are Direct will say it’s a data issue, that newsagents cannot provide the same accurate sales data flowing from supermarkets. This was nonsense when put 10 years ago, it is nonsense today. I say that as the owner of the newsagency software company serving more newsagents than. any other with newsagents icy software.
I tell you what … turn on scan-based trading for newsagents with accurate data and even more newsagents would achieve the desired accuracy.
This is an easy step for Are Direct to take, a fair step, a socially responsible step and pro small business retail step.
Look at a local newsagency competing with a major supermarket a couple of doors away. When it comes to magazines, the supermarket has a better deal, they make more money and save more time from how they are dealt with by Are Direct than the local small business newsagent.
Every single person at Are Media who is in contact with newsagents needs to understand this, they need to understand the unfairness of the situation as in related to newsagents.
Turn on scan-based trading for newsagents and create a fairer model for our channel, show your support for us in a practical way, show us some respect.
Issued today, by the administrator:
The first meeting of creditors for Ovato Limited was held this afternoon.
Regarding the situation at Ovato, a spokesperson for the Administrators said:
- The Administrators are continuing to trade the business as a going concern while they run a sale and recapitalisation process.
- There has been excellent support from customers and employees, and the Administrators continue to work with the suppliers.
- The sale process has commenced. There has been a number of expressions of interest, and the Administrators are working through those with the interested parties. Binding bids are due by the 11th of August.
- The Administrators are looking for a buyer as soon as possible, as the sooner the business has a long-term owner the better off all stakeholders will be.
- As part of their role, the Administrators are investigating a number of matters before reporting back to creditors (next creditors meeting scheduled to be issued on 17 August), including:
- The historical footprint of the company and legacy costs the company has been burdened with.
- The claims of various suppliers.
- The activities of the Group leading up to the appointment.
- The impact of the pandemic.
- A number of transactions involving the sale of divisions or businesses in recent times.
Stuart Carson
It’s Thursday morning. We have had our two magazine arrival staff members at the shop since 6am, waiting. Then, an hour and a half later, we get notified.
For years, Gotch managed pitched excuses, reasons why magazine distribution was challenges. Then, it was Ovato making similar pitches – the name change achieved nothing. Now, under new owners, well, here we are … waiting for magazines.
It’s a one-way relationship, and here’s why I say that. Their starting position when a newsagent reports short supply is that they do not believe you. It can take 3 ro 4 contacts to progress a claim. But, sometimes, you’re not successful,. even though know the magazines were not delivered.
One of my shops, one I bought just before Christmas 2021, does $380,000 a year in magazine sales. The distribution mess in Melbourne overseen by Are Direct is commercially harmful. Publishers should be screaming at them.
Footnote: I appreciate not everyone is impacted by this. Right now, it appears to be Melbourne focussed.
Several newsagents I have spoken with today from VIC, NSW and SA thought there were not getting magazines Monday. The confusion arose from the poorly worded notice from Are Media.
The Monday line should have been written: Monday 3rd January – normal delivery, except for West Australian newsagents who will receive their deliveries on Tuesday January 4th. That follows the standard set in the above line.
Integrated Publication Solutions (IPS), is a distribution company owned by Australian Community Media (ACM). Several months ago IPS announced they are closing down. This, naturally, has resulted in newsagents wondering about credits owed them by IPS.
The challenge, I am told, is getting answers from IPS, as has been noted in comments here.
It is appalling that newsagents have to deal with decades-old and seriously under-resourced accounts offices in magazine distribution businesses – not only at IPS, but elsewhere. It costs us money, which hurts given the low margin made from magazines.
Of more serious concern is the mental health impact on some newsagents of poor accounting processes in and poor account credit related communication from magazine distribution businesses.
Australian Community Media pitches itself as locally engaged and supportive. It would be a bad look for the business if local small business newsagents are not treated with fairness and haste in the settling up of refunds owing on the closure of ACM’s IPS magazine distribution business.
The closure of IPS is challenging enough with poor practices at Wrapaway.
Publishers of The Saturday Paper, Winning Post, Best Bets and a bunch of other titles should listen to concerns raised by newsagents about the out of date data handling processes of Wrapaway, the new distributor of these titles following the closure of the IPS business.
Wrapaway does not provide electronic invoices. Indeed, they do not incline until the end of the month.
For close to 20 years newsagents have been receiving magazine inventory with electronic invoices. Electronic invoices save time, guide accuracy and facilitate stock inwards reconciliation.
The Wrapaway manual processes cost newsagents time, accuracy and the ability to reasonably manage incoming stock.
One newsagent told me last week that the move to Wrapaway has added at least 30 minutes additional work each week, morning work, which has to be covered in the roster. The actual cost is close to $15.00. That hurts when dealing with meagre margin products such as newspapers and magazines.
Another newsagent told me they no longer sell the titles as there’s not enough money to be made to warrant the extra work.
I raised the issue with the folks at The Saturday Paper in September when the move was first made public. Their circulation manager was disinterested in the issues raised. I outlined what newsagents expected from a magazine distributor: electronic invoices at the time product arrives, no physical returns etc. Yet, here we are approaching December, and newsagents are worse off.
I like The Saturday Paper, but I don’t like the extra cost I have not to carry it in my shop. This is something Schwartz Media and the other publishers now engaged with Wrapaway could have resolved – if they cares about local small b business newsagents.
In Victoria, New South Wales and Queensland in recent months newspaper and magazine distribution has become even more unpredictable than usual.
Too often, newspapers and magazines arrive late in newsagencies. Sometimes, they don’t arrive at all.
This is not the fault of the newsagent.
Talking to the newspaper and magazine companies you get the feeling they don’t see it as their fault, either. They point at those they contract with.
Newsagents find it almost impossible to get assistance that resolves the problem of late and completely missed newspaper and magazine deliveries.
The distress the situation is causing for affected newsagents is considerable.
This letter outlines what interests the ACCC in its consideration of the takeover of Ovato Retail Distribution by Are Media:
Dear interested party,
Request for submissions: Are Media Pty Limited’s proposed acquisition of Ovato Retail Distribution Pty Ltd
The Australian Competition and Consumer Commission (ACCC) is seeking your views on the proposed acquisition of Ovato Retail Distribution Pty Ltd (ORD) by Are Media Pty Limited (Are Media) (proposed acquisition).
Are Media is the largest magazine publisher in Australia and ORD operates the largest retail distribution network for print magazines in Australia. Further details regarding the acquisition can be found at Attachment A.
The ACCC’s investigation is focused on the impact on competition. In particular, we are seeking your views on:
- The presence of alternative retail distribution networks for print magazines, and the ability for customers to switch between alternative retail distribution networks.
- The likelihood of a price increase for retail distribution of magazines if the proposed acquisition proceeds.
- The ability and incentive for a combined Are Media/ORD to foreclose or discriminate against competing magazine publishers seeking retail distribution services.
- The extent that the magazine industry is in economic decline and if so, whether the industry is likely to recover in the next three years.
- The potential expansion of existing distribution networks (for example, newspaper distribution) into the retail distribution of magazines.Further issues you may wish to address are set out in Attachment B.
This matter is public and you can forward this letter to anybody who may be interested.
The legal test which the ACCC applies in considering the proposed acquisition is in section 50 of the Competition and Consumer Act 2010. Section 50 prohibits acquisitions that are likely to have the effect of substantially lessening competition in a market.
Please provide your response by 5pm on 8 July 2021. Responses may be emailed to mergers@accc.gov.au with the title: Submission re: Are Media/ORD – attention Sophia Liu / Will Sommers. If you would like to arrange a time to discuss the matter with ACCC officers, or have any questions about this letter, please contact Sophia Liu on (03) 9290 1437 or Will Sommers on (03) 9910 9444.
The takeover presents challenges for newsagents, independent publishers and consumers. It will be interesting to see if there are submissions on these matters.
Here is solid evidence of magazine oversupply by Ovato, through their tech systems and their expert approach to magazine distribution.
Based on the supply / return data, which they have, this store should be getting 3 or 4 copies of this title, and not the 10, 13 or 15 copies it has been getting.
What a waste of time, money and space for this small business retailer.
A failure to supply inventory based on current sell through data is one of many operational issues the folks at Are Media will need to address when they take control of Ovato.
Over the years, many newsagents have given up having this fight with Ovato, because they get nowhere at all.
Has your newsagency ever been audited by Ovato? If it has, you may recall a period of stress as you dealt with their information requests while feeling like you have done something wrong, feeling criminal.
The thing is, Ovato controls what newsagents are sent. They receive sales data daily. They receive returns data weekly.
If there is an issue, they would see it in the data.
Scanned based trading, newsagents paying for what they sell, would fix any data issue. Establishing scanned based trading with approved ‘locked’ software packages could provide a time saver for all involved in the compliance side of magazine sales in newsagencies.
Announced this morning:
Sale of Retail Distribution (Australia and New Zealand) to Are Media Limited
Ovato and Ovato New Zealand Limited have entered into a binding sale agreement to sell the entire issued share capital of each of Ovato Retail Distribution Pty Ltd and Ovato Retail Distribution NZ Limited (together, “Retail Distribution (Australia and New Zealand)”) to Are Media Limited (“Are Media”) (the “Transaction”).
The consideration for the Transaction comprises a headline purchase price of A$15 million in cash and the acceptance of a negative working capital position of approximately A$27 million.
Are Media is a 16.4% shareholder of Ovato and is accordingly a substantial holder in Ovato for the purposes of ASX Listing Rule 10.1. Therefore, shareholder approval will be sought for the Transaction to comply with ASX listing rule requirements. Ovato intends to dispatch a notice of meeting in relation to the Transaction mid-June 2021, with the meeting to be held mid-July 2021.
The major shareholder of Ovato, the Hannan family, who collectively hold 43.4% in Ovato, has indicated its support for the Transaction and intends to vote any shares it holds in favour of the Transaction at the proposed shareholder meeting.
Ovato has engaged an independent expert, Lonergan Edwards & Associates, to determine whether the Transaction is fair and reasonable to Ovato shareholders who are not associated with Are Media.
Subject to the satisfaction or waiver (as applicable) of the conditions to the Transaction (which include customary regulatory approvals), it is currently expected that the Transaction will complete by the end of July 2021.
Put option to sell Marketing Services (Australia) to Ballygriffin Holdings Pty Limited
Ballygriffin Holdings Pty Limited (“Ballygriffin”), an entity owned by the Hannan family, and Ovato have entered into a binding put option deed under which Ovato could require Ballygriffin to acquire the entire issued share capital of Ovato Creative Services Pty Ltd, Ovato Technology Pty Ltd, Ovato Communications Pty Ltd and Ovato Creative Services Clayton Pty Ltd (together, “Marketing Services (Australia)”) for A$9 million.
Ovato Limited – ABN 39 050 148 644
Shareholder approval will also be sought for this transaction to comply with ASX Listing Rule requirements.
Ovato has engaged an independent expert, Lonergan Edwards & Associates, to determine whether the entering into the put option deed is fair and reasonable to Ovato shareholders who are not associated with Ballygriffin.
It is expected that the timing of the shareholder meeting will be similar to the Transaction referred to above.
Change of CEO & Managing Director
Kevin Slaven has advised the Ovato Board that he will not be seeking an extension to his current contract which expires on 17 September 2021. It has been agreed with Kevin that he will step down as CEO & Managing Director and remain in the business until the end of June to assist with the business sales and to ensure an appropriate handover.
James Hannan, currently Chief Operating Officer with over 18 years’ experience in print operations and senior executive responsibilities since 2014, has been appointed as the new CEO & Managing Director effective immediately. James, whilst responsible for the Group’s operations, also played a pivotal role in the successful negotiations with all stakeholders through the recent recapitalisation and restructure of the business and is spearheading the non-core assets divestment program. James will be very ably supported by existing members of the leadership team. The key terms of James’s employment contract are disclosed below.
Michael Hannan, Chairman, says “The challenges of the industry over the last decade were further exacerbated by COVID-19. In response, the business will bring its focus back on print, the core of its operations. It will allow focus to be placed on a strong, viable and profitable printing business in Australia and the ability to invest in new technologies to support print. The sale of the Retail Distribution and Marketing Services businesses will greatly assist in providing Ovato with cash reserves for ongoing transformation and will be the catalyst for a significant flattening of the corporate costs starting from the top with immediate savings being realised by not replacing any departing member of the leadership team.”
Referring to the change of CEO, Michael Hannan says “The Board recognizes the role that Kevin has played in a very difficult period for the company since being asked to take the reins unexpectedly in late 2017. He has addressed the challenges completing a very complex merger of two of Australia’s largest print businesses; IPMG with PMP, followed by a significant operational and corporate restructure to right size the business required by market conditions and the COVID-19 impacts.
The Board wishes to thank Kevin for his guidance and leadership through this difficult period, and for his loyalty and dedication to the company. We wish Kevin well in his future endeavours.”
This announcement was authorised for release by the Board of Directors of Ovato.
I predicted this when Are Media first acquired a stake in Ovato. To me, it made a logical next, step move.
For many years I have urged management at Ovato, formerly Gordon and Gotch, to provide newsagents with the ability to control their own magazine supply. My argument was that giving newsagents control over range of titles and quantities received would see newsagents stock and sell more magazines.
The historic master / servant relationship with newsagents got in the way.
The leadership of Ovato did not like the idea and did not deliver this. They have maintained a system through which it is difficult for newsagents to manage their magazine title range and the quantity of inventory received. And, despite having access to accurate sales data, this appears to play only a moderate role in supply decisions within Ovato.
Magazine publishers should be frustrated buy this and here’s why …
For decades, newsagents could not easily choose the greeting cards they stock. The card companies had an antiquated and opaque process, that newsagents, for the most part, were happy to go along with.
Over the last two years, several major card companies have provided newsagents with complete control over ordering, including the ability to replace one design with another.
Looking at comprehensive pocket level before and after sales data, I am confident in saying that providing newsagents control over what card designs they stock is a key factor in above average growth in card sales. I am talking here about 20% and more year on year card revenue growth – even with the Covid period sliced out of the data.
The data study I have undertaken included businesses that did not change card suppliers – those that controlled what they stock grew revenue several times more than those that did not.
The message for magazine publishers is simple – if you want to grow magazine sales in the newsagency channel, give newsagents full control over what they stock. In my opinion, the failure of Ovato to enable this has held back magazine sales opportunities.
Are magazine publishers frustrated? probably not since they do not actively engage with newsagents. It’s one-way and sales of their titles suffer as a result.
Thankfully, some card companies have realised the commercial value to them from giving retail newsagents more control over what they stock. Kudos to them.
Ovato sent this advice to newsagents today at 2pm, not to the software companies that are on the front line for handling such matters. Ugh!
Please be advised that Mr Wisdom Sudoku #128, on sale today 21st January, was incorrectly printed with the same barcode (931339800258901) as Better Homes & Gardens Sudoku #9 which went on sale 28th December.=
Could you please ensure you maintain both titles on sale for their respective on sale periods and process returns against the correct title code when each title recalls.
Note that this may require you to review any returns processed by your POS system, should you use a POS system to process your returns.
For agents on NPR (No Physical Returns), we will exclude these titles from your NPR calculation due to the errors that may occur in scan sales.
Mr Wisdoms Sudoku
Title code: 20638
Issue code: 1280
On sale: 21/01/21
Recall date 18/03/21
RRP $4.99Better Homes & Gardens Sudoku
Title code: 17428
Issue code: 90
On sale: 28/12/20
Recall date: 18/02/21
RRP $4.99Please accept our apologies for the inconveniences this may cause.
Thanks for your support.
What should Ovato have done?
In their note they say should you use a POS system. They know exactly who uses a system. Seriously!
This, from the Chairman’s address at last weeks (Nov. 26) Ovato AGM indicates that the company is restructuring in such a way that the financial responsibility to a chunk of employees who will lose employment is shifted to the Australian taxpayers.
In my opinion, it sucks. But … I don’t have the time to lobby on this. If I did, I’d say that in my opinion the trajectory of the company was set well before Covid, that those running the company should have known for years that restructuring was inevitable and that, for these reasons, the shareholders in the company should be responsible for funding employee entitlements, and, if they can’t, the whole business should collapse.
The restructure appears to be movements specifically designed to shift the liability for employee entitlements to taxpayers, and retaining, for shareholders, a smaller and, I guess, more profitable business.
But, hey, these are just my opinions. I am no expert.
I am, however, a long-suffering customer of the Ovato business, a business with inadequate infrastructure and inadequate strategic planning. It is my experience with these that feed into my wondering why Ovato is making the moves it is making and whether the reasons put forward as to justification for the restructure stand up.
Now, to be clear, I respect the folks working at Ovato. In my experience, they are professional and committee to Ovato customers. My issue is that the company does not provide them the resources they need to deliver the level of service we (customers) need.
But, more broadly on the restructure, I am curious as to the motives and long term plans of Are Media in all this.
I think it is important that employee entitlements are protected. However, I do not think companies should be able to shift things around through various structures controlled by essentially the same body for the purpose of avoiding the obligation of fully paying employee entitlements.
To me, what is happening at Ovato, the transfer of employee entitlement responsibility from the company to the taxpayer, could be considered through the lease of social responsibility. each time I see Ovato in the news, on social media and in emails touting business, there will be the reminder of how much taxpayers invested in remnants of the business so that the remaining business itself could trade.
Down here in small business land, most of us are not structured so that we can slice and dice and manoeuvre such that we keep the good bits and have others fund the funeral of the bad bits. I appreciate that sounds dramatic. Maybe I am missing someone but it is how it reads to this non accountant.
Newsagents continue to be treated poorly by Ovato., We do not have control over our level of indebtedness to the company, we carry considerable costs for wrong decisions by the company, we make bugger all margin on their products. Yet, we do it because magazines are a core category. That we do it, and they know we will, allows them to by inefficient and maybe that is a factor in getting them to the point of needing the restructure.
Who knows.
What I do know from the Chairman’s own words is that Ovato plans to restructure such that us taxpayers pay money towards the costs that will be a consequence of the restructure.
The last few months have been particularly stressful for some newsagents in Western Australia due to problems with magazine delivery.
The issue is not magazines at all on the on-sale day. Sometimes, they come the next day and sometimes two days late.
This is a relatively new problem, something that has happened in the last few months.
Newsagents impacted are frustrated as their calls for help, they say, fell on deaf ears for many weeks. They think the issue has come about because of more cost-cutting.
I am writing about this today to draw attention to the problem, to ensure publishers know of the break in the magazine distribution system that is affecting some in Western Australia.
The good news is that Ovato advised a couple of days ago that they think the issue is resolved. We will see what Monday and the days that follow bring.
I hope it is resolved as the newsagents involved would appreciate less stress.
The folks at Freshwater Fishing Australia magazine are offering it to retailers with a 50% GP offer and sale or return. Plus, it’s freight free.
I suspect we will see more direct to retailer opportunities like this from niche, special interest, publishers.
Freshwater Fishing Australia magazine is an ideal niche title in that readers are loyal. It works well with the decades-old cutaway service many newsagents offer.
I’d be interested to know if this 50% GP pitch works for the publisher.
Talking with a newsagent yesterday they explained how they were denied access to an increase in supply of Queensland Country Life by Australian Community Media.
They have been selling out of Queensland Country Life, as have their sub agents. They sought a modest increase in supply. The folks at ACM decided on an increase, but it was too small, smaller than what was requested.
Considering the increase in supply request, the newsagent looks at when in the shelf life cycle the title sold out. This can help forecast what could be sold. It is an approach that newspaper publishers themselves first used in Australia in thirty years ago in determining suburban newspaper top-up supply.
The only way the newsagent can satisfy their shop customers wanting to buy Queensland Country Life is to cut sub-agent supply, which will result in their frustration for sure.
The newsagent has a track record of excellent data and terrific results for this title. Unfortunately, the publisher appears disinterested.
I would have thought that now is not the time to be so frugal with a supply bump so as to deny certain sales of a title. I suspect advertisers in Queensland Country Life would want their ads reaching more eyeballs.
The situation was made worse by poor processes at ACM. Contact is challenging. They either want to sell more copies, or not.
This whole story is silly … silly in terms of the time the newsagent has had to spend on as slim margin products, silly in the way ACM manages contact, silly in the decision ACM ultimately made.
But it gets worse than silly – I am told the newsagent posted on the Queensland Country Life Facebook page, and they deleted the post. I posted a comment there, too, and next minute it was gone.
I’ve been contacted by more indie magazine publishers in the last 2 months about distribution to newsagents than in the last few years.
Five publishers have contacted me asking how to supply newsagents direct. There are new, launching titles, and two are existing and looking for a direct to retailer relationship.
Each conversation was interesting. It is fascinating hearing from niche title publishers. Their passion for their special interest is usually terrific.
Each of the five I have recently spoken with wanted a good relationship with newsagents. Better margin was on offer as well as flexibility for those prepared for firm sale.
Given the strong sales for niche titles, it is interesting to consider opportunities that may flow from direct supply. The challenge, of course, is the cost of managing hundreds of individual accounts along with the soft of using post to deliver titles.
Some niche titles have capacity for margin and this is where there may be opportunity for alternative supply arrangements.
Two of the titles are regional and fit with the interest today in nesting. One was arts related, writing, specifically.
Footnote: I suggested to each that for efficiency of management, distributing through Ovato was probably the best approach. I noted that while it was imperfect, it worked for plenty of publishers.
A newsagent sent me photos this morning of their wet magazines delivered via the News Corp. truck. It appears to be a feature of the trucks that they are open, with product not plastic wrapped subject to getting wet, like the entire shipment of magazines for this business.
You’d think that the folks in charge of the change in logistics arrangements would have ensures that the quality of service provided did not drop as a result of the change. Apparently, not.
This is the third time magazines have arrived wet in the newsagency that shares the photos with me.
People will not want to buy product that presents like this:
Rectification of the problem is a challenge. Gone are the days a rep would get in the car and personally deliver replacement stock.
