News Ltd has refused a request from Victorian newsagents to increase newspaper home delivery fees. The last increase was in July 2005 and that was the first increase in five years. The July 2005 increase did not cover cost increases incurred by newsagents over the five years.

News Ltd controls all the revenue earned by newsagents for the home delivery of News Ltd newspapers. One day News Ltd tells newsagents to act like business people and the next, through a decision like this, they treat newsagents as subservient slaves. News needs to decide what type of newsagents best serve its needs. Maybe the decision announced this week demonstrates that.

In the pages of the Herald Sun we often read about injustice. I best this poor treatment of small business newsagents and their families will not get a run.

The control exerted by News Ltd and other newspaper publishers over the fees charge by newsagents does not reflect fairness or best practice competition policy.

I received call yesterday from a newsagent considering selling or even giving away their newspaper home delivery run. While I am getting two or three calls a week from newsagents considering such a move, this one was different. As a second generation newsagent who had grown up in the business, their main concern was the appearance that they may be betraying the newsagents by getting out of distribution. They didn’t want their decision to shake the confidence of others.

The considerations for any newsagent considering selling off or quitting their distribution business have to local and surround the economic viability of the distribution arm of the business: territory size; newspaper mix; cost to service etc.

The chap I spoke with yesterday was like most considering retreating from distribution to focus on retail, they do not want to make the move but the falling return, in real terms, is forcing their hand.

When I was on the ANF Board in 2004 I and two other Directors met with senior executives from Fairfax several times to review the results of their national KPMG study into the economic viability of newspaper home delivery. While I will not breach confidentiality, it would be fair to say that the decisions being taken by some newsagents today to quit distribution would not surprise many newspaper publisher executives.

While the KPMG study was thorough and enlightening, confidentiality kept the results from newsagents except in somewhat meaningless summary form.

On the one hand publishers say they need the newsagent channel. On the other hand they control all of the key business levers except for the amount of labour the owner puts in.

If publishers want a viable newsagent distribution channel they need to review the fees they permit newsagents to charge. They also need to stop making newsagents carry any cost of excessive publisher subscription offers.

This is what it comes down to. The commercial viability of the home delivery business. Newsagents and publishers ought to be in active dialogue about this at a grass roots level. Publisher representatives need to be as open as Rupert Murdoch in discussing possible future news models.

Many newsagents, like the chap I spoke with yesterday, want to remain in newspaper distribution. They respect and enjoy the tradition. They like that it is local. But they need to feed and clothe their family.

Some entrepreneurial newsagents have banded together and created exciting new home delivery models – showing how home delivery can be viable. Their success is well deserved.

Maybe we need to let go of the local newsagent delivering newspapers altogether because the publisher controlled pricing only works at the consolidated mass operation level.

This is an important debate for newsagents.