Australia’s biggest magazine group is facing plenty of problems with its distribution system as Kerry Packer and his lieutenants restructure the operation of ACP.

The changes just keep coming at Kerry Packer’s Australian Consolidated Press (ACP) magazine division and its Network Services arm. And so do the problems. So much so that some newsagents are asking whether ACP has dropped the ball and forgotten a few things, or whether this is all a cunning ploy by Kerry Packer’s almost adopted son, PBL CEO John Alexander.

There’s actual a plethora of things happening at Network and ACP at the moment as you can see from this company announcement.

Network is the distrubition arm of ACP. It is the ‘interface’ between the Packer publishing arm and the various retail outlets around the country which sell magazines: newsagents, service stations, shops, supermarkets, airports and kiosks.

Network’s main executives offices are about to shift from 54 Park Street across Castlereagh Street in Sydney to the 10th floor of Stockland House, where many of the ACP magazines are based. Some wits call it “Ralph Towers” after the soft porn men’s title from the ACP men’s titles in that building.

Here’s an internal email issued on Friday:

“Network Services Head Office, NSDP and IT is on the move. All of Network Head Office, NSDP and IT will be moving to Level 10 Stocklands House in early-mid November. We will be moving into the area beside the Call Centre and the dividing wall will be taken down. As we get closer to the moving date you will be given instructions on moving procedures and seating arrangements.”

But some of the Group Publishers, such as Phil Scott and others are due to move to the refurbished corporate level of Kerry Packer’s Park Street bunker, probably about the same time as Network bosses move back to Stockland House. That’s in about two month’s time.

That means CEO Phillip Parsons and his new General manager of Group Business, Jonathon Champion, will be able to deal more directly with Network staff and many of the magazine publishers. Of course the production and publishing people, along with the powerhouse women’s titles remain at Park Street, along with Alexander and the other senior executive and corporate functions.

Jonathon Champion has been with Network for two years and was last week named to his new spot in an announcement from Parsons who said: “This newly created role is a result of structural reforms within Network to accommodate growth and refocusing of resources. All reporting lines will remain the same and the Network executive will continue to operate. Further structural changes will occur in the coming months and with those changes opportunities for all staff and Managers will unfold.”

What the announcement didn’t say was that Champion, along with Parsons, has been going around Australia in the past month, calling forums of newsagents to allow discussion of the problems that have emerged in NSW and Victoria with the subscription system, returns and the new First Fleet distribution deal (with Gordon and Gotch/PMP/Pacific Publications, part of the Seven Network).There are concerns in Queensland at the subscription system.

‘Fighting Fires’ would be more appropriate in some states. In fact problems is not an accurate word. B–ls-up, disaster and worse have been used. Magazines haven’t been flowing as smoothly as before from either ACP or Pacific. New Idea and TV times, and the Bulletin have been fitful in arriving at most newsagents on time, along with new Weekly and Woman’s Day.

Subscription deliveries have been appalling handled. One inner Sydney newsagent last week receiving its subscription magazine copies from ACP, but also those for four other newsagents.

Network and ACP showed no interest infixing up the problem, while another newsagent didn’t receive any deliveries of TV WEEK last week, and none were forthcoming at all, despite repeated phone calls. Finally the agent was told that there were no more copies.The loss of revenue was small, but its being repeated every week.

Returns to ACP/Network and Gordon and Gotch are being botched, but the bigger problem seems to be at ACP.
Some days up to a dozen newsagents in NSW are missing out on deliveries, as First Fleet struggles to understand the nuances of magazine distribution.

Normally, the newsagents returns are taken to a central point in Sydney and then sent to the Network/ACP facility at Banksmeadow and the Gordon and Gotch returns are sent to Albury.

On numerous occasions, the ACP returns have been sent to Albury, leading to demand from Network and ACP for newsagents to send in details of returns. But the information has already been sent in with the returns collected from each agent.

This raises the danger to ACP of losing control of the returns, one of the worse sins in publishing. Without an accurate idea of returns, costs can blow out as print runs are slow to adjust to rises or falls in return levels, accurate circulation figures become harder to obtain, costs also rise from greater handling charges, and relations with newsagents and other retail outlets become strained.

Many newsagents are apparently asking if Coles and Woolworths are having the same problems, or whether they are getting special treatment because of the desire of John Alexander and his deputy, David Gardiner to move closer to these retail giants to drive sales.
The contentious issue of subagent sales for newsagents is already undermining confidence.

Some 700 newsagents have lost the subagent delivery income, mainly due to the deals struck by ACP with Coles Express, Woolworth/Caltex and BP and Mobil. This will save more than $500,000 a year for ACP which normally went to agents. Some agents have complained that this move, plus the problems with deliveries and returns, is affecting the goodwill of their businesses. There is some chat on newsagent websites of legal action if the situation doesn’t improve soon.

What has upset some agents that at these recent forums, Phillip Parsons in particular was adamant that there would be no changes. That network was having to do the bidding of ACP(and that means Alexander and Gardiner). No discussion was allowed at the forums of the elimination of newsagent subagent deliveries.

Agents who attended were left in no doubt that they had lost this income stream, leading one Southern Sydney area agent to complain bitterly at losing the supply rights to the second biggest service station complex in Australia; the two Mobil stations at Pheasant’s Nest, on the Hume Highway, southwest of Sydney.

Parsons made it clear that the demands for cost cuts was being driven by ACP and agents had better get used to the idea. Agents now wonder if the offer of extra promotional spend and help by Network to try and help agents make up for the loss of income from the loss of the subagents deals from early next month, will actually work given the problems in supplying ACP magazines at the moment. But ACP must sense the problems it has. It has lifted the returns handling fee to agents by 50% in some cases.

ACP targets the range of 18% to 20% of each magazines print run as returns. In some cases, it has not much of an idea of just what has been going on since the First Fleet delivery deal started in Victoria in July and in NSW just over six weeks ago.

The problems agents have with distributing subscriber copies of ACP magazines has also been raised at these forums, on website chat rooms and in phone calls. Many agents say they can’t deliver the magazines for the what they are paid by ACP and that they would be better off not doing the subscriber deliveries and either giving it up to ACP to organise, contracting to one of several contract delivery companies growing in Sydney or telling ACP to use Australia Post.

Australia Post is the channel of last resort by ACP, and although the costs are not too far apart, for some reason ACP has pressed agents to handle the business, using the fear of giving someone else the business in the agent’s area if they don’t want to do the deliveries.Meanwhile at there is a new subscriptions system at Network that cost more than $1 million to install from the US. Its working, but agents say it has limits.

One of the most glaring problems is that subscribers cannot be told who their delivery agent is on the new system, hence the problem agents have when they receive the subscription copies of other agents. It’s like a big black hole.

Peter Fray

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