No other sector of the industry has higher barriers to entry or is as capital intensive as web printing. As magazine and newspaper volumes diminish the prospects of a new player entering the lucrative sector are remote. Which puts John Georgantzakos in a unique position. His company may not be the size of the other players, but he is fiercely competitive and protective of family-owned Spot Press. He spoke with Patrick Howard.
Printing is traditionally an industry dominated by family-owned, owneroperated businesses. The majority of printing companies have less than ten employees with the boss often taking a hands-on role. There are larger operations; $10 million to $20 million companies, and larger again, but even there most have grown from the family business. So it is not unusual that the brothers Georgantzakos, John and Dimitri, run their family-owned Spotpress. Their father George started the business in 1981, and in the best tradition of the industry, his two sons joined early, and are carrying on where he left off. What makes Spotpress so special is that it’s a web printing company, operating two Heidelberg heatset presses and two Goss newspaper presses at its Sydney plant, producing newspapers and magazines in the same rarefied business sector as News Corp, Nine, Ovato and IVE Group.
For John Georgantzakos the size of the other players is of little concern. He has a high level of respect and admiration for the large players. He also has cordial relationships with them all, with very little obvious competition.
“We strategically stay out of their way, targeting a different types of client. Their focus is on the corporate sector. Our focus on tier two and three publishers and retailers,” he said. “We don’t set out to compete with them. They’re servicing a different sector to us.”
Spotpress is one of two smaller independent, privately owned, web printers left, following the recent bout of consolidation. (The former Cadillac, now Graphic Web in Adelaide, owned by Sydney-based Access Print Solutions is the other.)
Spotpress is the sole family-owned business in the sector. As joint managing director of 30 years experience, John Georgantzakos is deeply informed and knowledgeable about the web market. He is engaged with the industry on multiple levels, notably as a director on the board of Printing Industries, but mainly as an owner-operator in the rapidly changing sector.
Spotpress operates in a unique specialised market where it is the dominant player. The ethnic newspaper industry is surprisingly large, and Georgantzakos is well versed in its many opportunities and challenges.
“We service the majority of the ethnic media in Australia. We print nine out of ten of them, maybe even more, nationwide. We literally print hundreds of ethnic publications, newspapers and magazines, in more than thirty languages.
“Over the course of forty years we’ve built up a good team that understands the idiosyncrasies of every culture we have to deal with. And remember, the way of doing business in every culture is not necessarily the same as in western culture.
One at a time
“We’ve built the business one customer at a time. In most cases our clients are owner-operators, the publishing business is their livelihood and they’ll fight tooth and nail to protect their livelihood,” he said.
The statistics are fascinating. The average newspaper print run is under 10,000 copies. Average pagination is 32-40 pages. Publishers continuously launch supplements and commercial magazines leveraging off their primary product. In a marked difference to the mainstream newspapers, overall the volumes in the ethnic press are stable.
“There may be a slight decline among individual titles, but that’s offset through the launch of additional titles.
There are customers that have other businesses, so there’s leverage there. It’s similar to a regional newspaper, but instead of being geographically based, it’s ethnic-based. The combined reach and the readership of multicultural print media are in the hundreds of thousands every week. Most people don’t realise the great influence these publications have, especially amongst older people where it’s often their primary contact. I once calculated that the combined readership of ethnic print media represents a quarter of Australia’s voting population,” he said.
Diversify for growth
John and Dimitri Georgantzakos are determined to meet the challenges thrown up by the changing media landscape. Spotpress is just emerging from a period of in-depth upgrades of its systems to improve productivity. The aim is to expand the range of offerings to its customer base, while maintaining the strong print relationship at its core.
“Because Spotpress is growing we’ve been focused on creating efficiencies in our business through software rollouts, implementation of MIS, CRM systems, and workflows. We’ve put software systems into all areas of our business. It takes a while to get them to integrate with each other; sometimes that’s easier said than done”, said Georgantzakos.
Georgantzakos knows Spotpress has to expand, but only in ways that makes sense. A swag of regional newspapers inherited from failing publishers was on-sold after steering them back onto a profitable path. They were viable businesses, but John and Dimitri didn’t want to be distracted from the main game, especially at a time of immense change. The experience allowed them to better understand the business models of their customers.
“Community media publishers have to evolve with the times. They have to diversify their revenue streams. There’s no magic formula. Today, publishers should be making money out of at least six revenue centres; online and print advertising, events, print circulation, ecommerce, and content licensing. No one can get there in a short term but you have to have a strategy to be there.”
One of the reassuring aspects of the Spotpress business model is the breadth of its customer base. Small publishers may not have the spend of the large corporates but the sheer number of customers, more than 450 in the case of Spotpress, means the company is largely insulated against the shocks that come when major clients switch printers.
“In the corporate retail world there is not that quantum of customers. So, it is logical that the growth of Australia’s two dominant heatset printers will come through strategic diversification. At Spotpress, we will diversify in our own direction. Our first strategy is a closer connect with our customers, assisting them with their needs. We’ll create businesses that revolve around servicing revenue growth, ad procurement, and strategies for distribution optimisation.
“You can’t be all things to everyone. Newspapers are still the core of our business. Over a third of our volumes are in newspapers. Our heatset division has evolved out of the need to service our newspaper clients who were launching magazines and supplements.”
Price sensitivity
Few sectors of the printing industry are as price sensitive to raw material increases as newspapers, especially to small owner publishers. When paper costs are the major factor in the overall economics, any increase is worrisome. Last year was an industry nightmare with paper increases in some cases of up to 20 per cent.
“The challenge of 2018 was the consolidation of the paper industry and the paper pricing pressures. They affected everyone. The series of incremental price increases would have been better managed if they had just rolled them into one up-front increase. When they’re incremental you tend to absorb the first one or two, naively believing that the situation is stabilising.”
Again Spotpress’s market shielded it from the risks of losing customers in the face of price increases. There was plenty of movement throughout the year but mostly in terms changing grades and qualities. Paginations and volumes held up remarkably well.
Rising costs of manufacturing are the day-to-day concerns of a hardworking print company owner. They align with disturbing trends of the migration of print advertising dollars to Google and Facebook and the retail apocalypse as a result of the internet. But they sit side by side with a belief in the resilience and long-term viability of print and of Spotpress as a business.