Fairfax buys INL, the largest NZ print media company

17 April 2003

The transaction includes the two New Zealand Sunday tabloids,Sunday Star TImes and Sunday Time as well as seven regional dailies, 53 community publications, 13 magazine titles and the largest magazine distributor, Gordon & Gotch, plus commercial printing operations. Among the INL titles transferred are two major metropolitan dailies, The Press in Christchurch and The Dominion Post in Wellington. It does not include INL’s Australian title The Geelong Advertiser, although chairman Ken Cowley says there is interest in that title from a prospective buyer.

The sell out is a rare concession on Rupert Murdochs’ part, famous for his reluctance to part with any newspaper titles anywhere in the world. Industry analysts speculate it reflects News Limited’s renewed focus on its pay television business – the sale dos not include INL’s New Zealand pay television division Sky Network Television.

The sale, which places a high valuation on the INL business and is subject to regulatory approval, involves a complex revaluation of the mastheads including a sale and leaseback structure to minimise tax. Fairfax will sell the mastheads to an offshore investor which can amortise the goodwill and claim a tax deduction, something Australian companies cannot do. Following the sale 30 per cent of the company’s revenues will emanate from New Zealand.

Fred Hilmer, CEO of Fairfax said, "We believe that we have secured this publishing group at a price that compares well with the price paid by APN for Wilson & Horton. We believe this acquisition represents sound value for Fairfax shareholders.”

Fairfax will become the largest publisher in New Zealand ahead of Wilson & Horton, which publishes The New Zealand Herald in Auckland. According to Hilmer there is little overlap between the two groups. "That's an important factor as it drives pricing power and a stability of earnings that we don't enjoy here [Australia] with our urban papers," he said.

He expects to gain savings from improved management of the newspapers under Brian Evans, currently Fairfax group general manager, regional and community newspapers. He also flags better purchasing power with paper merchants, editorial sharing, printing and distribution.

According to Dean Wills AO, Chairman of the Fairfax Board of Directors, the company’s intention is that the INL papers remain closely connected to their communities. He said that the company would establish an Advisory Board to ensure a positive ongoing relationship in this regard under Fairfax's proprietorship.

INL’s stable of printing presses, scattered throughout the country include Goss Communities, a HT70 and a number of MANRoland Unimans. Fairfax says the press assets are mid-way through a 20-year life cycle and do not require any major investment. It plans to upgrade the group’s colour printing capacity with a $1.2 million upgrade.

INL had a turnover last year of NZ$873.5 million and announced a net profit after tax for the six months to 31 December 2002 of $38.8, a 43 per cent increase on the same period in the prior year. It forecasts a full year of operating earnings of $NZ130 million in 2004.

Among the suburban publishing businesses involved in the change of ownership are:
  • Taranaki Newspapers Limited

  • The Christchurch Press Company Limited

  • The Dominion Post Limited

  • The Manawatu Standard Limited

  • The Marlborough Express Newspaper Company Limited

  • The Nelson Mail Limited

  • The Southland Times Company Limited

  • Timaru Herald Limited

  • Waikato Times Limited