1. Information sessions

2.  Stephen Kaye Circulation Director

3.  This is a conversation about defining and securing a sustainable and viable future for newsagents as a retail and distribution channel  For many years our Industry has heard increasing concern from newsagents about the viability of distribution territories

4.  Increasing pressure on the viability of the territories and retail agents, jeopardising the longevity of the overall network  Home delivery is not economical in certain areas  Home delivery service levels are not meeting the changing lifestyle demands of our end customers  Current territory boundaries are not optimal  There is a conflict of interest between distribution agents and the subagents they service

5.  Inconsistent presentation of retailers in terms of store presentation, service provided, IR management, OHS and store hours.  The current remuneration structure does not recognise different territories and the costs associated with operating in different areas.  The current Distribution network is over populated and not efficient.  The current Retail structure does not enable Publishers to benefit from the staff currently employed by retailers.  Anti competitive issues regarding other retailers should be addressed

7.  Majority of newsagents were not making as much $$ as they thought they should from distribution  Their life is simpler without distribution  Their retail store is easier to run without distribution  They have more consistent cash flow without having to chase debt  Customers will still visit their store, even if they don’t deliver their newspaper

8. Separating distribution and retail New consolidated territories New remuneration structure for distribution Bringing subscriber invoicing in-house Standard retail commission continuing at 12.5%

9.  6 months ago, News would not commit to the Newsagency distribution channel playing a role in the new model  Today, only those CURRENTLY within the “new territory” can tender for a distribution licence.  Already News has identified they need to put MUCH more value into the retail contract

10.  Understand  Educate  Gather information  Talk to others Newsagents  Talk to VANA  Attend sessions …… All to assist in making the RIGHT decision

11. The following assumptions are made:-  2500 Fairfax products  Magazine network = 5 current magazine distribution areas  Both publishers are running their distribution in the new world  Home deliveries arrive at around 2am  10,000 daily papers = 5000 home delivery & 5000 sub agents  Distribution = domestic metropolitan area.  Income and expense are “average”

12.  5000 home deliveries completed by 6.30 am.  5000 home deliveries would equal around 14 rounds, each delivering around 360 papers each. This would take around 2 hours and cover around 30 kms.  Average cost of a delivery driver per day (over 7 days) around $80 per day plus fuel allowance of $23, totally around $ 103 per day, per driver. (Around $1500 per day)  This would be paying the driver @ 74 cents per km.

13.  Wrapping to begin around 2am, two hours at least to wrap 5000 papers on 3 machines (Mon-Fri). Weekends would be 4 machines and 3 hours to manage the larger newspapers.  For efficiency and machine performance, having a dedicated wrapper/s.  Staff can normally move to sub preparation after wrapping and then into delivery of subs, position covers a shift 2am- 7am.  Therefore 3 wrappers (including subs prep and subs delivery) would cost around $300 per morning averaged over 7 days

14.  5000 distribution per day would be around at least 100 subs/schools or special orders.  3 hours to prepare, pack and deliver. On weekends this would extend out another hour per day.  Staff wise you would use your wrappers, using strapping machines and vans. Average bulk size weight say15 kgs, 5000 papers would equate to around 3.5 tone of papers, therefore 3 vans to carry around 1.5 tonnes each on an average Saturday.  Eg: Hyundai ILoad vans can carry 1.5 tonnes costing around $30k each or around $700 per week including fuel, rego, insurance and average repairs.

15.  To run an operation of this size you would need at least two full time staff. Management of staff, machines, finances, housing, and day to day operation.  A manager and an admin staff member would cost at least $150k per year or around $3k per week.  With 100 subs, this would take 4 staff members on a Monday all working at least 6 hours each on a Monday...costing around $700 on a Monday to manage returns processes.

16.  Housing of an operation of 10,000 papers would need at least a warehouse of around 400 sq. meters. The average cost of this would be around $35-50k per year.  You would need a computer system, phone system, office facilities and warehouse work benches. The average set up cost of this would be around $45k.

17.  Missed and replaced papers  Top-up of sub agent network  Management of subscriptions  Management of staff  Finance and accounting  Preparation of next day

18. Assumptions Herald suns  Monday - Friday $1.20  Saturday $1.60  Sunday $2.00  5000 home delivery, 5000 sub agents supply  Based on current distribution model **** These projections are simply an example and should not be taken as true costing's and income.

19. Home delivery  5000 M-F = 25,000 x $1.20 x 25% = $7,500  5000 Sat = 5000 x $1.60 x 25% = $2,000  5000 Sun = 5000 x $2.00 x 25% = $2,500  5000 x 7 day delivery fee @ 1.27 = $6,350 Total commission earned for home delivery $18,350 Sub agents  5000 M-F @ 12.5%=$3,750  5000 Sat @ 12.5%=$1,000  5000 Sun @ 12.5%=$1250 Total commission earned for sub agents $6,000 Commission earned on 10,000 herald suns = $24,350 p/w

20.  Home delivery drivers $10,500  Wrapping and sub agent prep staff $2100  Sub Agents Delivery $700  Admin staff $3,000  Returns staff $700  Rent $1000  other costs $2000 Totalling $20,00 per week or $1,040,000 per year Possible difference + $4,350 per week

21.  No more 4 am starts … now 6am or 7am  No more Sunday or Public holiday trading  No more managing customer complaints  No more managing customers’ bills  No more early morning management…staff, machines, breakdowns, late papers.  Easier to have holidays having to only cover retail.  More saleable asset to sell. 6 days a week, 7-7pm business  Still apart of the ‘newsagency industry”

22. agent Toll project … Vic now Toll return logistics - within 6 months Toll - prepaid bags and boxes – within 6 months Retail payment – Touch $20 offer for retail subscriptions parcel prepaid pay subscribe return

23. 15 parcels per day x 5 days = $75 per week 23 cents x say 10 payments per day x 6 days = $13.80 $20 x say 2 sale per day x 6 days = $240 Possible income = per month $1424 or $17,097 per year. Investment or cost of goods sold = zero. Other than … and a good clean, efficient retail outlet. parcel pay subscribe

24. News Limited  Brisbane trial feed back  State based Publisher workshops  Maps available early 2013 ANF  Request for a meeting with News limited to discuss “details” about T2020 process eg: retail and country issues  Request to submit industry feedback document based on state association meetings around the country

25. VANA  October 24 th MCG VANA conference – ◦ Guest speaker – Catrin Thomas, News Limited National Director, Retail Sales  November 2012 - Industry workshops ◦ Understanding the business model ◦ Licence process eg tender process ◦ Legal and accounting advice ◦ Model calculators ◦ Retail opportunities