Struggling ASX-listed media company APN News & Media is selling its print business, Australian Regional Media, to News Corp for $36.6 million.
ARM includes 12 regional daily newspapers in New South Wales and Queensland, 60 community newspapers and over 30 regional news websites.
Earlier this year, APN, which has assets in Australia, New Zealand and Hong Kong, posted a $10.2 million loss for FY2015, largely due to a $50.8 million impairment of its news assets. The division’s revenue has dropped 7% year-on-year to $188.5 million, although the shift to digital has increased its audience.
The company cut costs in the print division by $40 million, but stopped investing in digitisation ahead of the sale.
Last month APN raised $160 million in institutional support and $14.4 million from retail investors as part of a $180 million rights offer. The institutional shortfall bookbuild attracted strong demand at 65 cents a share, a premium of 12 cents above the offer price of 53 cents.
It also has shareholder approval for demerger of NZME, its New Zealand business and has been in exclusive talks with Fairfax Media about merging with its NZ media businesses.
News Corp is an APN shareholder and currently holds a 14.9% stake in the business.
The sale requires shareholder approval as well as sign off from the ACCC and FIRB, together with the consent of certain counterparties to the ARM business.
It also marks the end of an era that goes back to the company’s foundation.
APN chairman Peter Cosgrove said the funds will be used to pay down existing debt as the business focusses on its radio and outdoor media assets, which include Kiis FM.
“The divestment of ARM is an historic day for the company as APN has been the custodian of some wonderful newspapers whose community roots go back over 150 years. We are now
passing that ownership onto another media group with deep publishing experience across regional Australia,” he said
“We will be a more nimble media company purely focused on growing our media assets of radio and outdoor.”
APN shares are currently sit at $0.63.