The sale process for national news agency Australian Associated Press (AAP) is now focused on one leading bidder, insiders say.
At least two early interested parties dropped out because, say the insiders, the bidding had got “too rich”.
But a deal for the 85-year-old national news service, known for its fast and objective news feed, is near if the due diligence process progresses without major surprises.
AAP, owned by Nine, News Corp, Seven West Media and Australian Community Media, in April announced its closure, saying it was unable to compete with free information on the internet.
The initial plan was to sell the valuable commercial pieces of AAP, including press release distribution service Medianet, to fund payouts for the 600 full-time and part-time staff.
But the owners, led by News Corp and Nine, were surprised at the depth of interest from potential buyers for the business as a whole, not just the profitable pieces but the national newswire as well.
Those kicking the tyres of the business were bemused at the closure announcement. One bidder: “They destroyed value by first announcing a closure. They effectively said the business wasn’t worth much.”
In response, AAP delayed layoffs and opened talks with interested parties.
However, a new owner will have significant hurdles to make a national newswire profitable in an open market and without guaranteed supply agreements.
AAP’s two biggest customers, and main shareholders, Nine and News Corp, are likely to disappear as the core consumers of the newswire and as major sources of revenue post a sale. Together they are worth about $15 million a year to AAP.
News Corp is already advanced in establishing its own internal newswire to replace the syndicated content supplied by AAP to its newspapers and digital assets.
The project is being led by Mel Mansell, group director, editorial transformation and strategy, who is currently hiring, internally and externally, for NCA NewsWire, the working title of the internal news agency.
And that could make News Corp a potential competitor to a new proprietor at AAP.
News has flagged that it is open to selling its own newswire content to outsiders. Mansell: “It is also going to be content that we will make available as required to clients outside our business.”
That puts News is a strong position in the market with content it already produces for its own titles. Any revenue from such a fixed overhead (assuming its would be lower than that currently paid to AAP) would be a gift and make building a News Corp newswire more attractive.
This puts the potential market for an independent AAP newswire -- likely a cut down version of a national news agency -- with smaller players such as the Guardian Australia, Verizon Media and the Daily Mail, broadcasters and news websites.
AAP was always run mainly as a service for its owners, a way to cut overheads for bedrock content, rather than a revenue stream. The more commercial units, such as a service for broadcasters and a media contact database, came later in the newswire's history.
In 2019, AAP had revenue of $65.67 million, posting a small profit after a $10 million loss the year before. It has about 200 editorial staff.
At the moment, AAP will only confirm “detailed and confidential discussions” with a number of parties.
The process is expected to take another week or two, AAP says.
National news agencies are under pressure throughout the world, caught in the same digital disruption that media owners face, compounded by a drop in advertising from the pandemic. This has placed further pressure on AAP’s customer base.
The New Zealand Press Association closed in 2011 and AAP closed its New Zealand Newswire in 2018.
Campbell Reid, a senior News Corp executive and AAP’s chairman, has been contacted for comment.
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