Ferret's Stock to Watch RURAL PRESS LIMITED 09:36, Monday, 23 October 2006
A MEDIA COMPANY THAT SAYS DOOR IS OPEN TO RIGHT OFFER
Sydney - Monday - October 23: (RWE Aust Business News) ******************************************************
OVERVIEW ********
Shareholders of Rural Press Ltd (ASX:RUP) were told what it might have been if the company had been a bit bolder and acquired the Australian Financial Review among the collection of assets in its trade-off with Warwick when the original Fairfax owners split up.
Strangely, it was chairman John B Fairfax who raised the issue, reported by the Sydney Morning Herald on Friday at the Rural Press annual meeting.
Even the SMH picture of chief executive Brian McCarthy and Mr Fairfax addressing shareholders seemed to give the impression that the chairman, looking at his watch, appeared to be running out of time.
Was this a portent of things to come?
Or just another appointment elsewhere.
After all, John B's remarks were related to the time of the spilt about 20 years when the company might have been able to get its hands on other valuable assets.
But the most interesting part of the chairman's address to shareholders was related to the present media upheaval and what it could mean for the company.
The chairman said the changes to media laws which pass through Parliament last week have already resulted in fundamental changes in the media landscape.
He said the company has been looking at a number of options for a considerable time, and continues to do so.
"However, we shall not act hastily, we shall look at the benefits for all shareholders, and should an interested party knock on our door we shall more likely open it to those who can add media and professional value rather than simply financial clout," Mr Fairfax declared.
"Your company has a group of assets which are not merely of value today, but as the world changes, will be valuable in the future provided we adapt to those change.
"The company's trading outlook for 2007 is certainly more subdued compared with a year ago.
"The spectre of high fuel prices, increased interest rates and the return of drought conditions in many parts of Australia makes it difficult to confidently provide any further guidance to that given at our full-year results announcement.
"At this stage we are still marginally ahead of last year, so we are targeting growth for 2007," the chairman said.
In August, the company announced yet another record result by achieving record revenues, earnings and dividends for the 2006 financial year.
Except for two years, 1991 and 2001, Rural Press had been able to produce increased profits for the 17 years since listing on the ASX.
It has been able to increase annual dividends to its shareholders throughout this period.
The chairman told shareholders: "We face a future which will undoubtedly embrace many changes; but there is uncertainty for almost every media segment.
"There is no certainty about the internet whatever impact it is having.
"There is no certainty about free-to-air television due to the changes in delivery methods through digital and broadband technology; there is no certainty about radio due to the use of i-pods and mobile telephones.
"So I think I say to you - forget the hype about newspapers being dead," Mr Fairfax said.
"Every segment of the industry is in a state of flux and uncertainty, and most of us are doing something to protect our core business and perhaps take advantage of the changes.
"It is both challenging and exciting."
SHARE PRICE MOVEMENTS *********************
Shares of Rural Press shot up 84c to $12 on Friday. Rolling high for the year has been $12.10 and low $9.19. Dividend is 54c to yield 4.5 per cent. Earnings per share is 54.7c and price/earnings ratio is 21.94. The company has 118.8 million shares on issue with a market cap of $1.4 billion.
One factor which shareholders should remember is that Rural Press has to ride the worst drought in living memory and it remains to be seen whether the company has diversified quickly enough to fill in the increasing gap in pure rural revenue.
It is obvious that acquisitions in the past year have been aimed at this objective.
They included the purchase of CD Field Days in Fielding, NZ, Southern Estate Magazine in NSW and the purchase of the minority shareholders in Harris & Co in Bernie.
Last week the company announced the purchase of the North West Star in Mount Lisa from the Joel family, a family close to the chairman and good friends of Rural Press.
The company will continue to make financially sensible acquisitions as and when the opportunity arises, because with each new purchase its market coverage grows, providing advertisers with a broader but still very targeted reach.
Mr Fairfax told shareholders that Rural Press was certainly affected by the current drought.
"However, we are also cautioned in that not every part of the country where we publish is affected.
"We have diversified our revenue streams in areas such as printing and the Canberra Times which alleviate the sort of pain we might have it we still only had the agricultural weekly, The Land newspaper, on which the company was founded."
Rural Press has more than 200 publications across three continents and, this has been the company's "drought proofing" philosophy, to diversify geographically and by product.
But the chairman admits that rural Australia is doing it tough once again.
"Water remains a major problem; debates rage about wind farms, land clearing; ethanol production and so on.
"As with so many issues, self interest prevails with political expediency running the agenda," he said.
"My Utopian world asks that those we have chosen to govern us, do so for the benefit of us all.
"Just as we did in the media law law changes, we should ask the bureaucrats and our politicians to listen to the arguments and then do what is best for Australia," Mr Fairfax concluded.
BACKGROUND **********
Rural Press Ltd was listed on the Australian Stock Exchange in March 1989 after the restructure of the John Fairfax group after Warwick Fairfax briefly took control.
The specialist agricultural and regional publisher eventually finished up with the family of JB Fairfax, the cousin of Warwick who went to live in the United States.
Rural Press's roots are deeply embedded in country Australia.
The first publication - The Land - was launched in 1911 by a group of like-minded people who felt that farmers and graziers needed a strong advocate in the face of what was seen at the time as agriculture's diminishing political and economic influence.
Those reasons for the introduction of The Land more than 80 years ago - because as the first editorial pointedly stated - "it is needed" - hold firm today, and have been strongly embraced by the company and its employees.
Together, Rural Press's directors, management and staff are dedicated to striving tirelessly to enhance the economic, political and social well-being of rural and regional communities in every town, city, region, state and country in which the company is involved.
Rural Press believes its dedication to fostering rural and regional interests wherever the company operates has been and remains a worthwhile endeavour.
Rural Press derives much of its revenue from country people and country-related industries.
It serves the people of regional and rural Australia through its publications and our printing sites.
In addition, its operations serve rural people in New Zealand and the United States of America.
