Industry consolidation, whether by mergers and acquisitions or via company failures, is a topic that gets plenty of play in this magazine. This month, we look at the upside to a shutdown. Can acquisitive firms find a silver lining in the demise of a fellow print shop?
While consolidation remains a key trend, it is not the only one. In fact, the polar opposite force is also in effect. I wasn’t sure if ‘deconsolidation’ was actually a word, but I’m told it is. It certainly seems the correct term for what is taking place at the top end of town.
As ProPrint went to press, a sale of Blue Star seemed imminent. The process had already begun with the spin-off of New Zealand’s Rapid Labels.
When I ask industry contacts for their thoughts on a Blue Star break-up, there’s some consensus on which assets are worth buying and which will struggle to fetch a decent price. Webstar, which produces ProPrint, is regularly held up as a strong part of the stable, while sheetfed could prove difficult to offload.
One best-case scenario estimates the sale will net $150 million, up to $100 million shy of its debt load, not including the NZ$105 million Kiwi investors ploughed into the group’s bonds on the New Zealand Exchange. Those same bondholders who greenlit last year’s debt restructure have now been told their investments could be worthless.
Blue Star isn’t the only print media company in the deconstruction phase of M&A. In July, Network Ten sold outdoor media division Eye to rival out-of-home operator Ooh Media, which is owned by Blue Star’s backer, Champ Private Equity. It is clear that getting its fingers burned with Blue Star has not put Champ off the roll-up game.
Clearly printing is not the only form of ‘old media’ facing the twin perils of online competition and falling ad spend. In fact, PricewaterhouseCoopers has just revised down its five-year growth forecast for the Australian advertising market to just 2.8%. Within this, it expects print to be a poor performer. Free-to-air television is also feeling the pinch, and Ten in particular. But as sellers spin off non-core divisions that are potentially lucrative, does it show the wisdom of ‘sticking to your knitting’, or will it prove to be a case of selling off the family silver?
Steven Kiernan is editor of ProPrint
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