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)
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OVERVIEW
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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
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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
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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.
ENDS
Copyright © 2006 RWE Australian Business News. All rights reserved.
RUP
rural press limited
