PMP Ltd.

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PMP Ltd.

Level 13, 67 Albert Avenue
Chatswood
NSW 2067
Australia
Telephone: + 61 2 9412 6000
Fax: + 61 2 9413 3939
Web site: http://www.pmplimited.com.au

Public Company
Incorporated: 1991 as Pacific Magazines and Printing
Employees: 3,981
Sales: AUD 1.21 billion ($900 million) (2004)
Stock Exchanges: Australian
Ticker Symbol: PMP
NAIC: 511120 Periodical Publishers; 323110 Commercial Lithographic Printing; 323117 Book Printing; 511130 Book Publishers; 511140 Database and Directory Publishers

PMP Ltd. is Australia's leading media services company. PMP's primary business is commercial printing, and the company's PMP Print division is the leading commercial printer in Australia and New Zealand. The company's range of products include magazines—PMP formerly owned the Pacific Magazines group of titles—books, catalogs, directories, newspapers, government publications, direct-mail and other promotional printing, as well as printing for corporations. PMP's range of media production services also includes micromarketing, through subsidiary Pacific Micromarketing; digital premedia, through digital publishing subsidiary PMP dbooks; and distribution services, including addressing and plastic wrapping. PMP Distribution handles the company's market-leading distribution operations, providing door-to-door delivery services for printed matter. The company's distribution wing covers more than 96 percent of Australia's and New Zealand's homes. PMP also operates Australia and New Zealand's oldest and largest magazine distribution business, through subsidiary Gordon & Gotch, supplying more than 3,300 newspapers and magazines throughout Australia. Since adopting a new strategic focus in 2002, PMP has been phasing out its publishing operations, including the sale of its U.K. publishing house, Attic Futura, to France's Hachette Filipacchi Medias, and its magazine division to Seven Network, in 2002. PMP continues to operate its Australian book publishing business, Griffin Press. Listed on the Australian Stock Exchange, PMP posted revenues of AUD 1.21 billion ($900 million) in 2004. The company is led by former All Blacks—the Australian rugby team—captain David Kirk.

News Corporation Offshoot in the 1990s

PMP originated as part of the global media empire constructed by Rupert Murdoch through the 1970s and 1980s. While Murdoch's News Corporation gained leading positions in the print and broadcasting markets in the United Kingdom and the United States, the company also built up extensive interests across most of Australia's media landscape as well. Murdoch's interests in magazines began with his father, Keith Murdoch, who founded News Ltd. and gained control of Southdown Press soon after World War II. Southdown had by then acquired one of Australia's oldest and most popular magazine titles, New Idea—A Women's Home Journal for Australia, originally launched in 1902 by T. Shaw Fitchett.

New Idea remained a cornerstone of Southdown's growth into one of Australia's major magazine and newspaper publishers. Rupert Murdoch took over News Ltd. after his father's death in 1952 and, backed by New Idea 's strong revenues, sought to expand the group's magazine portfolio. In 1957, the company launched a new magazine format for Australia, TV Week. Using the United States' TV Guide as a model, TV Week became Australia's first television-oriented magazine, at a time when the country had just two television stations, reaching no farther than Melbourne and Sydney. TV Week became the bestselling magazine in Australia and over the next decades provided a solid cornerstone for Murdoch's empire building.

Into the 1980s, News Ltd. built up a substantial magazine portfolio, which, together with the group's strong array of Australian newspapers, was placed under subsidiary Southdown Press. At the same time, News Ltd. expanded its printing capacity in Australia. By the end of the decade, the company was one of Australia's leading printers as well.

Rupert Murdoch's massive spending spree during the 1980s—which included the acquisitions of the Chicago Sun Times, the Herald and Weekly Times, South China Morning Post, and publishers Harper & Row and William Collins and Sons—had transformed News Ltd. into the world's largest English-language publisher. News Ltd. also added U.K.-based Attic Futura, a specialist publisher of teen-oriented magazines active in the United Kingdom and in Germany. Meanwhile, News Ltd. had continued adding to its stable of magazines, including titles such as Listener In-TV, based in Victoria, renamed as TV Scene.

Another operation added during this time was Griffin Press. That company originally had been founded as the book printing subsidiary of Advertiser Newspapers Ltd., based in Adelaide, in 1858. Over the next century, Griffin grew into a respected printer and publisher. In 1931, the operation gained further scale when it acquired a new printing plant, called The Register. Following World War II, Griffin began investing in new printing technologies, including offset lithography and die stamping, as well as adding automatic bookbinding facilities. In the 1950s and early 1960s, Griffin also acquired a number of additional printing plants. These were then consolidated into a single state-of-the-art facility in Netley, near Adelaide, in 1964. Into the 1980s, Griffin branched out from book publishing, adding a range of general printing services, such as labels for bottles, cartons, and other graphic materials. Griffin also later added digital graphics and printing capabilities and micro-marketing capacity. By the early 1990s, Griffin claimed the leadership in Australia's print media production sector.

In the meantime, Murdoch's spending spree had placed the group heavily in debt. By 1990, News Ltd. was buckling under a debt topping $8 billion, with more than $1.2 billion due by 1992. In response, Murdoch launched a dramatic restructuring of News Corp. In exchange for a refinancing package from his more than 146 creditor banks, Murdoch agreed to sell a number of News Ltd. holdings.

In 1991, News Ltd. bundled the Australian magazine operations of Southdown Press and Attic Futura together with the company's Australian printing division and spun them off as a new company, Pacific Magazines and Printing. A total of 55 percent of the new company was then listed on the Australian Stock Exchange, with News Ltd. retaining a 45 percent stake. Included in the creation of PMP was the Griffin Press business, which formed the heart of its printing operations. Other PMP printing interests included Progress Press, Wilke Color, and Wilke Directories. PMP activities also included the largest combined door-to-door distribution business in Australia.

Refocused in the New Century

PMP remained dominated by News Ltd. into the second half of the 1990s. One result of this was the extension of the company into still more areas of operations, such as a $175 million bid in 1996 to enter the CD and video printing business through a takeover of Shomega, itself formed through a merger with digital media group Show-Ads. Founded in 1928, Show-Ads not only gave PMP a boost in the digital media market, but also in the market for direct-mail and related publications and distribution. The acquisition was also part of the decision by the company to take on a new name, PMP Communications, that year.

News Ltd. sold off its 45 percent stake in PMP in 1997, saying that PMP no longer fit within its core operations. Yet by the beginning of the next decade, PMP also was forced to re-examine its own operational core. Profits were proving harder to come by for the company, especially as its flagship TV Week, battered both by the appearance of free television supplements in many Australian newspapers, and by the availability of television listings on the Internet, saw a steady circulation decline through the 1990s and into the 2000s. The rise of Internet usage also had led to an erosion in the group's other titles. As it entered the new century, PMP found itself burdened with debt and slipping profits.

PMP attempted to launch its own Internet strategy in 2000. In that year, the company teamed up with "convergent media expert" Imagination Entertainment, forming the joint venture Pacific Imagination Online. The two companies hoped to unlock the potential Internet value of subsidiary Pacific Publications' magazine portfolio. Yet PMP already had been outpaced to the Internet by its competitors, and its online efforts failed to take hold. By the end of that year, the company had slipped into the red. The company then announced that it would conduct a review of its publishing operations.

In 2001, PMP appeared to have found a solution for its magazine publishing woes when it reached an agreement with its chief Australian rival, Independent Print Media Group (IPMG), to merge their operations. The resulting company might have become a true magazine powerhouse in the Australia and New Zealand market. The deal was quickly quashed, however, by the Australian Competition and Consumer Commission. PMP and IPMG continued to hold talks through the end of that year in an attempt to come up with concessions that would appease the competition commission. Those talks ended bitterly in December 2001.

Company Perspectives:

Increasing the return on your marketing investment—in today's fast-moving market. PMP provides innovative and tailored solutions. Our technology and deep expertise can improve the way you create and deliver your message, and it can help you target that message to the right people in the right way. PMP's integrated media production solutions help our clients to exploit new opportunities rapidly. By adopting a digital approach to communication workflows, your information (data, text, documents and images) can be captured and managed in a digital environment, streamlining your communications and creating efficiency gains. PMP's products, services and expertise can help you exploit the digital era—reducing costs, improving processes, controlling inventory, and developing new products all through a digital environment and workflow. The PMP approach is to leverage the finest technology, the best people and the most carefully-chosen solutions to your advantage. It's an approach that gets results.

Instead, PMP found a different partner, turning to Seven Network in July 2001 in an effort to raise cash to pay down its debt. The two sides agreed for Seven to pay AUD 85 million ($43 million) to acquire 50 percent of Pacific Publications. The deal also called for the two parties to share PMP's Gordon & Gotch Australia magazine distribution business. Gordon & Gotch was originally founded in the early 1850s, and had grown into Australia and New Zealand's largest magazine and newspaper distributor. PMP had acquired Gordon & Gotch's Australian operations in 2000, from INL, based in New Zealand. PMP acquired Gordon & Gotch's New Zealand operations as well in 2004.

By then, however, PMP's magazines had slumped in value, sending the group's share price plummeting into the penny stocks region. By June 2002, the company decided to exercise its option to sell Seven Network its stake in their joint venture. In exchange for AUD 65 million, PMP sold Seven Network full control of Pacific Publications. PMP kept, however, the Gordon & Gotch distribution operation.

Following the sale of Pacific Publications, PMP announced a strategic refocus of its operations in general, which included its decision to exit the magazine publishing business altogether. Soon after, PMP announced that it had found a buyer for its U.K. publishing operation, when France's Hachette Fillipacchi Medias agreed to buy Attic Futura for AUD 115 million.

PMP's stock remained in the basement, however. By the beginning of 2003, the company's shares were worth less than 50 cents (Australian) each. In March 2003, the company brought in a new CEO, David Kirk, to help turn the company around. Kirk, formerly a captain of the country's All Blacks rugby team, had experience in the Australian media market and was president of Norske Skog Australia at the time of his appointment.

Kirk led the company on a new strategic review. As part of that review, the company moved to reduce its debt, in large part through the sale of a number of noncore subsidiaries. At the same time, the company began restructuring its focus around a new core of printing, launching an investment program to step up its print division's efficiency. To this end, the company pledged AUD 124 million in May 2004 to upgrade its equipment and install four new heat-set presses at its main plant. The company expected the new presses to come online in 2005.

PMP's refocusing effort appeared to be paying off by then. At the beginning of 2005, the company announced rising profits, up nearly 54 percent over the previous year. The company expected to reap the benefits of its printing press expansion as well in the coming year, especially by 2006. In the meantime, PMP continued in its efforts to pay down debt in order to release the group's full profit value. Although its legacy lay in magazines, PMP turned into the new century as one of Australia's leading printing and distribution companies.

Principal Subsidiaries

Canberra Press (Melb) Pty.; Canberra Press (Plant) Pty.; Canberra Press Holdings Pty.; Gordon and Gotch Australia Pty.; Griffin Press Pty.; Keppell Printing Pty.; Marketspace Pty.; Mercury Walch Pty.; Pacific Intermedia (NZ) Limited; Pacific Intermedia Pty.; Pacific Micromarketing Pty.; Pac-Rim Printing Pty.; PMP (NZ) Limited; PMP Digital Pty.; PMP Distribution Limited (New Zealand); PMP Print Pty.; PMP Property Pty.; PMP Publishing Pty.; PMP Wholesale Pty.; Prestige Litho Pty.; Shomega Limited; Show-Ads Pty.; The Argus & Australasian Pty.

Principal Competitors

Publishing and Broadcasting Ltd.; Independent Print Media Group Proprietary Ltd.; Rural Press Ltd.; R.M. Williams Holdings Ltd.; Consolidated Press Holdings Ltd.; Reader's Digest Australia Proprietary Ltd.; Retail Technology and Services Ltd.; General Publishers Ltd.; Enterprise Information Management Proprietary Ltd.

Key Dates:

1991:: News Ltd. spins off magazine divisions Southdown Press and Attic Futura, as well as Griffin Press and printing operations into a new company, Pacific Magazines and Printing (PMP), which is listed on the Australian Stock Exchange.
1996:: PMP acquires Show-Ads and changes its name to PMP Communications.
1997:: News Ltd. sell off its 45 percent stake in PMP.
2000:: PMP acquires the Australian operations of Gordon & Gotch.
2001:: After a failed merger with IPMG, PMP merges Pacific Publications into a joint venture with Seven Network.
2002:: PMP announces its decision to exit magazine publishing, selling off its share of the joint venture; Attic Futura is sold to Hachette Filipacchi Medias.
2004:: PMP acquires Gordon & Gotch's New Zealand operations; the company launches construction of four new presses, expected to be completed in 2005.