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On Wednesday irreverent but respected political blog Crikey published a story trumpeting the imminent demise of Australasian bookselling conglomerate REDgroup Retail, owners of Angus & Robertson, Borders and Whitcoulls chains. The journalist’s name is Tom Cowie, and he’s new to Crikey, but a story like this is likely to turn heads for a journalist just earning his chops. Well, it would, if more of it were accurate.

Focusing on the ebook side of publishing as I do, the yarn surprised me, since Borders.com.au and Kiwi chain Whitcoulls, both REDgroup brands, are the only companies really doing anything worthwhile in ebooks in Australia and New Zealand.

Phrases like “mired in debt” and “slashing its range” speak of a company about to call in the receivers. So I contacted REDgroup’s group communications manager Malcolm Neil, who was also quoted in the Crikey story. Below are some of the quotes that Mr Cowie may have left out.

 

Talking to  Mr Neil and from my own knowledge of the industry, it’s no secret that Australian publishing is in the doldrums right now. Make no mistake, Neil admits that times are tough, and no company wants to miss debt repayment deadlines. “The [Crikey] story is off the back of the New Zealand Stock Exchange announcement,”  he said. Last month REDgroup told the NZX that it would likely breach of two of its three banking covenants next month. “It’s certainly not a good thing, no question,” said Neil. “It’s been a tough year. But, having said that, that’s not just us, that’s publishing in general. But we are having no trouble servicing our debt. Our repayments are $9m on a EBITDA of $25m.” I won’t pretend to be a business analyst, but “they” say that you shouldn’t use much more than one-third of your earnings to service your home loan – so this doesn’t seem too dire, does it? At least that big outlay on the Borders.com.au website should repay the expenditure into the future.

Others quoted in the Crikey story agree that the industry is down about 4%, returns (unsold paper books) are up and stock is getting reduced to cut costs. It would be easy for me to point to its tardiness to start the shift to digital publishing, but I won’t. I’d love to know how many Australian and New Zealand dollars that Amazon are banking now though.

Whether REDgroup are cutting more or less inventory than others or their returns are more or less than the industry average, we’ll never really know.

What I do know is that Borders.com.au have sold all but one major Australian publisher to supply digital versions of titles for their site, and are “within a whisker” of having the full set, says Neil. Within a week I should be able to reveal the schedule for relase of each local publishers’ ebooks through Borders.com.au.

But that doesn’t sound like a company that …

“A whole lot of publishers aren’t doing business with them at the moment,” a senior book publishing source told Crikey.

Mr Neil was incredulous at the source’s quote. “It’s just not true. This is just an absolute flat denial. The source couldn’t be from a major Australian publisher.”

Something doesn’t add up, that’s for sure. Do I smell publishing payback? Neil admits that “REDgroup are not that popular. We done business aggressively with publishers in the past, as they have with us – everyone’s trying to get the best deal for their business.” Either way, with the company making up a quarter of the entire industry, it’s hard to see “a whole lot of publishers” not dealing with them. The industry would be down a lot more than 4 per cent.

Oh, and another little Crikey error Mr Neil wanted to clear up. He fully expects a contraction in the industry over the next three years, but suspects that “Stores with smaller turnovers will be under the most pressure. They tend to be independents…”  not so much the Angus & Robertson franchisees. In any case, Tom, only about a third of the 183 stores are franchises.

There’s already one correction at the bottom of your story. Feel free to add to it.

Via Jason Davis’ Book Bee

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