Paper merger will boost profit within two years, says INL

By SIMON HENDERY, IRENE CHAPPLE and NZPA

Media giant Independent Newspapers expects the merger of its two Wellington daily newspapers will have a positive effect on bottom-line profit within two years.

INL announced yesterday that it was merging Wellington's Dominion and Evening Post newspapers with the likely loss of 80 to 90 jobs.

INL, 44 per cent owned by Rupert Murdoch's News Ltd, said it believed the Wellington market could no longer sustain two daily newspapers.

The new morning paper the Dominion Post will appear from next month.

INL chief executive Tom Mockridge said the larger merged paper would offer readers more news and features and its increased circulation would give advertisers greater reach.

Mockridge said INL subsidiary Wellington Newspapers, which publishes both papers, had suffered an advertising downturn, which meant resources were stretched to sustain two separate publications.

Managing director (publishing) Rick Neville said a "substantial" restructuring cost in the millions of dollars would hit the company this financial year.

Next year its result would be "neutral-to-positive" compared with the present year, as revenue declined but efficiencies increased with reduced staffing and other costs.

Profit would substantially improve in future years. "It's easier to grow a single big newspaper than two smaller newspapers."

Mockridge said the downturn in Wellington advertising had coincided with a steady decline in the Post's circulation and a recent rise in the price of newsprint.

The two papers have had separate editorial staffs but shared advertising, production and printing facilities under a single management.

Neville, a former Evening Post editor, said international experience showed that similar mergers had led to strong circulation growth for morning metropolitan dailies.

He said there had been an increasing swing from the Post by advertisers who realised the Dominion had significantly more readers.

From a high of 99,704 in 1974, the Post's circulation had fallen to 54,000.

The Dominion's most recent audited circulation figure of 70,565 was up 1994 on the previous audit, but down from a high of 77,268 in 1968.

Fresco Advertising's Fraser Carson said he doubted the merged paper would retain the full advertising revenue of the two papers.

But Grant Maxwell of The Media Edge said the merger would make advertising more efficient.

Craig Marsh, group executive officer of rival Wilson & Horton, publisher of the New Zealand Herald, said the demise of a Wellington newspaper was not good news for the industry. INL's share price fell 2c yesterday to $3.92.