Struggling regional media publisher APN News & Media is building its online presence in an effort to reposition for growth and boost digital earnings.
The group is paying $36 million for an 82 per cent stake in the online retailer brandsExclusive.
The website, which boasts 1.8 million members, offers premium clothing brands, accessories, shoes, toys, homewares and sporting goods at discounted prices.
APN chief development officer Matt Crockett said there had been a rapid rise in e-commerce, with new ventures emerging to take advantage of the huge shift in consumer habits.
“It is a key part of our strategy to increase our position and exposure to high-growth media assets,” he said on Thursday.
“The fastest growing part of the media and digital marketing segments are digital transactions businesses and e-commerce within that.”
APN will pay a further $30 million if brandsExclusive meets set earnings targets for the 2013 financial year.
brandsExclusive co-founders Daniel Jarosch and Rolf Weber will stay and manage the company after the sale.
Mr Crockett said the purchase was part of APN’s move to grow its portfolio of digital ventures.
“At the moment, the traditional online advertising market assessments don’t include e-commerce or group buying,” Mr Crockett said.
“So I think they understate the true growth that is actually happening in digital marketing and digital advertising.”
The purchase adds to APN’s existing online transactional businesses such as group buying site GrabOne, auction and classifieds site Sella and sports tipping site Jimungo.
Newspaper publishers in Australia and globally have been hit hard in recent times, with declining circulation and the migration of advertising from physical mastheads to websites, viewed online, on mobile and on tablet devices.
APN owns regional newspapers and radio stations across Australia and New Zealand, and has been hit by dwindling advertising revenue.
It posted a loss of $45.1 million in 2011.
Despite APN’s hopes for brandsExclusive, it received a lukewarm response from investors.
APN shares dropped 2.5 cents, or 3.4 per cent, to close at 71 cents, just two cents above their all-time low.
Morningstar analyst Michael Higgins said APN faced stiff competition in the e-commerce space, with players historically battling to retain market share.
“We are not convinced brandsExclusive will be an exception and are conservative in our growth assumptions, going forward,” Mr Higgins said.
