Peter Tonagh-led group in agreement with AAP management to buy newswire

Australian Associated Press is likely to live on, but jobs to go with initial agreement to buy the 85-year-old newswire service.

AAP boss Bruce Davidson told staff on Friday afternoon there had been an agreement on general terms with the hope of an agreement on a final sale in the next two weeks. Picture: AAP

Australian Associated Press is likely to live on after management came to an initial agreement with the Peter Tonagh-led consortium to buy the 85-year-old newswire service, but jobs will still be lost as a result of the purchase.

The decision has also angered Finder.com.au founder Fred Schebesta, who told The Australian he did not think adequate consideration was given to his own offer for the business.

AAP chief executive Bruce Davidson told staff on Friday the board had agreed terms with the consortium for the sale of the newswire service in a company that will have around 90 employees, with around 50 jobs still to be lost.

While details of the bid are confidential, it is understood the business will be initially run as a not-for-profit with the sale price in the low millions.

Mr Davidson told The Australian the expected sale was a great result for the maintenance of a pure news wire service in a deal that will include the fact checking service and photography business.

“I am pleased that, after months of discussions with various parties, it appears we have been able to secure a new home for AAP’s legacy of trusted news,” he said.

Mr Tonagh, a former News Corp and Foxtel CEO who is leading a consortium to buy the business, told The Australian he was hopeful of an agreement for the finalisation of the sale in two weeks.

“I’m was looking forward to working with the AAP team to continue its great work and to find new commercial opportunities to ensure its long-term survival.”

Almost two weeks ago, Tonagh revealed that he was heading the consortium of business investors and philanthropists, which includes Samuel Terry Asset Management boss Fred Woollard and Australian Impact Investments boss Kylie Charlton.

The consortium is reportedly hoping to raise up to $12m to fund the business before anticipating to turn an annual profit of up to $2.1m by 2030.

The consortium was hoping to pressure its management to strike a deal before AAP closes, with a deadline for its closure extended to July 3 as management evaluated the agreement.

However, Mr Davidson said there would be job losses at the newswire with the consortium employing a total of 85-90 AAP staff, including around 70-75 editorial staff, plus management, IT and support personnel.

Mr Davidson confirmed to The Australian AAP currently has 135 current editorial staff, including editors and photographers, meaning the consortium’s decision to buy the service still means about 50 editorial jobs will go.

Peter Tonagh. Picture: John Feder/The Australian.

AAP current management will hold on to the profitable press release service medianet, and Mediaverse, AAP Directories, subediting business Pagemasters and Racing operations, which still employ about 250 others plus contractors.

It still not decided whether they will seek a sale of these businesses, but Mr Davidson told The Weekend Australian that “clearly once this is finalised, we have to look at the rest of the business and there will have to be changes.”

Mr Davidson said he was nervous talking the sale as “there is no contract signed” but “we are pretty confident a deal will be finalised.”

“I really couldn’t go another weekend without telling staff what was happening.”

The Australian reported last week that finder.com.au founder Fred Schebesta was also interested in the AAP newswire. Schebesta was in early talks with AAP management and their consultancy TMT Partners and submitted a formal bid late last week.

Schebesta told The Weekend Australian that he was frustrated that more consideration wasn’t given to his offer and jobs will still be lost.

“I’ve been told I’m an unsuccessful bidder and I’m disappointed they would not give more consideration to a growing technology company from Australia. It was a reasonable first offer.”

Schebesta said he would still seek to employ AAP staff who lose their jobs after the sale to the Tonagh consortium.

“I’m frustrated that so many journalists and editors are still going to lose their jobs. They’re going to find under my leadership it would be a different AAP.”

Chief executive of Australian Associated Press (AAP) Bruce Davidson. Picture: AAP

AAP announced in March that the company would shut, leaving several hundred journalists and editors without jobs.

The decision was a result of News Corp Australia (publisher of The Weekend Australian), and Nine Entertainment deciding to pull out of the venture, which was costing the companies tens of millions of dollars a year. Seven West Media is also a minor shareholder.

AAP customers include The Guardian, The Daily Mail, Antony Catalano’s ACM, and Eric Beecher’s Private Media, which pay a fraction of the cost shareholders Nine and News bear for the service.

The Australian revealed in March that The Guardian cut its contract to AAP by 40 per cent to just $70,000 after the publisher renegotiated its supply deal.

Investor packs claimed the new AAP could turn a $2.1m profit by 2030 but would need to cut back on staff, reporting rounds, photos and move to a six-day week.

News Corp and Nine have made it clear they will not be customers or shareholders of a new AAP, with News Corp to launch its own internal newswire service for mastheads and sell content to third parties.

AAP chairman Campbell Reid, who is also a senior News Corp executive, declined to comment on Friday.

Competition regulator the ACCC had been reviewing the decision to close AAP and chairman Rod Sims said on Friday evening that the likely agreement was welcome news “for media diversity and competition, especially during this difficult period for news media in Australia.”