Media boss draws shareholder Eire

Printing and publishing group, APN News and Media (ASX: APN) has gone into a trading halt over speculation about the future of its chief executive, and a potential capital raising.

The Irish Times reports that Ireland’s Independent News & Media (INM), APN’s largest shareholder, has lost confidence in CEO, Brett Chenoweth, and had called for an extraordinary general meeting to oust him.

A source close to INM said that the company had lost confidence in Mr Chenoweth’s ability to implement the strategic initiatives required to reposition APN to take advantage of the structural shift from print to digital media.

APN has announced that the comments may have arisen because it is being advised by Macquarie Capital about a potential capital raising.

With $500 million of debt at the end of June 2012, and a market cap of just $194 million, APN desperately needs to unencumber itself, and potentially regain the confidence of its bankers. An equity raising could give the banks some short term reassurance, and buy the company some more time to turn around its business, but the current share price is in the doldrums, and would likely need to be conducted at a big discount to the current price.

APN’s share price has fallen over 60% in the past year, and more than 93% over the past five years, after posting lacklustre revenue growth as well as flat profits in two years and losses in three of those five years. Hit by falling circulation levels of its print newspapers and magazines, APN is trying to cut its publishing costs, and diversify its business away from printing.

APN is not alone, with both Fairfax Media Limited (ASX: FXJ) and News Corporation (ASX: NWS) taking large steps to replace their falling print revenues.

Foolish takeaway

An encouraging sign for traditional media companies is the growth in the number of consumers happy to pay for quality news on digital media. The $64 question is whether they can grow their digital revenues faster than their print revenues are falling.

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