OVATO IN ADMIN – WHERE DID IT ALL GO WRONG?

The fall of Ovato into voluntary administration has been caused by rapidly changing market demands, and in particular the supercharged rise of the smartphone as a communication channel.

Ovato is a high-volume business, with catalogues and magazines its core products. Its supersite in Warwick Farm, opened less than three years ago, has seven heatset web presses, capable of pumping out huge volumes of print, and needing those huge volumes to be sustainable.

The rise of the internet, particularly combined with the smartphone, and then hastened by Covid, smashed its way into the Ovato core print markets. And Ovato hasn’t been alone as a high volume heatset magazine and catalogue printer in facing the perfect storm; two of the three biggest heatset printers in the US, QuadGraphics and Quebecor had to merge to survive, while the other, RR Donnolley, has been through countless restructures, the latest with a private equity company taking it out of public hands in February. Similarly the biggest heatset outfit in the UK, Polestar, with plants all over the country, collapsed into a pile of dust six years ago, and just last week one of the remaining major UK heatset operations, YM Group, which includes the well-known Pindar Group, went bust.

Women’s gossip magazines, once the queens of magazine publishing, with humungous print runs that formed the bedrock of operations like Ovato and Polestar, have been devastated by the smartphone, and it is easy to see why – who wants to look in print at what the Kardashians did last month when they can see what they did last night on video on their smartphone, comment on it, andthen  order what they were wearing at the same time, all on the same screen. Consequently those magazines have either been axed, or survive with much reduced print runs.

Meanwhile Ovato’s other main market sector, printed catalogues for major retailers, have fallen foul of new young marketing departments fixated on digital communication, who are eschewing the proven power of print for the instant analytics of digital. Ovato lost most of the Woolworths catalogue, and the Kmart catalogue, two of the biggest jobs on its books, both with huge weekly print runs.

Rival IVE similarly lost the Coles catalogue when it decided to switch to digital, and with it 10,000 tonnes of print a year, but it wasn’t such a hammer blow for the determinedly diversified group. Ovato’s strategy though was increasingly to focus on the narrow world of heatset magazines and catalogues, and while there are merits in the narrow focus approach, it hasn’t paid off for Ovato.

Its recent attempts to sell off the family silver – Gordon & Gotch, Griffin Press, various associated businesses and premises – to save the main asset have sadly proved futile.

Now the Hannans are out, the future of Ovato in doubt, and the little device in all our pockets is the reason.