The continuing performance problems at Gordon and Gotch, the magazine subsidiary of PMP, and a growing fight with newsagents over oversupply issues, have seen a significant senior management change. COO David Arnott, who is effectively the boss of the magazine distributor, has decided not to extend his contract and will leave.

His decision was revealed in a memo to staff and others this week by PMP CEO David Kirk, who described Arnott as “a very experienced executive who has done a great job in helping to turn around this business, which he leaves in substantially better shape.”

Really? Gordon and Gotch will incur a substantial loss because of the continuing problems with the 1st Fleet magazine distribution contract (with network services of ACP) in NSW and Victoria, high fuel costs and problems handling returns. PMP revealed the problems in a profit downgrade several months ago which was mainly driven by problems in the printing business.

PMP revealed in February that G&G’s financial position worsened in the first half to a loss of $200,000 from a profit of $1.5 million, with expectations of more losses this half.

But the G&G problems haven’t been fixed and relations with newsagents are poor, with the growing possibility the company could face legal action from the Australian Newsagents Federation over oversupply claims, slow credits to newsagents and demands for higher payments of the oversupplied magazines.