There’s confirmation today that for all the touted benefits of outsourcing, some deals just don’t work. As expected, printing group PMP delivered lower earnings, with EBITDA falling 3.5% to just over $72 million.

But the real surprise was in the results for the Gordon and Gotch magazine distribution business, where losses accelerated sharply in the six months to June (although the company claims things improved in the month of June).

The problems were discussed in an ASX open briefing with PMP CEO, David Kirk, and the news isn’t good. Heads have rolled at Gordon and Gotch and PMP as a result of problems with their joint venture with rival Network Services – part of the ACP Magazines arm of PBL. They’ve outsourced the delivery of their magazines to 1st Fleet, a private Sydney-based transport company, in an arrangement that covers Victoria and NSW. And for Gordon and Gotch it has been a disaster.

The Gordon and Gotch Magazine Distribution business made an EDITA loss (earnings before interest) of $4.8 million, compared to a loss of $1.6 million in the previous year. The second half loss was $4.6 million compared to $0.2 million in the first half.

Said Kirk: “Gordon and Gotch damaged its competitive position with operational inefficiencies earlier in the year and some of its customers have been lost.” But Kirk claimed Gordon and Gotch had improved relations with newsagents who have been threatening legal action over supply questions, returns and costs.