Ekeing out the last knockings at The Daily Sport — with humour, at least

Posted by Peter Kirwan on 16 May 2008 at 15:22
Tags: Media

This one has the fingerprints of James Brown, the founder and former editor of Loaded, all over it.

These days, Brown is to be found helping out as “consultant editor-in-chief” at the Daily Sport. Barry McIlheney, formerly managing editor of EMAP Metro, is editor-in-chief.

You might find the Sport’s effort to reincarnate itself as a lads mag on newsprint either desperate or imaginative.

But you can’t deny the chutzpah that Brown and McIlheney have brought to the business of eking out The Sport’s last bit of post-David Sullivan revenue potential. (Circulation, by the way, is reputedly down to less than 100,000: McIlheney has taken to describing the paper as “like The Independent — with tits”.)

The Sport has just released something called The Real Bloke Report, which insists that almost half of “working class men” have between £200 and £500 of disposable income to spend every month.

We’re told that only 30% of upper- and upper-middle class men enjoy similar leeway.

This is one of the first pieces of credit crunch marketing I’ve seen. Stand by for much more in a similar vein, mostly without the humour of this effort.

It also points to a truth that’s instinctively understood but rarely articulated about cash-poor middle class males who cannot escape the tyranny of their own aspirations. (By contrast, Rosie Millard at The Sunday Times — and many others — routinely give us the female side of this equation.)

A few more of these, and the Sport’s agency sales team (if it has one) might even be allowed to buy beers fora few of those cash-poor middle class ad planners who live and work in the Big Smoke. . .

(Does The Sport have a web site? I can’t find one. But Brand Republic does carry a story on The Real Bloke Report here — registration reqd.)

The end of an era at Johnston Press

Posted by Peter Kirwan on 16 May 2008 at 14:15
Tags: Johnston Press, Trinity Mirror

A few points on the Johnston Press rights issue.

First of all: the discount at which investors will be able to buy new shares issued by Johnston is massive: 61%.

Remember, too, that the company’s share price has already plummeted from 275p in January to 115p now. The new shares will be available at 53p a pop.

That’s a lot of sugar to sweeten Tim Bowdler’s unexpected pill. By contrast, Carlsberg, the brewer that’s been hit hard by recession, is hoping to deliver a similarly big rights issue at a 40% discount.

Yesterday, Bowdler and his lieutenants underplayed their pessimism about ad revenues. Between the lines, however, the belief that ad markets are in serious trouble is obvious.

The discount signals that Johnston Press has limited options. Disposals (at a reasonable price) are unlikely.

But what about cost cutting? Yesterday’s call with analysts was notable for containing zero discussion — on either side — of the potential for job losses.

At this point, wry smiles will cross the faces of Johnston Press employees accustomed to working for a company that squeezes 30% operating margins out of its papers.

Still, the omission will seem odd to those investors who are temperamentally keen on the widespread sharing of pain. If investors start asking questions about Johnston’s cost base, things could get tricky.

More broadly: where does Johnston’s rights issue leave the regional newspaper industry?

Crowded into its respective territories across the UK with the hatches battened down as revenues decline by 10%+ on an annualized basis.

That’s where.

For the next year or two, the industry will be a lot more boring than it was in the credit-crazed mid-Noughties.

So far as Bowdler & Co are concerned, the market for consolidation is firmly shut. Only limited horse-trading is on the agenda.

Johnston might be interested in the occasional digital deal, but even that’s unlikely. (Unlike Trinity Mirror, which likes to acquire digital revenues, Johnston Press believes that what’s needed is the “digitization” of its existing operations.)

Interestingly, Tim Bowdler believes that doing so needn’t cost “an arm and a leg”.

Looking ahead, yesterday’s announcement could come to be seen as the birth of a different kind of Johnston Press.

Much will depend on the identity and preferences of Johnston’s new chief executive, who will succeed Bowdler in 2009. By then, much of Johnston’s debts will be up for re-financing — and the company will embark on a new chapter in its history.

During yesterday’s conference call, the “hypothetical” talk was of returning free cash flow to investors, rather than embarking on more acquisitions when the economy recovers.

In more ways than one, it’s the end of an era.

How to get paid by Lord Rothermere for reading about the death of newspapers

Posted by Peter Kirwan on 14 May 2008 at 17:57
Tags: Associated Newspapers, Media, News International

Lovely column on an unlovely subject by Roy Greenslade in today’s Evening Standard. Greenslade’s piece underlines the failure of price cuts and bulks to stem the The Sun’s long circulation decline.

In what seems to have become a bit of a personal crusade, Greenslade writes:

Enormous sums are being wasted by News International in order to conceal an undeniable underlying truth: the mass market for newspapers is a doomed market.

I’m sure that the bulks and the price cuts and The London Paper don’t look like waste from Murdoch’s perspective.

News International’s aggression is a standing warning to dumb-ass trophy buyers who might be tempted to try it on at The Mirror or Independent before these papers enter their dotage.

Murdoch is also sending a clear signal that News Corp intends to dominate the business of squeezing the final drops of value out of the national newspaper market. For market leaders, decline can be optimised, just like everything else.

My own maths suggest that the number of readers willing to pay full price for The Sun will decline to less than 1m by 2015. (There are currently 2.1m of them, down from 2.7m in April 2006.)

Things seem likely to come to a head sooner at the Evening Standard.

Because I no longer commute, I don’t get to read the Standard much these days. On this occasion, however, a representative of WH Smith made me an offer I couldn’t refuse as I walked to the cash till.

“Have you got a magazine costing more than £3 in that pile, sir?”

Yes, I answered. (Actually, I had several.)

“Then buy the Evening Standard and we’ll refund you £1 on your bill.”

I must have looked a bit non-plussed. He clarified the deal with the infinite patience of a Key Stage 1 teacher:

“Take this, and we’ll give you 50p.”

At which point, I grabbed the bundle of newsprint, feeling as if I ought to make a charitable contribution.

Or something.

Never mind Murdoch’s price cuts. Or the freesheets. Chris Anderson will have a coronary when he hears that Rothermere and WH Smith have started paying Londoners to read the Standard.

Gavin O’Reilly: Bring on the Grey Cardigans — and quick

Posted by Peter Kirwan on 13 May 2008 at 14:36
Tags: Independent News & Media

According to the NUJ, Independent News & Media has been blocking “much-needed new recruitment” on the Belfast Telegraph.

It seems that a long overdue consignment of new Grey Cardigans has been delayed by the need to underwrite Simon Kelner’s tab at The Ivy.

The bill must be enormous. We say this because Gavin O’Reilly, chief operating officer of IN&M, also appears to be cutting corners when it comes to his company’s corporate site.

In the bottom left hand corner of IN&M’s home page, there’s a fetching picture of O’Reilly accompanied by what’s intended to be a bit of rousing copy. It goes like this:

“INM has a very clear, compelling and coherent strategy for growth, with a very resolute and sturdy version of our newspaper brands’ place within the fast-changing media matrix.”

Is this some kind of elaborate Freudian slip? As in: “Here’s one version of our corporate strategy for you, another for him, and yet another for Mr O’Brien sitting beside the aspidistra on Table 12?”

Apparently not.

We’re told that the word Mr O’Reilly meant to deploy was “vision”, not “version”.

Chris Anderson & The Freetards: Reach for your gun, but stay pragmatic

Posted by Peter Kirwan on 13 May 2008 at 13:22
Tags: Media

One of the great things about listening to Chris Anderson, the editor of Wired, at the UCLAN Journalism Leaders evening a few weeks ago was the pleasure of witnessing that huge temperamental incompatibility that exists between the news industry and the software industry.

At UCLAN, Anderson was plugging his forthcoming book Free, which is largely based on this article published in February.

It seems to me that Anderson’s much-trumpeted thesis is little more than a series of riffs on a well-known piece of software economics: the near-zero marginal cost of incremental digital production.

The idea has been knocking around for the past two decades — ever since packaged software companies realized that they could make super-profits because they didn’t need to purchase raw materials or invest in machine tools.

If I sound a bit blasé, forgive me. I’ve followed the software industry for over a decade. I still buy books like Anderson’s, but successive booms and busts have inoculated me against the techno-utopianism in which he — and large parts of Silicon Valley — specialize.

The software industry itself is chaotic, protean — and fascinating. This is an industry that transforms other industries. Intellectually, however, it breeds a drearily predictable form of determinism that calls to mind Dave Spart.

(Not that this heroic name is applied to Anderson and his ilk. Instead, we need to thank a journalist-blogger who spends his time impersonating Steve Jobs for inventing the word freetard to describe them.)

But if the history of technology diffusion tells us anything, it’s that innovations are frequently adopted in ways that surprise their makers.

In the 1890s, the New York Times forecast that Alexander Graham-Bell’s new invention, the telephone, would be used to “carry music, lectures, and various oral entertainments to all the cities of the East”.

In the late 1990s, meanwhile, it was an article of faith that lots of FTSE-quoted retailers was going to be put out of business by Boo.com and Amazon. The reality turned out to be infinitely more complex and nuanced. Today, the average Briton spends the princeley sum of £213 online every year.

The point here is that the future-gazing of Anderson and his ilk is a fine way to start an argument. It’s a wonderful way to sell books. And if you feel like putting the fear of god into concert hall owners, retailers and journalists, there’s nothing better.

But history tells us that the techno-utopians are usually wrong when they predict revolutionary upheaval that’s pre-determined by the features of technology itself. Life is much more contingent and messy than that.

So forgive me if I shy away from singing hymns to a rigidly determined future. (Give me those 2.0 tools and I’ll use them, even love them, but it’s hard to get shouty with the groupthinkers who cry: “Journalism is dead! Long live the journaliste citoyen!”)

By the same token, I don’t really belong on the other side of the fence, either. This is where reflex debunkers like Andrew Keen and Andrew Orlowski live. (No doubt, Ivan Fallon pops around for a cup of tea and a chat every so often. . .)

Accordingly, like a lot of other people, I spend most of my existence shuttling back and forth between the software industry and the news business, trying to knit together some kind of coherent narrative, something practical that works in the here and now (as well as next week, next month).

That’s been the consistent theme behind my efforts at Fullrun for the past five years, where I continue to run a subscription-based news service for people in the technology industry who are trying to understand content — and their peers in the media who are reaching out in the opposite direction. It’s not straightforward. But that’s the fun of it.

All of which is a long-winded way of introducing Lisa Williams, founder of Placeblogger and guru of hyperlocal news in the US.

At Mediashift IdeaLab, Williams has identified ten things journalists should know about surviving in a high-tech industry. She writes:

Journalism is becoming a high tech industry, and that means that career norms for journalists are approaching those of high tech workers — shorter job tenures, working for smaller companies, and much more.

That little gem of an argument — that journalism is becoming a high-tech industry — prefaces a load of good advice. Unlike Anderson’s rather predictable meditations on “free”, I really do wish I’d written this myself.

Why? Because it’s pragmatic, not programmatic. Here’s a sample:

“We get laid off when the economy is good, and we get laid off when the economy is bad. . . We don’t even take it personally anymore. . . If you value your sanity, have some savings and don’t take out big mortgages.”

Who knows? Perhaps the Journalism Leaders Programme at UCLAN should make personal finance part of its continuing education programme for the newspaper industry’s digital immigrants. . .

PS: Thanks to Mike Ward, head of the department of journalism at the University of Central Lancashire, and Francois Nel, founding director of the department’s Journalism Leaders Programme for inviting me to Preston to sit on their panel.

Having spent a couple of hours chewing the fat with Francois and the other panelists over dinner, I’d recommend the pragmatism with which they approach the job of educating digital immigrants about working in the software industry.

RBI insider’s blog goes dark: What happened to Divestment Watch?

Posted by Peter Kirwan on 12 May 2008 at 14:14
Tags: Reed Elsevier

Mmm. A fortnight ago, Business Media Blog pointed to a blog called Divestment Watch, written by the web operations manager of RBI-owned Totaljobs.

According to BMB, it was “written by an insider with a brain thinking about what may happen” to Reed Business Information.

Now, it seems, the blog is down. A forlorn notice at Google-owned Blogger.com records:

Sorry, the blog at divestmentwatch.blogspot.com has been removed. This address is not available for new blogs.

What ever happened to this promising exercise in user-generated content?

Google’s cache yields a clue. On 2 May, The Ops Mgr noted speculation that directors of Reed Elsevier and RBI were among the 150-200 unique users visiting the site on a daily basis.

Apparently, the blog had even been discussed in the presence of Reed Elsevier’s bankers (UBS) and consultants (PriceWaterhouse Coopers).

Wrote The Ops Mgr: “It’s nice to know that there are some people interested and hopefully listening.”

We hope The Ops Mgr’s dialogue with management has continued in a similarly bright and breezy fashion. Somehow, though, we doubt it.

Reed Business Information: Redundancy costs and exhibition potential

Posted by Peter Kirwan on 12 May 2008 at 13:13
Tags: Reed Elsevier

The anonymous author of Business Media Blog picks up on my earlier post about Bernard Gray’s comments on Reed Business Information.

If Gray was talking down the prospects of a successful sale of RBI on behalf of an interested bidder, that’s hardly a crime. Indeed, some would suggest that Gray’s fiduciary duties encourage him to make the comment.

Sensibly, however, BMB is more interested in the prospects of a successful sale.

S/he doesn’t find compelling my point that RBI under new ownership would be free to (or required to) develop its own trade shows in earnest.

The trade show market is very crowded and it is not easy to find new niches of any scale

That’s true. No doubt a big roster of ready-made trade shows would make RBI more attractive. But I still believe that RBI’s strong magazine brands possess a natural advantage over many pure-play show organisers. And I’d argue that there’s a lot of untapped potential for events within RBI.

BMB also raises the question of how a bidder might develop RBI’s business in the future if Reed Exhibitions remains within the parent company. In particular, BMB suggests:

In many of its core B2B markets Reed Exhibitions owns the leading show — Hotelympia in the catering sector for example — so I would presume that Reed would require some kind of restrictive covenant on competing from a new owner of RBI.

Interesting thought. But how would such as “restrictive covenant” be structured?

Reed Exhibitions runs 460 shows and conferences. Accordingly, from RBI’s point of view, there’s a risk that any covenant is going to be very restrictive — to the point of placing a restraint on RBI’s ability to trade.

More likely is some kind of deal that involves Reed Exhibitions paying the relevant RBI titles for supporting specific shows and conferences.

Contracts like this aren’t ideal — I’ve lived with them in the past — but they are more plausible than restricting RBI’s ability to enhance its business under new ownership.

It looks as if the author of BMB might be an insider. Among other things, he/she agrees that a successful bidder for RBI would get to take plenty of costs out of the business.

Playfully, BMB suggests that “firing the COO would cost at least half a million alone”.

If that’s even remotely true, one can only admire the negotiating skills of Mark Kelsey — the executive in question.

More seriously: cuts come eventually to every well-upholstered business. The crucial point is that redundancy costs are a one-off exceptional cost. By contrast, the extra profits released by those cuts are a multi-year benefit. Between those two realities, there’s always room for negotiation.

Here’s a final pointer in favour of a successful sale, and one I haven’t mentioned before — Reed Elsevier’s stance. I get the strong impression that Sir Crispin Davies wants to move ahead quickly with the reincarnation of the business he runs. His shareholders like the direction in which he’s going.

Whisper it ever so quietly, but these factors might just result in some room for manoeuvre about price. Arguably, this is a luxury that EMAP’s Alun Cathcart didn’t enjoy.

Spectator Business: Champagne editorial — but the publisher is drinking something different

Posted by Peter Kirwan on 9 May 2008 at 12:58
Tags: Press Holdings

Andrew Neil has been celebrating the success of Spectator Business. Apparently, the first edition attracted £75,000-worth of advertising — off the back of a “free” circulation of 42,000.

Who are the lucky 42,000?

I had a good look around, but The Spectator’s web site seems to be silent on the matter. Likewise that bit of the site reserved for Spectator Business.

But here comes Media Week, with the suggestion that 12,000 copies will be distributed to, er, people travelling first-class on Eurostar and staying in five-star hotels in London.

Bulks, in other words. Mysteriously, a further 30,000 will be sent out to “targeted customers”.

Who they? Beats me.

Could some of them be drawn from The Spectator’s subscriber base? Possibly, but if that’s the case, advertisers might start opting for cheap pages in Spectator Business (rather than expensive ones in Spectator proper).

Cannibalization isn’t pleasant. And perhaps this explains why Spectator Business has been so indistinct about its circulation strategy.

Of course, it’s never been the done thing to look too closely at the circulations of British business magazines. Even so, Neil’s efforts to sustain upmarket products off the back of weak circulation arguments strike a bum note.

Demented circulation wheezes were a speciality of [The/Sunday] Business, which itself went through more incarnations than the Dalai Lama.

Now, apparently, Spectator Business has inherited some of the same genes.

But if this spin-off starts out with a flimsy circulation, the aim — presumably — is to sign up lots of honest-to-goodness subscribers, and quickly.

(Or is it? Having just visited the Spectator Business web site, I find I can’t subscribe online. All it would take is a little bit of HTML and a Google Checkout account, but no — Instead, I need to call Axis Media Ltd on 0141 335 9062. Like lots of potential subscribers, I suspect, I’ve postponed doing this. Probably indefinitely.)

But let’s assume that Spectator Business has a run of luck with subscribers. Let’s assume — generously — that it manages to accrue 10,000+ of them.

What then? A good deal more will be needed to credibly challenge the market leader — Haymarket’s Management Today, which has been plugging away successfully for 40 years.

MT distributes over 50% of its 100,000 circulation for free, but tops up that number by sending copies to 42,000 members of the otherwise unremarkable Institute of Management.

For years, it’s been MT’s link with the Institute’s self-selected audience — plus some excellent content — that has allowed it to trounce competitors with that big six-figure circulation.

Will Spectator Business’s small audience of foyer flaneurs and Eurostar commuters trump Haymarket’s bigger, more controlled, reach?

In the eyes of media planners who treat business magazines as an optional add-on to schedules, I doubt it.

Andrew Neil’s continuing quest to launch a worthwhile business magazine in Britain is becoming painful to watch.

As the livewire editor of a tumescent Sunday Times between 1983 and 1994, Neil did as much as anyone to condition us to consume vast amounts of newsprint every weekend — and ignore magazines.

Surely, by now, the man has already done enough to atone for his sins?

As for Martin Vander Weyer, the excellent editor of Spectator Business, everyone knows that he is capable of generating champagne for the business brain.

Sadly, his publisher’s circulation strategy seems to be running on Irn-Bru.

Newsquest in Scotland: How much profit is enough?

Posted by Peter Kirwan on 8 May 2008 at 19:53
Tags: Gannett, Media, Newsquest, Trinity Mirror

Nothing like the threat of strike action to set the pulse racing. Especially in Glasgow.

In Scotland’s interesting metropolis, they’re breathing fire over Newsquest’s proposal to cut 40 jobs at the Glasgow Evening Times, the Herald and Sunday Herald.

There’s talk of “disastrous impact”, and an allegation that Gannett-owned Newsquest is “squeezing the very life out of some of Scotland’s most famous titles”.

Why? In order to line the “pockets of US shareholders”, of course.

Unfortunately, many of those “US shareholders” are public sector workers in places like California and Idaho. Their meagre pension funds just happen to be invested in companies like Gannett.

But that’s hardly relevant.

Instead, we’re struck by NUJ president James Doherty’s suggestion that the Herald has cut its editorial staff from 186 to 113 during the past five years.

That’s “despite the Glasgow papers making Newsquest £17.1m” during the same period.

Now these sound like intriguing numbers — all the more so because parent company Gannett’s accounts tell us very little about the performance of the company’s UK papers.

(What we do know, from Gannett’s most recent quarterly filing, is that sterling-denominated ad revenues at the company’s sprawling UK operations fell by 7%, with publishing revenues down by 6%. Whether the Herald or Insurance Times or someone else is to blame for this is a moot point, but the Q1 YOY declines in newspaper-related classified ads at Newsquest do look particularly nasty. Try a 21% YOY decline in revenue from car ads, and a 14% decline in property ads — a lot worse than Trinity Mirror’s Q1 regional results).

So Mr. Doherty, if you’ve got further and better particulars, we’d be delighted to hear them.

Is Newsquest supporting its beleaguered US business by cutting costs out of successful Scottish newspapers? Or are the cuts really a response to declining indigenous profitability?

Let’s not be bashful: we think we should told.

If RBI doesn’t sell, we’re not in Kansas anymore

Posted by Peter Kirwan on 8 May 2008 at 15:35
Tags: Guardian Media Group, Reed Elsevier, United Business Media

Bernard Gray, the former FT hack and former boss of CMP, caused a bit of a ruckus at the PPA conference this week when he suggested that Reed Business Information might not find a buyer.

“The elephant in the room is RBI,” said Gray. “It’s not going to trade at the value that Emap traded at last year. There’s a significant chance nothing is going to happen to it.”

Coming from Gray, this was more than a bit cheeky.

For Gray is currently executive chairman of TSL, the company that owns the Times Educational Supplement. TSL itself happens to be bankrolled by the private equity firm Charterhouse Capital Partners.

And according to the Indy, Charterhouse is one of the private equity firms sniffing around. . . (yes, you guessed it) RBI.

So Bernard Gray has a motive for talking down the price of RBI. But does his argument hold any water?

The sale of RBI was announced back in February by Sir Crispin Davies, chief executive of Reed Elsevier.

Now before you interpret the ensuing silence as negative, it’s worth bearing in mind that selling a company takes time. In fact, Reed Elsevier only sent out detailed financials — in the form of an information memorandum — to interested bidders this week. (According to the Times, the recipients are all private equity firms.)

Bidders will certainly try to argue that RBI should be valued on a lower multiple than EMAP.

The market’s valuation of pretty much everything has deteriorated during the past six months. In addition, Reed Elsevier is only selling magazines and web sites. It wants to hold on to Reed Exhibitions, and this removes value from the deal.

On the upside (for bidders, if not employees), RBI is a well-fed, well-watered, business.

(How many managing directors does it take to run the UK subsidiary of a £1.4bn-turnover publishing company? Down in Sutton, RBI has four, plus a chief operating officer and a chief executive.)

The value engineers of private equity must be licking their chops. To the extent that they can, er, streamline operations at RBI, they’ll be willing to bid more aggressively.

RBI also has attractions that EMAP didn’t. One of them is Totaljobs, the RBI-owned network of job sites that attracts 1.8m uniques every month.

That’s more punters than the Guardian’s well-tended job site (1.4m). And although it’s some way off the market leader fish4jobs (3.2m), RBI’s online jobseekers are a better-qualified bunch. At Totaljobs, revenues are growing by 35% a year.

So while a successful bidder won’t get Reed Elsevier’s trade shows, they will get a solution — in so far as one exists — to the problem of shrinking recruitment revenues in print.

By contrast, building up trade shows — especially when you own a raft of successful magazines — has got to be the easier option.

In point of fact, because Reed Elsevier’s exhibitions arm has worked at arm’s length from its magazines, you could argue that RBI is bursting with potential for spin-off exhibitions and conferences.

Sir Crispin Davies’s decision to put RBI up for sale so soon after the sell-off of EMAP’s B2B properties looked a bit dicey. Markets, no less than human beings, can suffer indigestion.

But magazine portfolios like this don’t come up for sale too often. My guess is that Davies will get this one away.