Guardian Cities: Local sites for local cityfolk?

Posted by Peter Kirwan on 17 November 2008 at 13:54
Tags: Guardian Media Group

So now, courtesy of How Do, we’ve got a name for it: Guardian Cities.

The rumblings about Guardian Media Group’s ambitions in regional markets have been ongoing for a while.

Not so long ago, I heard they were looking for someone to lead the effort. There were whispers — probably wrong, it now transpires — about large amounts of unused print capacity, too.

If you think about it, GMG’s position in local newspaper publishing is intriguing.

Small enough not to be entirely mesmerized by the need to preserve print profits. Big enough to have plenty of experience and resourcing on tap.

GMG also happens to be a dab hand when it comes to classified job advertising at a national level. (”Couldn’t we do something at local level, too? With our audience of young professionals in big cities?”)

On that basis, I occasionally half-wondered whether GMG would skip the awkward evolutionary step that involves printing freesheets for every British conurbation. (Tactical distribution of free copies of the Manchester Evening News aside.)

So perhaps we’ll see McCall & Co proceeding directly to local sites for local people.

How Do’s report suggests that GMG’s researchers have been asking Mancs how they’d react to “a Guardian-branded website that would connect you with your local community, cover local issues and provide you with information that was highly relevant to your area”.

A spokesperson from Farringdon cautions How Do: “The fact that we are doing research doesn’t itself mean we will or won’t launch a new product.”

No. But the fact that you’re putting research money into the concept is intriguing. Encouraging even.

Especially when so many print-addled newspaper executives poo poo the idea of web-only local publishing. (A consensus this solid makes me suspicious that too many in the industry are simply repeating conventional wisdom.)

Interesting, too, to note that Tony Elliott of Time Out (which has sites for London, Edinburgh, Manchester) is looking for funding to help transform his empire for “a situation in two to three years where the comprehensive role that we play is online”.

In an interview with the Guardian in September, Elliott described the BBC as a “perfect partner”.

Perhaps we should take this to mean that Elliott views GMG — which does have a few quid in the bank and seems to like joint ventures — as an imperfect partner. . .

Why is the cost of newsprint rising by 20% when ad revenues are falling by 20%?

Posted by Peter Kirwan on 17 November 2008 at 12:45
Tags: Media

Much rejoicing at Norske Skog, the world’s second-largest manufacturer of newsprint.

The boys from Lysaker are happy with their plans to jack up newsprint prices by as much as 20% this year. So happy, in fact, that they’ve been nattering to the FT about those plans.

The opportunity to stick it to publishers has opened up courtesy of a stronger dollar. Back in January of this year, it cost 51p to import a dollar’s worth of paper from North America. Now, it costs 64p.

Accordingly, paper imported from the US has become a lot less competitive in Europe. Like this:

In the first nine months of 2008, newsprint exports to western Europe fell 20.6 per cent from the same period last year, according to the Montreal-based Pulp and Paper Products Council.

Just to help things along a bit, Norke Skog suspects that European paper manufacturers have this year reduced capacity by 6%, double the 3% drop in demand. (That’s those long lead times in operation, no doubt.)

So what’s the inevitable result of less competition and less capacity? Rising prices, of course.

But 20%? When your customers are already reeling from similar-sized declines in ad revenue, this will only accelerate the decline of print, pushing publishers to close more papers more rapidly.

If the Scandinavian paper mills went looking for a way to kill off their prospects of future growth, they could scarcely do better.

For good measure, the paper barons seem to be suggesting — a tad defensively — that the price of wood, energy and transport has “risen significantly”.

Mmm. Depends where you start from I guess. This morning, the price of oil sits around $54 a barrel, compared with $150 during July.

And the Baltic Dry Index — which provides a reliable guide to the cost of shipping goods worldwide — has dipped below 1,000 for the first time in six years. The index has fallen by 89% this year.

Norske Skog really should be a bit more careful about the tone of its discussions with the media. Unfortunately, the FT’s report reeks of anti-competitive intent.

Oddly enough, the industry has been here before. In 1995, the European Commission launched an anti-trust investigation into newsprint manufacturers.

Back then, they were attempting to foist price increases of 20%-25% on a publishing industry that was recovering from recession. This time around, they’re attempting to do it as we enter a recession.

Norway isn’t part of the EU. But this doesn’t mean that Norske Skog can act with impunity.

If m’learned friends in Brussels aren’t already sniffing around the various cabals of the European newsprint industry, they surely will be soon.

The mystery of Lord Carter’s Digital Britain: Tactical tweaker or a new Keynes?

Posted by Peter Kirwan on 14 November 2008 at 14:58
Tags: Daily Mail & General Trust, Guardian Media Group

Stephen Carter (or Lord Carter of Barnes as he is otherwise known) published his preliminary manifesto for Digital Britain in the Times last week.

The former Ofcom boss and No.10 strategist has been instructed by Gordon Brown to find a replacement for the billions of tax income that won’t be generated by the City during the next decade or so.

As Lord Carter puts it: “We need to nurture those parts of the economy that can generate the growth potential and jobs that we have got used to from the financial services sector.”

Hence the hoary old idea of. . . Digital Britain.

Fairly clearly, Carter is aiming to re-kindle the enthusiasm for all things white, hot and technological that characterized the early years of the first Blair administration.

Only this time, hopefully, for real.

In the past, Carter (a former chief operating officer of NTL) has been accused of overweening fondness for telecoms infrastrucuture.

True to form, Carter spends much of his outing at the Times wittering on about. . . well, infrastructure.

Interestingly, he does this without mentioning the rather problematic prospects for Fibre To The Home (a.k.a. the kind of super-fast broadband access that’s already available in France, and which will be required here, too, before we can start exploiting the full promise of web video).

According to estimates I’ve seen, FTTH (or something like it) would require a capital investment of £10bn-£15bn.

Even during the boom years, BT was stand-offish about getting involved. Perhaps, therefore, this really has become a job for Alastair Darling.

Attempting to reflate the economy with a build-out of fibre optical capacity could neatly update Mr Keynes for the 21^st century.

Writing at the Times, Carter does eventually get around to content — the stuff that will flow through those pipes. And yes, his plans include you. Apparently.

We can focus on the continuing supply, only partially guaranteed today, of the flow of UK-originated content, and in particular news, nationally, regionally and locally, that works on and across all those platforms we will have built, providing competition for quality.

Only partially guaranteed today? As Alan Rusbridger hinted in the Guardian recently, Carter’s plans in this respect might have a bit of Lord Reith about them.

Spreading some monetary love in the direction of regional newspapers would be controversial.

At DMGT and Johnston Press, for example, the promise of public subsidy (plus concomitant regulation) would probably go down like a cup of cold sick.

At the moment.

However, if the current declines in ad revenue continue into 2009, that cup could yet start to resemble a piping hot portion of goodness from the No10 soup kitchen.

Lord Carter of Barnes expects to publish a preliminary report in the New Year. This will be followed by the Full Monty next summer.

So we’ll soon find out whether Lord Carter has been asked to tweak Digital Britain at the margins. Or to re-imagine Lords Keynes and Reith for 21st century.

If it’s the latter, we might yet need to dig out another prop from New Labour’s early years from the back of the cupboard.

Back in the day, John Prescott used to stitch together an emotional majority at party conferences by deploying the maxim “traditional values in a modern setting”.

That sly old maxim might yet turn out to have some left in it.

UK news media job losses: To October 2008

Posted by Peter Kirwan on 14 November 2008 at 12:00
Tags: Guardian Media Group, Independent News & Media, Media, United Business Media

As requested by one reader, a graphic. Prepare yourself for a big increase in November.

PS: Jeremy Dear (NUJ) and Jon Slattery (ex-Press Gazette) make the point that these reported job losses understate the real magnitude of the problem.

Plenty more jobs are being burned off by non-replacement of staff, for example. Here’s Dear on the subject:

The true picture in some newsrooms is grim. For example yesterday I spoke to a journalist at a daily regional paper who was the only reporter there that day. The reporting staff as a whole has dropped by half. It’s a familiar story for those working in local newspapers. But it is also now becoming more familiar to those working across the media.

A reader called hizz makes the same point — with reference to Northcliffe.

Certain parts of Northcliffe are doing drip drip redundancies and saying nothing about it in public at all, because it’s a sub here, an exec there, and a strict policy of non-replacement when the overworked and underpaid hacks who are left quit.

True enough. All we can do, I think, is capture the trend.

That said, If you’re reading this blog, you can help us by submitting news of unreported redundancies. Get in touch with me: 0208 670 0039 / fullrun [at] googlemail [dot] com.

Do remember to use a non-work email address. A non-work broadband connection might be a good idea, too. When you submit info, I’ll do my best to confirm it. . . and add your numbers to the running total.

Digital revenues at Trinity Mirror & Johnston Press: Better than expected

Posted by Peter Kirwan on 13 November 2008 at 17:14
Tags: Johnston Press, Trinity Mirror

This morning, Trinity Mirror announced that digital ad revenues grew by 15.5% during the four months between July and the end of October. That’s down from the 40.2% YOY increase announced for 1H08.

Yesterday, however, Johnston Press announced digital ad growth of 36.8% between July and October.

The first thing that needs to be said about both sets of numbers is that they point to a creditable performance — not least when compared with Nielsen’s recent suggestion that digital display ad spend declined by 5.3% during Q2.

Or, for that matter, Enders Analysis’ forecast that digital display advertising revenues in the UK will be flat at best during Q3.

The welcome suggestion is that digital revenues at both Trinity and Johnston Press are more robust than elsewhere in the market.

Even so, we’re left with an obvious question: why is Johnston Press outperforming Trinity so comprehensively in terms of digital ad growth?

It’s possible that Trinity Mirror faced tougher comparatives with prior year performance.

But if that’s the case, can we expect to see Johnston Press catching up with the downward trend that’s visible at Trinity Mirror?

Quite possibly. Yesterday, Stuart Patterson, JP’s CFO, cautioned analysts on the subject of that 36.8% growth rate. “In recent weeks,” he said, “we’ve seen quite a slowdown in digital advertising.”

No surprises there. Around half of JP’s digital revenues are employment-related. On this basis, further slides seem inevitable.

News media job losses: 140 per week — and climbing

Posted by Peter Kirwan on 13 November 2008 at 11:23
Tags: Media

How many news media jobs have been axed since the recession began in earnest in July? Yesterday’s news that Daily Mail & General Trust plans to cut 300 jobs in London — currently the subject of quibbling — brings the total of reported job losses to 2,709.

In case you were wondering, that’s around 140 job losses per week.

To reach that figure, I’ve combed through every story mentioning “redundancy” or “jobs” on Press Gazette and Media Guardian during the relevant timeframe. The monthly totals look like this:

• November (until the 12^th of the month): 595
• October: 175
• September: 922
• August: 214
• July: 803

Presumably, this is a significant underestimate. Some stories don’t carry sourced numbers for job losses (I haven’t included them.) In addition, small media companies carrying out redundancy programs don’t make the headlines.

One thing to note is the differing behaviour of media owners when it comes to making job cuts.

Broadcasters seem content to announce kitchen-sink reductions in headcount. BSkyB did this in July (250 jobs). Channel 4 followed suit in September (150 jobs). So did ITV (429 redundancies in the company’s news operation).

Print-based publishers have been behaving differently. Both Trinity Mirror and Johnston Press, for example, have avoided the Big Bang approach, instead taking a piecemeal approach to cutting jobs.

In early August, news leaked of 30 redundancies at Johnston Press in Scotland. This was followed by news of six job losses at the company’s operation Northampton, and eight in London. The proposed closure of JP’s presses in Northampton added 70 print-related jobs to the total.

September brought suggestions of five further redundancies at JP’s Sheffield operation.

Since then — nothing. So judging by publishing reports, we’re looking at 111 job losses since July at Johnston Press.

Yesterday, however, Johnston Press announced that it had cut 936 jobs since the start of the year. This equates to 12.4% of the workforce. (To confirm this for yourself, listen to this short extract from JP’s conference call with analysts. The call has been edited to exclude tricky questions from analysts. Perhaps these were just too painful to publish.)

Many of JP’s 900-odd cuts haven’t made the news. But don’t allow that to fool you. It’s generally reckoned that a 15% annualized cut in headcount is the most that any company can impose before operational performance really starts to suffer.

It shouldn’t come as a surprise that JP is bang on target for this notional maximum during 2008.

The other point to notice is the relatively high total of job losses for November thus far. This month, we haven’t seen broadcasters announcing huge job cut packages. Announcements like these inflated the numbers in July and September.

In November, the action has been mostly confined to a broader range of print publishers making smaller cuts. In addition, we’ve started to see B2B publishers joining the list. In November, these have included Incisive Media (30 jobs) and United Business Media (47 jobs).

The curve has started heading upwards. Sadly, we’re probably still in the foothills. There’s a mountain still to climb.

Footnote: Before the questions start rolling in, let me point out that these numbers are broad-brush calculations.

There are print-related jobs contained within the published totals (c. 210 between Westferry and JP Northampton). Some obviously non-editorial jobs, too (for example, the 60 announced at FT Group in October).

I have also included sales jobs lost at places like News International (around 100, according to Media Week).

As for the broadcasters, well, their big numbers are fairly non-specific. ITV is on record as announcing a remarkable 429 job losses at its news operation in September. But the 250 job losses announced at Sky in July will doubtless include many workers who’ve never been near a news story (for example: call centre staff).

The point here is that across the news media as a whole it’s impossible to disentangle editorial from non-editorial redundancies. So I’ve chosen to count all job losses that have been announced (or reported).

The methodology isn’t perfect. But at least the trend line generated by these numbers will give us an idea of where we’re heading in the coming months.

Johnston Press: Ad revenues in freefall behind a PR smokescreen

Posted by Peter Kirwan on 12 November 2008 at 19:02
Tags: Johnston Press

You’ve got to laugh at the trading statement issued by Johnston Press this morning.

The last we heard from Tim Bowdler & Co, ad revenues fell by 19.7% during July. The company also disclosed that ad revenues fell by 23% during the first three weeks of August.

You’d presume that the company might give us an update on trading during August, September and October. They have — but the information that’s divulged in JP’s press release is partial, to say the least.

It’s also couched in some of the most convoluted language I think I’ve ever seen in a financial release.

(As if that wasn’t enough, JP’s webcast doesn’t include any of the tricky questions that were presumably asked by analysts at the end of this morning’s session. Perhaps the intention was to avoid a repeat of this.)

In any event, shoving these obstacles aside, here’s what I’ve been able to make of the numbers.

As I say, JP’s press release doesn’t divulge a YOY percentage decline for overall ad revenue declines between July/August and October.

To get hold of this, you needed to listen to the webcast of Johnston Press’s presentation to analysts this morning.

This was something that most reporters couldn’t, or wouldn’t, do. Instead, working off the back of JP’s press release, reporters tended to use the quoted figure for JP’s ad revenue declines since the start of the financial year — 15.5%.

Listen to the webcast, however, and you’ll discover that 15.5% doesn’t begin to describe what’s currently happening to JP’s revenue base.

In fact, during the 17 weeks between early July and the end of October, JP’s ad revenues slumped by “just over 24%” YOY. That’s a significant deterioration from July’s decline of 19.7%.

Today’s coverage of JP’s trading statement made grim reading. Only some canny management on the part of JP’s PR handlers stopped the stories from sounding a lot worse.

Conde Nast cuts digital costs to protect print

Posted by Peter Kirwan on 12 November 2008 at 16:57
Tags: Media

In a forthcoming column, I argue that things will start to cut up rough for consumer magazine publishers in the New Year. On the other side of the Atlantic, it’s starting to happen already.

The New York Times reckons that Conde Nast has ordered 5% cuts in budgets across the company.

There’s no mention of the UK in the piece. But Conde Nast has cut three editorial posts at Wired.com, reducing its staff to 25.

Portfolio, the all-singing, all-dancing business magazine that launched in April 2007, will go from 12 to 10 print editions per year. Around 15%-20% of the jobs associated with the title will go.

As it turns out, the main burden of the cuts will fall upon Portfolio’s online operation. Exclusive web-only content will be nixed and “most of Portfolio’s web site staff [will be] dismissed”.

Conde Nast will be the first of many consumer publishers to go down this route. The logic isn’t hard to grasp; you just follow the money. In this equation, web content = big costs and small revenues.

But downsizing web operations to safeguard your core business in print isn’t a sensible step for any publisher.

We’re reaching the stage at which recession has started to undercut media owners’ ability to invest in the future.

NB: The New York Times reports that between January and September, ad volumes in all US-published magazines were down by 9.5% YOY.

Scandal or the public purse: How to underwrite the cost of journalism?

Posted by Peter Kirwan on 12 November 2008 at 13:25
Tags: Daily Mail & General Trust, Guardian Media Group, Johnston Press, Newsquest, Trinity Mirror

At first, the concatenation of Paul Dacre and Alan Rusbridger at the front of Monday’s Media Guardian looked a bit like one of those combinations the Dulux Colour Wheel warns you against.

Lime green and purple. Or brown and blue.

The extract from Dacre’s speech to the Society of Editors was mostly a rant against the encroachments of privacy law. (Full speech here.)

By contrast, Rusbridger argued that Britain’s local newspapers should join the lengthening queue of industries seeking a government bail out.

Colour is only skin deep. Dacre and Rusbridger were arguing on behalf of completely incompatible philosophies of ownership. But both maintain that society needs to pay a price to sustain the newspaper industry.

In Dacre’s view, society must put up with regular invasions of privacy, and the resulting salacious exclusives, if newspapers are to have a commercial future. He doubts whether mass circulation newspapers can survive if they aren’t free to write about scandal.

The encroachments of privacy law, he suggests, are therefore a direct threat to the “reporting and analysis of public affairs” conducted by the popular press.

Rusbridger argues for another kind of subsidy. He can’t see why local newspapers shouldn’t feed at the trough of public subsidy alongside the BBC.

If ITV no longer wants to adhere to its public service remit, government should think about giving the money to local newspapers.

Who is to say that Channel 4 (not to mention some aspects of the BBC output) is any more deserving of state funding than those responsible for the sometimes humdrum, but essential, task of keeping people informed about what their local councils, courts, police, health and fire services are up to?

If there’s going to be a digital switchover surplus shouldn’t local newspapers be in with a shout, rather than shuffling the money around a limited pool of broadcasters - who are, in any event, rather urgently re-inventing themselves as digital content providers?

The real importance of both these pieces is their timing. Perhaps a real — and long overdue — debate about the future of news media may be about to start.

Unsurprisingly, the recession is going to be the catalyst. That, plus the doings of Ofcom, Mr Justice Eady and Lord Carter of Barnes.

Rusbridger can see it coming: “As the mists clear from the banking crisis it’s not clear if many MPs are aware of the potential for a similar one on their own doorsteps.”

He’s right about that. The real question, however, is whether anyone really cares about the fate of a business whose practitioners regularly rank below estate agents in terms of public esteem.

We might be about to find out.

News Corp. warns on profits as tabloid ad revenues start to decline

Posted by Peter Kirwan on 6 November 2008 at 12:46
Tags: News International

Profit warnings are becoming the rule rather than the exception. Further rounds of cost cutting are being lined up. This is where things start to get tough.

Welcome to Act II of the recession.

Yesterday brought another significant revision in forecasts — this time from News Corp.

Until yesterday, the company had been forecasting 4%-6% growth in operating profit for its current financial year.

Now the tune has changed. Yesterday, Rupert Murdoch forecast a double digit decline in profitability.

The solution? More cost cutting, on top of the “big economy drives” that Murdoch has already instituted at Wapping and elsewhere.

Coincidentally, Murdoch Snr. added some intriguing detail about the state of British ad markets. In the words of the Telegraph’s James Quinn:

He went on to say that the downturn in advertising in the UK was “strange” with the Sun and the New of the World largely holding up until this week, but that its broadsheets – the Times and the Sunday Times – had seen a “more considerable” fall led by “mono advertising and classifieds.”

There could be all kinds of reasons for this two-speed decline. Unintended consequences following the switch to full colour production? Perhaps. The reorganisation of sales teams at Wapping may also have resulted in a blip in revenue generating activity.

But there’s a big demand-led explanation that also sounds plausible.

News International’s middle class audience has been suffering beneath the burden of increased mortgage payments for some time. They traded down from Sainburys to Lidl long ago. Hence, perhaps, the early decline in advertiser demand to reach this audience.

It’s possible that Murdoch’s tabloid readers have remained an attractive target for advertisers precisely because they have continued to spend money on the High Street.

Why? Perhaps they’re less indebted than their middle class counterparts. (They’re almost certainly less reliant on the phoney prosperity generated by the housing boom.)

Alternatively, perhaps tabloid readers have taken the Sun’s jokey coverage of the credit crunch (”Crash, bang, wallop”) at face value.

Either way, my guess is that the recent declines in ad revenues at the Sun and the News of the World are evidence of something new.

We’re looking at a reaction to the fall in consumer demand caused by rising unemployment.