Ofcom wakes up to local news crisis. . . but will probably doze off again soon enough

Posted by Peter Kirwan on 24 March 2009 at 14:22
Tags: Johnston Press, Media, Newsquest, Northcliffe Media, Trinity Mirror

Now, finally, we know what it takes to get Ofcom out of bed.

Cindy Crawford used to demand $10,000 a day. In the case of Stewart Purvis, the absurdly-named partner for content and standards at Ofcom, it’s a 37% YOY decline in ad revenues at Northcliffe Media.

Oh, and 1,000 job losses.

Wiping the sleep from his eyes, Purvis — whose CV includes stints at Channel 4, ITN and the BBC — was all over the news bulletins last night.

What we got was yet more bleating about the role of local newspapers in a democracy. (In case you were wondering, their role is to tell voters what goes on in government “between elections”).

The abiding impression created by Purvis’s soundbite was that of a man flapping his arms in the air and repeating: “Something must be done.”

This is fine so far as it goes. But Purvis has got competition. For months now, culture minister Andy Burnham has been performing this role.

Regrettably, when it comes to taking real action — or any action at all — the minister has proved as useful as a one-legged man in an arse-kicking contest.

But still: let’s not be too harsh. Let’s ask instead what has woken Purvis from his slumber. What, in other words, was so special about yesterday’s announcement from DMGT?

On 18^th March, Gannett announced that Newsquest’s ad revenues declined by 32% (in constant currency) during January and February.

On 11^th March, Johnston Press announced a 36% decline in ad revenues during the first nine weeks of the year. On 26^th February, Trinity Mirror forecast a 37% decline in regional ad revenues during January and February.

The idea of freefall declines in regional ad revenues isn’t new. It’s been staring the industry in the face since last autumn.

Did anyone genuinely think that the 25%-30% YOY declines in regional ad revenues recorded during Q408 were going to be the end of the story?

For the past six months, this government’s response to signs of distress among local media has been consistent: let Lord Carter deal with it.

Carter largely ignored the gathering crisis in local newspapers in his interim report which was published in late January. But he provided a glimpse of his thinking last week.

On Tuesday 17^th March, Sly Bailey –- whose willingness to make waves is becoming admirable — told the FT that regional newspapers face “immediate peril”.

Two days later, a reporter asked Carter about Bailey’s repeated criticisms of him.

The noble technocrat had this to say: “Internet advertising is repricing traditional media inventory. I’m not entirely sure there’s an awful lot you can do about that.”

Carter’s quote got me wondering. What if the bleating of bureaucrats like Burnham and Purvis is actually misleading?

What if the secretary of state for culture, media and sport and the partner for content and standards actually turn out to be minimum-waged employees of the Department of Folding Deckchairs?

Furthermore: what if masterly inaction actually lies at the core of government policy?

Lord Carter may yet emerge as a Shirky/Jarvis-style technocrat who believes that the entire edifice of regional print ownership needs to collapse before a new digital order can be born. (It’s certainly a view. But until a few months ago it was controversial enough to be unmentionable in polite conversation with Big Media types.)

If Carter does hold such views, the Treasury will love him for it. HM Treasury has fought an aggressive rearguard action against any government minister who has dared to suggest that bail-outs should be offered to anyone other than bankers. You’d have to guess that Lord Carter is in agreement.

And then there’s that renowned friend of local democracy, Gordon Brown. I wonder how much priority he places upon the need for voters to stay informed “between elections”?

Of course, it was nice to see Stewart Purvis waking up to what’s been occurring beneath his nose for the past six months.

Sadly, I wouldn’t describe his new-found wakefulness as particularly encouraging. It’s entirely possible that Mr Purvis has just misread government policy in a fundamental way.

Regional press bosses go lobbying alongside the subsidy jockeys of Channel 4 & ITV

Posted by Peter Kirwan on 4 March 2009 at 18:43
Tags: Guardian Media Group, Johnston Press, Newsquest, Northcliffe Media, Trinity Mirror

It’s reassuring to see that the regionals finally mounted a proper effort to lobby Lord Carter in January, shortly after publication of the interim Digital Britain report.

At the very least, this lobbying effort should have been launched back in October, when Carter was appointed as minister for communications, technology and broadcasting. Arguably, of course, the regionals should have started bending the ear of culture minister Andy Burnham last summer.

In the event, Carter’s interim Digital Britain report emerged in late January.

It showed what happens when — as in the case of the regionals –- you approach the prospect of public sector intercourse like a Mormon cast adrift in Las Vegas.

Across hundreds of pages in Carter’s report, the regionals were crowded out of proceedings by the smart alec subsidy jockeys of Channel 4 and ITV and the smooth-talking telecoms operators. Carter mentioned newspapers precisely four times.

Messing about with megaphone diplomacy (Tim Bowdler in the Sunday Times) and blowing your top (Sly Bailey in the wake of Carter’s report) have been poor substitutes for engaging with the government on its own terms. The failure to engage has cost the regionals precious time.

It’s been entertaining, though. In particular, the sarcastic statement that Bailey released after publication of Lord Carter’s interim report voiced the irritation of many in the industry.

Unfortunately, it had the side-effect of making Trinity Mirror — and the regional newspaper industry as a whole — look woefully out of the loop.

For much of 2008, this was the case. Last week, however, Bailey made a strenuous effort to convey the impression that this had changed.

As she presented Trinity’s 2008 results, Bailey was at pains to stress that lines of communication with the government had been opened up. Along the way, however, the chief executive of Trinity Mirror also dropped a few mixed messages into the ether. 

Talking with Ian King at the Times in the wake of her results presentation, she had this to say:

“The old concerns about dominant market position do not apply. Advertisers do not see it that way — the regulator is the only one left who still sees markets in that way. There is an urgent need to change the way regional newspaper mergers are considered.”

This is the standard argument for a relaxation of competition law. But when Bailey spoke to City analysts last week, she seemed to say something different.

Asked whether consolidation would bring “genuinely new opportunities” in its wake (as opposed to more of the same old cost-cutting), Bailey suggested that it would give Trinity Mirror “more clout” in advertising markets.

But surely more clout for publishers must mean less clout for agencies and clients?

This is the kind of suggestion that will cause concern at the Office of Fair Trading and the Competition Commission.

Of course, it might be possible to reconcile these two apparently conflicting positions by arguing that an increase in the regionals’ ad market clout simply doesn’t matter in a world where so much revenue is migrating from print to digital.

This point is easy to argue. But it will be tricky to prove conclusively.

Presumably, this is what Lord Carter has asked the regionals to do. To crunch the numbers, the regionals have engaged the big-brained analysts at OC&C, the strategy consultancy.

It will be intriguing to see what they come up with.

Bowdler hints at mega-deals and relaxation of regional ownership rules

Posted by Peter Kirwan on 5 January 2009 at 17:37
Tags: Johnston Press, Northcliffe Media, Trinity Mirror

If we’re to take Tim Bowdler’s interview with the Sunday Times at face value, Britain’s regional newspaper owners might be about to receive a belated Christmas present from Peter Mandelson. 

In the interview, Bowdler hints that HM Government could soon relax competition rules in order to allow further consolidation of the regional press. According to the Sunday Times, he believes that the government is “sympathetic” to the industry’s case.

Specifically, Bowdler thinks the time is right for a bold merger announcement that would give regulators “something to sink their teeth into”.

Going down this route would involve a competition probe, and months of uncertainty. To make this worthwhile, Bowdler argues that the proposed merger would need to be a big one. And the outcome of a probe would need to be pre-ordained.

“It would be an unnecessary and unwelcome distraction but it depends on the size of the prize and the confidence that it could be achieved.”

If the outgoing boss of Johnston Press is talking like this, it seems likely that a deal is being cut. Something is afoot.

Of course, a big merger will open the door to reduced costs by unleashing a torrent of job losses. This would also bring concerns about editorial quality into even sharper focus.

In the Observer this weekend, Peter Preston nailed this concern eloquently. Continued cost cutting, he wrote, means that “too many papers. . . have abandoned their fundamental reason to exist”.

More will go the same way in the wake of a mega-deal (or two). In this respect, one of Bowdler’s comments strikes me as particularly interesting.

“There is a realisation today in government that the way in which our industry has been regulated hasn’t been that helpful and today it is less appropriate than it was.”

What, I wonder, does Bowdler mean by this? Is he repudiating the light-touch regulatory regime that allowed the City to hollow out the regional press from within?

Or is he hinting that Peter Mandelson’s blessing will come with strings attached?

This seems plausible. If you’re a press baron, relaxing competition law seems like an obvious remedy. But the view from Whitehall is more nuanced.

Last year, the government showed itself willing to relax competition law for bankers who will do the Treasury a favour.

But administering the same medicine in the wider economy would have big implications. If Johnston Press receives favourable treatment, what’s to stop Tesco, or BT, from lobbying for their own special measures? 

Governments aren’t in the habit of doling out competitive advantage to private companies at the commonweal’s expense. Quite possibly, the price of increased consolidation will be increased oversight.

This would make others think twice before special pleading. It should also allow the government to sidestep the charge that it is encouraging the continued disembowelling of the regional press.

Of course, the details would be nightmarish. And our regional newspapers aren’t likely to turn into European-style social enterprises overnight.

By the same token, the free market ecosystem that has sustained Britain’s newspaper industry for more than a century has never looked shakier.

UPDATE: 6th January 2009: Perhaps the gift isn’t Lord Mandelson’s to give. Judging by this story, Tim Bowdler may well be anticipating Lord Carter’s Digital Britain report. 

Ad recession: We’re at the end of the beginning, not the beginning of the end

Posted by Peter Kirwan on 8 August 2008 at 10:58
Tags: Associated Newspapers, Daily Mail & General Trust, Johnston Press, Media, Newsquest, Northcliffe Media

Writing in the FT, Tim Bradshaw predicts that ITV’s forecast 20% YOY decline in September ad bookings might come to be seen as “the moment the credit crisis finally hit advertising budgets”.

This is unlikely. The credit crisis was taking a visible toll on ad expenditure as long ago as January. But in ad markets, as in property markets, the real point of impact was early May.

That’s when the decline in ad revenues moved aggressively into double-digit territory. The scale of the collapse is really visible in the numbers for Newsquest’s classified ad revenues provided in monthly bulletins issued by Gannett.

In April, Newsquest was dealing with a classified market that fell by 5.7%. During May, its classifieds were down 14.7%. (At Trinity Mirror, the Q2 decline seems to have been similarly sharp; at Northcliffe, less so.)

Since then, we’ve moved up another gear. Last week, Trinity Mirror disclosed that ad revenues at its regionals declined by 17% during June.

That’s actually worse than ITV’s prediction for September. Why? Because ITV is comparing its performance with a buoyant September 2007, which featured England reaching the Rugby World Cup final.

Strip out the effects of that, and, as ITV’s Rupert Howell notes, the channel’s underlying YOY decline in September will be something like 14%-15%.

This feels about right. When it comes to percentage declines, the big ad budgets devoted to commercial TV are always going to lag behind what’s happening in the regional press. The smaller local businesses that sit at the economy’s sharp end always feel the pinch first.

So that we can all keep a sense of proportion, here are a few data points that illustrate the speed and scale of the downturn.

The percentages refer to all ad revenues including digital (or in the case of Newsquest, to classified revenues only, where mentioned). The months mentioned are those in which the declines actually occurred (rather than when they were reported to the market by the companies in question). All % comparisons are year-on-year. . .

July:
Trinity Mirror regionals: down by “around” 17%
Trinity Mirror nationals down by “around” 13%

June:
Newsquest classifieds: down 19.3%
Northcliffe regionals: down 16%

May-June:
Trinity Mirror regionals: down 11.3%
Trinity Mirror nationals: down 13.2%

May:
Newsquest classifieds: down 14.7%
Northcliffe regionals: down 12%

April:
Newsquest classifieds: down 5.7%

March-June:
Associated Newspapers: down by 3%
Northcliffe regionals: down by 11%

March-April:

Trinity Mirror regionals: down 3.3%
Trinity Mirror nationals: down 2.4%
Northcliffe regionals: down 6.7%

January-April:

Trinity Mirror regionals: down 3.1%
Johnston Press: down 7.1%

January-February:

Johnston Press: down by 4.2%

DMGT’s investment in Spot Runner could bring cheap local video ads to regional newspapers

Posted by Peter Kirwan on 20 May 2008 at 10:55
Tags: Daily Mail & General Trust, Northcliffe Media

Just caught up with this: Daily Mail & General Trust has invested in a US company called Spot Runner, which specializes in helping small companies to create and place cheap TV ads.

As part of the deal, DMG&T will take a lead role in deploying the start-up’s technology in Europe — something we look forward to watching with interest.

I’ve been following coverage of Spot Runner casually in the US media and marketing press for a year or so. Founded in 2006, the company allows thousands of mom and pop businesses to run highly localized TV ads across the US.

It’s a classic Long Tail effort –albeit one that seems highly geared toward North America’s highly fragmented local TV market (at least at first glance).

Recently, for example, Spot Runner struck a deal with Stuller, a US company that makes money by distributing cheap jewellery to 40,000 independent retailers across America.

For a minimum spend of $1,500, any one of these stores can plaster their own details across a templated ad featuring Stuller goods created by Spot Runner. Spot Runner also does the leg work of finding remnant air time for the resulting ad in local markets.

So what? Well, here’s what. Forget about America’s highly localized TV markets. Instead, focus on the fact that Spot Runner’s technology is ideally suited to small companies anywhere in the world who want to make and run video ads on the web.

Naturally, if Spot Runner can combine video advertising with the power of local search and content, the results could be very powerful indeed.

Online video has become an extremely lucrative niche for national sites. The potential for local advertisers doing their stuff — at low cost — on thousands of local news sites is obvious.

Spot Runner’s ambitions don’t stop with video. Nick Grouf, the company’s chief executive, is making it abundantly clear that Big Media should regard Spot Runner as a multi-platform rival to Google:

“Businesses don’t think, I want to be in print, or be online, or on TV. They think I want to [grow my revenue]. What we’re doing right now is trying to learn more about how to make our advertisers successful. To the extent that print is part of that [purpose] we will help them with that focus.

This kind of talk has got a large number of Google’s fre-enemies excited about Spot Runner. Aside from DM>, the company’s investors include global ad networks WPP and Interpublic, broadcaster CBS and Spanish-language media giant Grupo Televisa.

Paid Content suggests that it knows “on good authority” that Google tried to buy Spot Runner soon after its launch. The start-up allegedly turned down the offer — and Google has subsequently ventured into TV advertising on its tod. (NB: Other accounts suggest that Google walked away from Spot Runner — see here.)

The potential isn’t lost on the highly-rated former Microsoft executive Joanne Bradford, who recently left her job running Microsoft’s global ad sales organization to take up a senior role at Spot Runner.

It’s going to be interesting to see how DMG&T delivers on its commitment (as Paid Content puts it) to “help take the service to UK and other parts of Europe”. . .