What will INM Buy?

JTMan

INM are on the hunt for acquisitions or mergers. INM have opened up a new role head of A&M.

What will INM targeting?
--> INM have already purchased 3 small NI magazines.
--> INM say they want consolidation in the print industry, in order to extend the life of print, by creating greater economies of scale.
--> INM looking at NI / UK opportunities as well as RoI opportunities.
--> INM looking at digital as well as print.
--> INM will not go after targets until they are put up for sale or so they say.

So who will INM buy?
--> Sunday Business Post?
--> Landmark Media Investments? or some of the LMI titles? Perhaps, this will happen if/when LM goes to the wall.
--> Communicorp?
--> TheJournal.ie?
--> Some SME UK newspaper group?

L1011

Communicorp to transfer some cashflow to Denis. I can't see them being allowed buy more papers here, either SBP or Landmark.

IRE60

--> Sunday Business Post?
Just turned a profit for the first year under new Mgt. PC would have to be dragged screaming to work for them (again)!

--> Landmark Media Investments?
Competition Authority would put the kibosh on that as it stands I think.

--> or some of the LMI titles?
Yea - if they go tits up then there are a few regionals that might be attractive - would have to fight with Celtic Media as they already provide some pre-press for them

--> Communicorp?
Yea, another well touted yarn - don't know what would have to be divested.

--> TheJournal.ie?
So they could get some of their copy back on a daily basis!:eek:

--> Some SME UK newspaper group?
I wonder if the mgt have the appetite for the Mainland again. Comm have finger in the water there via an Emap purchase - so it might have some synergies.

Having said all that - they need some growth method - their 'digital first' strategy is bo11ox - so something else will need to be thought about.

JTMan

Divest as the carrot in exchange for Communicorp sounds plausible. The divesting could be the sale of some non-core titles. Sunday World, 50% of the Irish Daily Star and Herald could all be pawned off in one go perhaps, that is if you can find a purchaser.

Canadel

Waterford Whispers News. Bring a bit of serious and objective news reporting to INM.

bogmanfan

Harmonia would be my bet

Loafing Oaf

Can't see the percentage for INM in acquiring SBP or IMI. Surely INM would be best served by the demise of those papers?

L1011

Loafing Oaf wrote: »

Can't see the percentage for INM in acquiring SBP or IMI. Surely INM would be best served by the demise of those papers?

Even without seeing them being allowed buy them, them ceasing to be would create a situation where they probably couldn't buy anything else as their ownership % would get too high. Keeping a competitor that isn't the Irish Times Trust is quite useful.

ArthurGuinness

You left out Maximum Media, Her and Joe.ie etc. A very plausible buy.

jmcc

ArthurGuinness wrote: »

You left out Maximum Media, Her and Joe.ie etc. A very plausible buy.

Why? Are those sites actually making money? INM is already trying to ape the Daily Mail website but not really doing a good job. It is failing badly on the T&A angle.

Regards...jmcc

IRE60

ArthurGuinness wrote: »

You left out Maximum Media, Her and Joe.ie etc. A very plausible buy.

They'd love to think so! I think that they would need to invest in something more sustainable than a semi 'lads mag'. where's the USP - how easy is it to replicate - very.

You want to be looking at other, less visible areas. Adtech possibly - or leaning on there strengths (and they do have a few).

Look at Storyful or Newswhip - class acts utilising assets to bring you metrics/information you wouldn't automatically think about.

I'm backing away form the keyboard now as I fee a rant brewing...steady...

JTMan

ArthurGuinness wrote: »

You left out Maximum Media, Her and Joe.ie etc. A very plausible buy.

The Sunday Business Post discussed the possibility of INM acquiring Maximum Media, INM said that although they liked Maximum Media they have looked beneath the hood. i.e. They fear that it is very loss making.

Meanwhile, INM have drawn up a list of 100 UK digital media companies of interest.

INM also said that they think that consolidation in the Irish newspaper industry is inevitable.

(INM also said they believe there is some more life left in the rapidly declining Herald newspaper, they would say that).

reason vs religion

Is the SBP really turning a profit? Even though they have a pretty bare-bones editorial staff, I still find it hard to believe that it would have been resuscitated so quickly.

IRE60

Turned a narrow profit - all down to cost control and they made as few purchases dowe the supply chain which will help (WebPrint).

Interesting interview with Pitt in the SBP - some points were positive as he'd be in for a more cohesive approach to some of the issues facing the industry as a whole. I mean the NII/Bewsbrands are practically silent at this point.

His 'gloss over' on the Herald was interesting, 20/20 vision on hindsight. Their move to the morning has been a disaster in terms of sales.

The Maxium spin should be put to bed at this point - it looks like theses 'rumors' might be coming from them.

His 'ad blocking is not an issue' was more likely bravado - "we're not sh1tting it yet" kind of approach. Given we're going to go over 20% usage in Ireland by the end of this year its certainly on the radar.

reason vs religion

IRE60 wrote: »

Turned a narrow profit - all down to cost control and they made as few purchases dowe the supply chain which will help (WebPrint).

Is that not very positive news for newspapers - that cost-cutting can allow a 30k a-week publication to turn a profit?

IRE60

reason vs religion wrote: »

Is that not very positive news for newspapers - that cost-cutting can allow a 30k a-week publication to turn a profit?

I don't understand the logic in that sentence: It suggests that under the previous cost structures, the levels of sales and advertising were equally met by costs. Two huge costs - print and distribution - the latter may be renegotiated and they bought a print plant out of liquidation - both will help. Their advertising revenues are growing - all seems positive.

The Guardian sells an average of 2350 copies a day in the Republic - on average - it generates over €2,200,000 annually at the till!

JTMan

IRE60 wrote: »

His 'gloss over' on the Herald was interesting, 20/20 vision on hindsight. Their move to the morning has been a disaster in terms of sales.

Pitt seems to think the solution is to become more Dublin focused and to market the Herald more. Cant see either solution working.

IRE60 wrote: »

His 'ad blocking is not an issue' was more likely bravado - "we're not sh1tting it yet" kind of approach. Given we're going to go over 20% usage in Ireland by the end of this year its certainly on the radar.

Pitt had his ´nothing to see here, all is grand´ spin-man hat on during the interview.

IRE60

JTMan wrote: »

Pitt had his ´nothing to see here, all is grand´ spin-man hat on during the interview.

worked with IN&M in the 90's and early naughties - and heard similar rhetoric when that 'whole inter web thing' was an irritant! Ostridge view of the problems facing them.

L1011

reason vs religion wrote: »

Is that not very positive news for newspapers - that cost-cutting can allow a 30k a-week publication to turn a profit?

I suspect the readership profile of the SBP might have some influence in that - there are advertisers there who would not bother advertising in a 30k a week mass market.

Joe_ Public

IRE60 wrote: »

worked with IN&M in the 90's and early naughties - and heard similar rhetoric when that 'whole inter web thing' was an irritant! Ostridge view of the problems facing them.

Were those not the glory days of Unison which was going to change the Irish media world FOREVER?

IRE60

Joe_ Public wrote: »

Were those not the glory days of Unison which was going to change the Irish media world FOREVER?

FOREVER!!!!!

Jesus, the mania. But it was a service provider at heart with a 'portal' type thing going on and a shareholding in telephony, callcards, premium rate, sweat equity in a few bingo type companies.......

But roundly ignored the elephant in the room - that interweb thing!

Joe_ Public

IRE60 wrote: »

FOREVER!!!!!

Jesus, the mania. But it was a service provider at heart with a 'portal' type thing going on and a shareholding in telephony, callcards, premium rate, sweat equity in a few bingo type companies.......

But roundly ignored the elephant in the room - that interweb thing!

Yet some very big hitters were hired to put shape on the thing - from memory Rory Godson and Alan English were both involved - so I'm not convinced the elephant in the room was being ignored exactly. I don't think there was enough understanding as to what they were trying to do, but the lesson of history is that people would not buy into it even when money was sloshing around in their pockets, and they certainly won't now when those same pockets are almost bone dry.

IRE60

Yea - there was a bit of 'what the fcuk are we' - no doubt there and anything that didn't fit in 'print' went under the wider umbrella of 'Indocom' - a knid of holding body that oversaw all sorts of disparate 'tech' companies.

But, there was a huge reticence there to even begin to engage in the web. The belief was that the 'printed word' would prevail. And, in Ireland's case, it did buck the trend as print was in the ascendancy until 2006.

Anyway, that's the past!

Back to the topic - there's some value (value always is relative to what you pay fro an asset) in regional papers. But is that good money after bad - you'd possibly be looking at a 10 year* forecast in terms of extrapolating money out of the business.

Technology : that's where the business will be, so perhaps investing in some of that. Publishing specific tec, analytics, ad blocking (and fcuk the 'potential' EU view that bouncing a punter using adblocking plugin may be 'illegal'). AdTech: interesting area.

More websites: not really sure about that unless they were niche products.

L1011

INM with Unison and OReillys cable shareholding could have slingshotted to being a huge ISP. Royal cock up.

reason vs religion

IRE60 wrote: »

I don't understand the logic in that sentence: It suggests that under the previous cost structures, the levels of sales and advertising were equally met by costs. Two huge costs - print and distribution - the latter may be renegotiated and they bought a print plant out of liquidation - both will help. Their advertising revenues are growing - all seems positive.

The Guardian sells an average of 2350 copies a day in the Republic - on average - it generates over €2,200,000 annually at the till!

I don't quite understand what you mean. Basically what I'm saying is that it amazes that, when newspapers across the world are losing money, the SBP, whose circulation has dramatically decreased in the last decade, could bring themselves to a break-even point so quickly. And am wondering does it mean that the newspaper industry's crisis is premised on newspapers remaining as comprehensive as they are now - i.e. if the Guardian scaled back the breath of its coverage (and stopped making Irish Times-like acquisitions ) would it comfortably turn a profit.

L1011 wrote: »

I suspect the readership profile of the SBP might have some influence in that - there are advertisers there who would not bother advertising in a 30k a week mass market.

Yeah, that's a good point. But the IT has the same attraction, and (with possible correction from IRE60) their advertising revenue is significantly down on ten years ago.

IRE60

I’d like to kick off with a kind of complaint.

The term “with possible correction from IRE60” I found a little cutting. “Correction” has connotations of some Dickensian Governess, wagging a digit whilst scolding and berating her charges. I like to think that I perhaps inform, cajole and, to a certain, degree educate. Granted sometimes that’s in a direct and forthright manner, possibly even wavering on acerbic with the odd post. But correcting – never!

There are a few issues here: I don’t think the recent fortunes of the SBP capture the new dynamics in the newspaper market. The SBP was bought by a few canny investors bringing publishing skills and financial muscle – who did their homework and saw – with some pain attached I’d wager – the potential in the paper (group) at particular levels of sales. Stress tested no doubt at varying points around its then circulation.

I think that some publishers have become ‘bloated’ with last decades acquisitions and the only way to alleviate themselves of the spare tyre is to take a hit financially.

I suppose that the crux of the matter is whether they can continue, in print, the depth of coverage they do now (and we can chip in that some of they don’t have any depth etc). The cost structure of publishing is really the cat-of-nine-tails. Regardless of circulation (to a greater extent) there are penalising fixed costs in distribution.

Sending a van to Listowel with 100 papers is going to cost the same as sending it down with 75!

Declining circulation will cut back in newsprint – you’ll use less of it, but that’s it. Behind that are the same fixed costs you were spending on when your circulation was 30% higher. Pre-Press – the same, film and plates – all the same usage at a lower circulation. There are massive, unavoidable, costs to print just one copy of a paper.

Staff: moot point on quality etc – but just concentrate on basic headcount. Newspaper proprietors may argue differently, but there a point in staffing where you can’t fall below to produce a paper and I’d argue at that tipping point you doing just that, production, and the very little latitude for grandiose 2,000 word articles on the Brexit, Trump or the homeless crisis.

So, to swing back to the last post: some publishers could make a profit if they could jettison some fixed costs – all associated with print. If they could ‘just’ get people to convert to digital then they would be in a much better shape. But there’s the fly in the ointment. The Great Unwashed – why won’t they just concede and go digital. Your newspaper every year (5 days) is costing you just shy of €600 – a tablet and a sub will cost you half that – and you could buy a new tablet every year and still come up trumps!

40% of Europeans pay around €1.50 every morning M-F for a newspaper – religiously every morning. But only 1.5% of them would be willing to buy a digital subscription.

That’s the real problem that publishers face, not accountancy and write-downs but it’s to completely change a mindset.

JTMan

Well said IE60.

The variable costs are mainly staffing costs. Production costs and distribution costs have fixed and variable elements but mainly a fixed component. Newspaper proprietors have being focuses on cutting their main variable cost, staff, while circulation declines 5-15% per year. In many cases, staff costs have been cut in line with revenue declines. However, there is a finite line for how far variable cuts can go before remaining fixed costs make print no longer viable.

Local press, especially in the UK, have seen the cold face of what happens when cuts have gone as far as they can, with significant newspaper closures. The shelf life for the nation papers is going to be longer, but they will succumb to the same faith starting with the lower hanging fruit such as the tabloids and the Írish editions of the UK papers.

Paywalls, with the exception of high quality premium content, are not delivering enough revenue. Nor are online ads.

The clock is ticking. The sun is going to set. The only question is the timing.

JTMan

Roy Greenslade has an excellent article today on the future of print here.

Szero

IE60 and Roy present 2 competing visions of end game.

IE60 says ...

IRE60 wrote: »

Declining circulation will cut back in newsprint – you’ll use less of it, but that’s it. Behind that are the same fixed costs you were spending on when your circulation was 30% higher. Pre-Press – the same, film and plates – all the same usage at a lower circulation. There are massive, unavoidable, costs to print just one copy of a paper.

Roy says ...

It does not mean the immediate closure of papers because the lesson from regional owners is that it is possible to continue publication through cost-cutting. Papers can be produced with skeleton editorial staffs. Indeed, Richard Desmond has been doing that at the Daily and Sunday Express and Daily Star for several years.

Space in newsprint papers can be filled. The end result is something that looks like a paper, but the content lacks any real value. It is not journalism. It is pointless material without any public benefit.

SZero says ... Fixed costs can be cut. Distribution can be shared among competing newspaper groups, printing facilities can be shared, the number of pages in the newspaper can be cut and degrees of automation can be added. Fixed costs are not entirely fixed but granted that they have a finite cutting potential whilst staff costs are much easier to cut.

Roy says that newspaper will continue with skeleton staff and junk journalism and he says that local press proves that this is possible. What Roy misses is that distribution costs per paper for local press are normally significantly lower than national distribution costs per paper. Distribution costs, whilst they can be cut, have a finite cutting potential for a national, and could be the final nail in the coffin for nationals.

IRE60

The line with 30% above was a reference to pre-press – which is the same for reducing newspaper sales – unless you cutback pages – which Roy alluded to.

Newspaper publishing has/had a notorious high cost of entry and the reality is that the costs are high and very much fixed.

Naturally, and taking a clinical numbers only approach, page numbers can fluctuate but for a benchmark, let’s take a paper that had x numbers of pages now and the same level ten years ago. Prepress, Printing and Distribution are the same fixed cost.

The bean counters that are parachuted into struggling publishing empires some have that same mindset – cut staff and pages. A short term solution to a longer term problem.

The two most valuable assets, for a sustainable newspaper, are its brand and its staff (everything else can be outsourced). And I’d argue that the two are inextricably linked. A good newspapers brand was built on the quality of it publication: good writers, good (better!) subs and skilled editorial design people.


Distribution can be shared – and I believe it’s the one area the all the newspaper groups are in agreement about. Distribution is shared, in many areas, at a local level. It’s the main arterial routes that you have at least two distribution companies laying down tyre tracks over each other seven days a week. Regional distribution costs are, per copy, lower than nationals – but their geographic footprint is much smaller. I’d warrant a ‘per mile’ cost attribution would side with the nationals.

And again – you reach a point where you cannot operate a print plant below a certain level of staff so there no saving there.

If we were stating again – one massive print plant, catering for all papers* and one distribution network.

To use that much hated expression ‘we are where we are’. Most of the large newspaper groups in the Irish Newspaper market invested heavily in print plants in the 90’s/00’s. They can’t simply shut them and co-chair with another group because they will still have the costs of the repayments! So they are stuck with that cost and there’s no cutting there.

*The Indo and Times looked hard in the early 90’s at a joint plant. Different ‘web-widths’ was one of the stumbling points.

Cutting staff and pages is a race to the bottom. Naturally there can be cost savings and it’s an easy win – for the bean counters only- and to what end. Producing an editorially weak ****e product after the cuts?

What happens then – one time newspapers buyers abandon your publication for a decent one. Advertisers, on seeing the sales decline, begin to fall off and you are back to square one: revenue is exceeded by expenses.

This will focus the mind on the problem in hand:

JTMan

It would seem that the Irish Times and INM are moving towards shared distribution and shared printing. The cost savings are enormous and would slightly prolong the remaining lives of the papers.

Sunday World and the Irish Daily Star are now printed by the Irish Times. INM's Newspread business distributes the Irish Times. This has caused big cost savings for both companies. A point often missed when people are analysing their respective accounts and surely a sign of things to come.

Meanwhile today, INM said there has been an "accelerated decline" in newspaper advertising. Also, the Guardian have sounded alarms over digital advertising decline today.

IRE60

There seems to be a tipping point reached. DMGT, the Daily Mail publishers issued a profit warning a few days back on the back of print ad revenue. The Telegraph are looking for head count on the back of their revenue.

The World and Star were always up on the same press and it makes sence. The capacity of the citywest plant in limited. Distribution is getting leaner and it was the correct thing to do. When papers fought tooth and nail each morning there was no way they woud have distributed collectively. Now that the dynamics of the game have changed I think, as the fat lady is gargling, this a matter of extracting the most out of print, reinvest in digital, and pray!

A very interesting guy yesterday talking about the Fastnet race. He said you should always climb into a liferaft, never step on to it, if you can get the difference. Stay till the bitter end on your vessel!!!

mrsdewinter

"A very interesting guy yesterday talking about the Fastnet race. He said you should always climb into a liferaft, never step on to it, if you can get the difference. Stay till the bitter end on your vessel!!!"

That quote tells us a lot about that man's mindset and possibly something about the macho culture of sailing but how does it relate to the newspaper industry or indeed what you wrote just above??

JTMan

Back to distribution costs and printing costs, the 2014 Irish Daily Star accounts give clues as to how much it costs.

The Irish Daily Star paid INM 6.02 million EUR for both distribution costs and printing costs in 2014. (2013: 5.7 million EUR). Separately, the accounts state that 3.5 million EUR was spent on distribution and promotion expenses. Hence, roughly speaking, assuming no more than 0.5 million was spent on promos and adverts, national distribution costs 3 million EUR per year and printing a national title costs 3 million EUR per year. Granted, Irish Daily Star have possibly reduced the costs by moving to using Irish Times facilities in 2015.

One can debate just how fixed distribution and printing costs are but 6 million EUR is a guide price to what it costs. Add staff costs and admin costs and you realise that many of the 'Irish' editions of the UK press must be sailing very close to a break even cliff-edge point.

IRE60

mrsdewinter wrote: »

"A very interesting guy yesterday talking about the Fastnet race. He said you should always climb into a liferaft, never step on to it, if you can get the difference. Stay till the bitter end on your vessel!!!"

That quote tells us a lot about that man's mindset and possibly something about the macho culture of sailing but how does it relate to the newspaper industry or indeed what you wrote just above??

To completely deviate as way of explanation. The quote means that the life raft is a the vessel of last resort and should only be used when your ship is a gonner. My comparison is about the publishing business having to stick with print until the bitter end - then abandon that vessel.