IN THE mid-2000s, the brash and bullish Johnston Press thought buying into Irish regional newspaper market was a licence to print money.
It spent more than €200m building up its Irish portfolio, now just 10 years later the Scottish-based plc may be about to depart facing a write down of more than 95% on its investments. By any standard it’s an ignominious defeat.
Confirmation in a statement to the stock exchange by Johnston Press this morning that it is at an advanced stages of agreeing the sale of its Irish regional newspaper operation is perhaps not all that surprising. For some time JP’s chief executive Ashleigh Highfield has been pursuing an aggressive digital first strategy in the UK, and attempting to reduce the company’s massive debt burden.In fact JP is positioning itself to capitalise strongly on digital advertising, if and when it catches up with the losses from traditional print, through innovation and new thinking – what Highfield has previously described as “bringing the advertisers and consumers closer together”.
However while the UK market has perhaps turned a corner and is showing signs of recovery, it is difficult to see and light at the end of the tunnel for the provincial press in Ireland, which continues to hemorrhage readers, and is facing into yet another year of advertising decline. Worse still, due to the relatively small nature of the Irish market, any chance of salvation in digital is at best slim.
What is perhaps shocking is the amount that JP’s Irish newspaper portfolio – which includes 14 newspapers such as the Limerick Leader, Kilkenny People, Leinster Leader group and a number of other titles – is valued at, just €8.5m. It paid almost €140m for the Leinster Leader group in 2005, and failed to sell in 2009 when it reportedly sought €70m for its Irish titles.
The story first appeared in yesterday’s Sunday Times by that newspaper’s Ireland Business Editor Brian Carey. That newspaper said JP were in negotiations with the Mediaforce ad agency owner Malcolm Denmark to buy its Republic of Ireland titles. Though the deal would not include its Northern Ireland titles, which includes a profitable printing operation. JP closed down its printing presses in the republic in recent years, centralizing its printing at its Carn plant outside Newry.
JP’s is without doubt the worst story but there will be other casualties in Ireland’s provincial press in the coming years. It is certain now that many local newspapers in Ireland will simply not survive the transition to online and the consequences for local democracy and local communities in Ireland are quite profound.
Below is an extract from a 2011 book chapter I wrote for The Local: the rise and fall of the regional press in Britain and Ireland edited by John Mair, Richard Keeble and Neil Fowler (Abramis: Bury St Edmonds). It makes for interesting reading, especially considering things are gotten worse since.
“In the four years between 2007 and 2011, audited circulation of Irish weekly regional newspapers dropped by more than a quarter. Among the biggest individual drops in sales were the Johnston Press owned Leinster Leader and Limerick Leader, down 43% and 28% respectively between January-June 2008 and January-June 2011. The Independent News and Media- owned Fingal Independent, a Dublin suburban weekly, sold just 3,319 papers weekly according to its audited figures for January to June 2011, down almost 40% on the same period in 2008. The Galway city-based Connacht Tribune, of the few independently owned titles left, dropped 14% between 2008 and 2011, but remained the country’s largest selling weekly with 21,000 sales.
It is Johnston Press’s Irish story that is most spectacular however. At the very end of the Irish boom in 2007, the Edinburgh-based media company boasted growth in ad revenues of 7.5% in Ireland for their 2006 fiscal year, despite a slump of 13% the same year in the UK. Its Irish success story was built largely on the back of acquisitions of titles, including a reported €140m paid for the Leinster Leader group just two years previously, racking up significant debts in doing so.
By 2007 Johnston had eleven paid-for titles and ten free sheets published weekly in Ireland. The company’s then chief executive Tim Bowdler described its Irish operations as the ‘star performer’ and the company announced plans for new ‘lifestyle magazines and niche products’ in Ireland. It was a steep rise to success.
When it came, however, the fall was just as steep. Just six months later, in August 2007, Johnston announced a significant drop in Irish advertising revenue. Bowdler was still predicting growth in Ireland, but ‘not by the same margin’. Two years later, in 2009, the company announced it was reviewing its entire Irish operation. The Irish Independent reported the company planned to sell its Irish titles, however bids for the portfolio of newspapers were not sufficiently high enough. The paper speculated Johnston has spent more than €250m building its Irish empire, while offers to buy the portfolio were less than half the €70m hoped for.
Days later the company, in an interim management statement, confirmed that its efforts to sell its Irish titles were unsuccessful. The Irish state broadcaster Radio Teilifís Éireann (RTE) reported Johnston later sold a Co Dublin local weekly, the Tallaght Echo back to its former owner for reportedly less than €1m. He had sold the title to the Leinster Leader Group, later bought out by Johnston, for €5m in 2005. The same year the company introduced drastic cost-cutting measures including retrenching its sub-editors across many of its Irish titles. In November that year, it closed its Limerick Leader printing press with the loss of 30 jobs and centralised its entire Irish printing operation in Northern Ireland. The company reported a 29% drop in newspaper advertising revenue in its Irish operations in the first six months of 2010, though that decline had improved somewhat (18.2%) in the same period in 2011. In its latest published interim results, it describes the economic environment in Ireland as ‘challenging’.”