Why greed is helping to ruin the regional newspaper industry, as Newsquest cuts staff at the Bolton News

It is devastating. I understand how all those at Newsquest’s Bolton News who face losing their jobs feel, a quarter of the editorial force in that organisation, 10 in total are to go.

They will join a long procession of journalists who have lost their jobs during a bitter decade of decline, many of them great journalists and more than a handful I’m proud to call my friends.

A quarter of the workforce are to be cut in the editorial department of the Bolton News by Newsquest.

A quarter of the workforce is to be cut in the editorial department of the Bolton News by Newsquest.

The first word that came to my mind was greed. I searched for a quote to match my mood and came up with this: “One of the weaknesses of our age is our apparent inability to distinguish our needs from our greeds.”- Don Robinson.

The issue for newspapers is that they have always tried to squeeze the money out of the businesses. I’ve not become a socialist over night (just for the record),  I understand the need to turn a coin.

But it makes business sense not to be too greedy. Here lies the problem. I’m not sure my accountant friends will agree, but newspaper profit margins have always been too high.

Johnston Press used to boast profit margins of 35 per cent and the rest of the industry licked its lips and look with envy at what they had achieved.

When I joined the defunct Northcliffe Newspapers in the early 1990s, the company didn’t have such high profit margins, but they were still heading towards 20 per cent.

The reason is that the company didn’t have to bust a gut to reach 35 per cent was that it was making towards £100m and Lord Rothermere was more than happy, describing the regional newspaper arm as his ‘jewel in the crown’.

Then the collapse in income and the bottom fell out of the industry. Northcliffe, which had posted £96m profits saw them plunge to just £17m and panic set in.

This panic effectively saw the slash and burn team move in and clear out large chunks of the newsroom…and to be fair any other department which could be cut.

While the business started to adapt and modernise, fewer staff, no editions, online first, rather than reassess the need to make smaller profit margins to fit in line with a new business model, companies decided they needed bigger profit margins.

Certainly, where I was last based, they were targeting 27 per cent, certainly higher than in the glory days of larger profits. So with revenues down in news print, online failing to make up the shortfall, targets were set higher.

The point about profit margins is that most companies would be happy to make between 10 and 15 per cent (this is being generous), so you can see how newspapers have been pushing the boundaries…or being greedy.

Gracia Martore, chief financial officer at the Newsquest’s US parent, Gannett, said recently: “Let me once and for all dispel the myth that Newsquest doesn’t make money. Newsquest makes a lot of money.

“In fact, their margin, as I have said a couple of times, is consistent with the margin that our local US community publishing operations generate.

“So their margins are in the high teens to low 20s. And they have consistently made money throughout the years, even in a year like last year when revenues were under as much pressure as they were.”

So here we have it. Straight from the horse’s mouth, Newsquest is doing very well, thank you…

The issue is that the company, like other newspaper businesses are squeezing the life out of the organisations. The more staff you cut, the worse the product inevitably becomes.

Without doubt the newspaper business needed an overhaul. In some areas there were too many people doing the work. However, there is a time when staff cuts are so deep that the product suffers. This can be seen everywhere now.

If these firms were serious about keeping going, they would perhaps decide to reduce the profit margins slightly and maintain the existing workforce to protect the product.

However, by cutting staff the decline of the business becomes a self-fulfilling prophecy. Fewer staff, a poorer product, sales decline further, less income, then cut staff again, the circle of despair is complete.

I know the shareholders would moan desperately about their dividends being reduced if profit margins fell, but they will not get a penny if the business folds.

Surely, it’s worth a gamble to cut the margins, protect the staff and even look to invest in new products such as apps to ensure the longevity of the business? Unfortunately, the words horses and bolted come to mind.

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Don’t blame the rise of the ‘evil’ web sites for the decline in newspaper sales and jobs of journalists, there are darker forces at work

It’s easy to blame the web for the decline in newspaper sales. Like most industries, there’s always a need to find an easy answer to what went wrong, but this is too simplistic. Why did sales fall off the end of the cliff?

The reality is much more complex than the emergence of the web. The internet wasn’t just switched on in 2006 and the world came to an end. Why 2006?

Having emptied my briefcase for the first time since 1987, I came across some fascinating sales figures from a couple of newspapers I was lucky enough to have worked for.

What they clearly highlight is that for regional newspapers life was pretty rosy until this point.

The rise of web sites isn't the only reason why newspaper sales have declined.

The rise of web sites isn’t the only reason why newspaper sales have declined.

The figures I found, even with the bulks taken out, show that though sales were on the way down, it was a steady, moderate decline, not the 10-20 per cents we are seeing now.

So, from the early 80s until 2006 the average annual sales decline according to my stats was around -2.6% for the newspapers I worked for. Many editors would give their right hand for this result today.

Then we hit 2006. Suddenly the average sale loss hit between six and seven per cent, for some it was even heavier losses.

This became the trend for a few years until around 2012 when newspapers, if they hadn’t already, started hitting the double digit sales decline. Today, other than the odd exception, most of the decline sits unhappily above 10 per cent.

Those which aren’t quite there are often the smaller selling newspapers which have probably hit the plateau of decline. Indeed, if they were in double figures they would be shut or free within a couple of years.

What this decline does show is that the web is not the only excuse for the sales loss. The web has been around for many more years than the last nine years of rapid decline.

I accept that newspapers pay more attention to it than ever before, but that’s because the newspaper sales decline has speeded this process up. What actually happened in those dark days of 2006?

The truth is that the advertising income suddenly collapsed, particularly classified, and owners realised that the regional newspapers were no longer cash cows.

One regional newspaper owner used to call their regional papers the jewel in his crown as the millions rolled in. But it was in 2006 that they suddenly disappeared off the face of the earth, the royal visits to the provinces ended, never to return.

With the prospect of incomes on the slide there was an invasion of grey-suited consultants. They entered the offices to start their bean counting. What was sad about the process of dismantling the business was that these poor folk knew nothing about newspapers.

I remember well being questioned why one reporter had only written 10 stories in a month and another 200. The answer was simple.

One was an investigative reporter who helped to jail a county council leader. These kind of stories cannot be knocked out in five minutes, the other reporter was a junior who spent their time banging out nibs.

But they just didn’t get it and asked how many stories could be written in an hour, in two hours. How many pages could be subbed in an hour or a day?

By the way, the target was to sub eight pages a day. I recommend any sub/content editor to see if they can sub eight pages a day based on a reasonably high story count and small ads. It’s really tough, no chance of a lunch break.

So with incomes down, staff cuts, getting rid of editions, reducing the covering of courts and council, reducing pagination, printing on toilet paper, increasing cover price, oh, and a bigger emphasis of the web, sales started to dip dramatically. The perfect storm.

Ok, I can’t hang my coat on any one of these being completely responsible for the sales decline. Collectively, however, they are a potent force. What it does mean, however, is that the evil web is not necessarily to blame.

Equally, the web is not the part of the business which will prop up the newspapers either. Yep, we all know the truth, that however you fiddle the figures or get the poor advertising folk to flog ads online, the chances of making up for print revenue decline via the web is as unlikely as England winning the Ashes this year or anyone considering that George Bush was a great president.

If it could, we wouldn’t have seen the cuts that have really impacted on the business. Peter Preston’s article for the Guardian reinforced this view this week, you can read it here http://bit.ly/1AGm0FA

Peter has viewed the latest figures from Murdoch’s paywall sites and the Mail online. The paywall was designed so that digital money covers the loss of print advertising and cover-price cash. Unfortunately, it’s not working.

At the Mail, growth was scheduled at 40% year on year, to bring in £100m in ads online this financial year and make up for the decline in print revenue.

However,  growth has dropped to 20%, the half-year digital ad take, at £36m, makes £100m seem a distant dream. I don’t have all the figures to hand, but you can only think that this is a similar picture across all national and regional press.

So, I go back to my argument in my last post. Surely, all newspapers need to look outside the newspaper/web model? Specific apps, with great content, written by expert journalists cornering the market in their subject might be the way forward.

Remember, mass media has gone. Personal media is the way forward, so deliver personal media. What do advertisers crave most? They want to know that their adverts and promotions hit the bullseye (target audience) like darts champ Phil ‘the Power’ Taylor in his glory days.

This is what apps can do. Why not give it a go?

Why regional newspaper web sites will end up a busted flush and how to save the jobs of local journalists

The first newspapers, if they can be called that, often wrote about and targeted specific markets/audience. Regional newspapersA lot of what was written was about politics and was spiteful and untruthful, similar to today?

These were the days before mass media. Early newspapers/pamphlets were so small that if you lived a couple of streets outside its ‘circulation’ area there was little or no chance that you would have a clue what was being written about.

Slowly, the content broadened and started to look like the offerings served up in today’s newspapers. It was thanks to the Victorians that the term mass media was born.

Taxes were cut on newspapers so the chances that a decent business could be made from the world of news became a reality. Add to this the machinery to produce newspapers in large numbers and suddenly things started moving, and they did.

They moved rapidly away from the concept of the niche market. Why write content which was limited to a couple of streets when you could talk to a whole town, city,  county or country? The bigger you were, the more profitable.

So here was the birth of the mass circulation newspaper, both nationally and regionally. But the world has changed. As I have said previously, mass media has been replaced by personal media.

Readers today want to pick and choose what they read, back to the old pick and mix section in Woolies. They no longer want to have to skim the news to find what they want, it has to be delivered to the doorstep.

This makes you ponder the usefulness and longevity of local newspaper web sites. Regional newspapers seem firmly set on continuing producing the same kind of site without any thought of how successful it can be in the future in terms of audience and advertising.

It is inevitable that the web sites will grow rapidly for the time being as the life is beaten out of the newspapers by continually increasing the price and further reducing costs, but this rise will have a ceiling.

The battle to retain web audience and reduce the high bounce rate will become as tough as retaining newspaper sales. The policy of using web bait to randomly grab the audience for a brief few seconds will not build the audience.

One of the main problems is that the web sites reflect too heavily the newspaper ethos of being all things to all readers.

We know that this cocktail of content is not what people want. The future both in terms of revenue and content for the regionals must surely lie elsewhere than the busted flush of a web site only model.

If readers really want specific content, let’s give it to them. Why give readers unfathomable web sites when the media business can offer more sophisticated ways of delivering content?

Ok, keep a web site if it allows  newspaper owners to sleep at night. But for the sake of the business they have to look at producing specific content through the use of apps.

Advertisers would be right to question how successful their ads are on a newspaper web site and whether they get value for the pittance of money they pay.

However, offer them the chance to advertise on a specific content app, which has quality journalism and targets a niche audience which is after their product and you can see how this might be a better, more profitable business.

For example, why not have an education app for your area. Writing about schools, play groups, universities, bringing up children, opens the doors for advertisers desperate to hit the family market directly. What the advertiser will know is that every time someone clicks on the education app they are likely to be after what they are offering.

Apps are more expensive to create, but the cost is coming down, and the likelihood is that newspapers can charge a premium for advertisers to buy slots on the app.

Without doubt, the existing newspaper web site business model will not be able to bring in the income these businesses will want. However, rather than cost-cutting, why not expand and modernise the model?

There is a great future for the young journalists. The need for quality content is greater than ever before. The issue we have to accept is that it will not be within traditional media.

If the wise regional media executives want to truly modernise their business and move away from the stale web site scatter gun approach to content, they will look to niche apps. If you think I’m wrong, just consider for a minute how many specific apps you now turn to for your content.

Think about your interests and then how frustrating it can be to find exactly you want in chaos that is online. But if you had different apps with your interests on without the sweat of fighting with the web, it would make life so easy.

Regional newspaper groups have the tools to change, but have they got the guts to make the plunge or just go for the easy option of more cost-cutting?

Editors, the great beasts of the newsroom face extinction as the desire for money replaces ethical journalism

Editors. Those great beasts of the newsroom. So often they have been misunderstood by those who work with them.

They are made out to be characters to fear, as if they are some peculiar villain from a Hammer House of Horror film.

Every newsroom I have entered had a legend about their editor and some terrible, dark deed.

The reality is that commercial pressures are so strong that many newspapers have buried or not reported stories involving some advertisers like the Daily Telegraph and HSBS.

The reality is that commercial pressures are so strong that many newspapers have buried or not reported stories involving some advertisers like the Daily Telegraph and HSBS.

Eccentric behaviour included throwing typewriters out of windows, threatening staff with violence, pulling a gun out on a senior member of staff or just snarling at journalists as they headed through the newsroom on their way to the pub.

Some were so feared you never spoke to them unless you were called into their throne room.

The stories all had an element of ‘brutality’ of the boss. As time went on this feeling changed to admiration as staff realised this psychopathic behaviour was all about creating an aura in a bid to protect the newspaper and its brand.

The editor needed to be bullet-proof to help them in the fights that lay ahead.

One of the main battlegrounds was editor v the advertising department.

Don’t get me wrong, all editors I have known were more than aware of the need for the business to turn a coin, indeed, many are more commercially savvie than their advertising counterparts.

However, the editor has always had to look at the bigger picture. Why sell your soul for a £150 quarter page ad if the brand would be damaged?

The battles over the horrific ad features were long and hard, as were the fights to stop ‘L-shaped’ ads on page one or full-page ads on the back page of paid for newspapers.

Why would you want to read about your local football team when you could view the latest ad for Virgin trains?

Why fight? Simply, readers mainly buy the paper for news, not adverts. Get the audience in to read the newspaper and the ads would be read. No-one ever said to me I can’t wait to pick up the newspaper for that half-page ad for double-glazing.

So the editor has always been there to protect the brand. Unfortunately, this often led to scenes which wouldn’t have been out of place in a sequel to the Godfather.

Ad reps could often be seen quivering as they presented the latest ugly ad feature planned for page five. The editor’s laser eyes would fix on the poor rep as they tried to persuade them to bend this one time.

What the editor knew was if they did bend the rules once, the floodgates would open and the next move would be for a full-page front page advert selling the delights of a local seedy massage parlour.

But life has changed, a creeping theft of space higher up the book is on the march, first pages two and three were surrendered to full-page adverts, then the back and the future of all front pages is under scrutiny.

Slowly, the power of editors has been removed, those in charge don’t believe they have a use and there are mutterings that all journalists should be editors-in-chief. How wrong they are.

The pressure is on to put ads in places which was usually the realm of quality stories.

As newspaper companies manage their decline, they are trying to bleed the business dry and accentuating the decline by caving in to the desires of advertisers.

Peter Oborne has already lifted the lid on the Daily Telegraph bowing to commercial pressure by failing to publish stories about one of its advertisers, HSBC.

What has surprised me is that everyone seems so horrified. For years there have been heated debates between editors and managing directors about whether a negative story about an advertiser should be published.

Rightly, the editor has stood their ground. But this breed of editor is being surgically removed from newspapers across Britain.

They are being replaced with journalists who, through no fault of their own other than they have diminished power, just say ‘yes’ to everything or face being black bagged.

Once again, I stress that editors more than anyone understand the principles of business and know cash is important, but they would never dream about not printing a court story about an advertiser.

This would be a rocky road for the so-called Fourth Estate which is meant to be independent of government and business.

Readers definitely want to know if there’s a crooked car dealer or butcher in town, but the likelihood of publication is now not a given as in a previous life.

There will be former editors who will be shouting at me over this statement, telling me that it’s time the new class of editors ‘grew some balls’, so to speak. This is not that easy when your opinion holds little or no weight in the business.

Nick Davies in his book Hack Attack says: “The commercial pressure in UK newsrooms is relentless, particularly for mass-circulation titles.”

His point is that journalists have to get that exclusive whatever it takes to ensure that a newspaper sells and revenue tumbles in from sales.

The problem is that with falling sales nationally and locally, great stories aren’t going to bring in massive sales so there’s a decline in revenues.

To make up for this revenue shortfall is the desire to sell space wherever an advertiser wants it, to the detriment of the entire product.

Peter Oborne is right to be outraged, but as we are finding out in this bitter spat between national newspapers is that, with a nod and a wink, newspapers have been protecting big spending advertisers for some while.

The truth is that similar decisions on what to and what not to publish about certain advertisers is going on all of the time, these are not isolated incidents.

The editors of old were right to stand firm, but like dinosaurs they are about to become extinct and the newspaper industry is a poorer, less ethical place without them.