Aug
14
The Slow Death of Newspaper England
Filed Under Blog, Industry Analysis, internet, mobile content, news media, online advertising, Publishing, social media, Uncategorized | Leave a Comment
Every week now another piece falls into place. The decline of the newspaper business as anything that anyone would want to progressively invest in is now turning into a rout. Like B2B magazine publishing, the question now is not what does the future hold, but how do we clear up the junk afterwards. These gloomy thoughts are prompted not just by Trinity Mirror’s catastrophic results this week, in which the half year to end July saw pre-tax profits decline from £84.8m last year to £28.9m this year, on revenue down from £382.2m to £371m. Or by the reaction of the markets: shares jumped 18% on rumours that the company was organizing a further share buyback, thus sacrificing its balance sheet on the altar of market valuation. And I am not further comforted by the fact that the Sunday Mirror gained from the disappearance of the News of the World, a situation which is purely temporary now that the Sun on Sunday has entered the market. Or by the announcement that the group internal investigation clears Piers Morgan and his colleagues from charges of phone hacking; this story has two years to run, and there seems to be no last shoe dropping/fat lady singing syndrome in sight yet. You could wallpaper the bathroom using denials and announcements from News Corp on internal investigations that show no wrong doing, and the same may yet be true of Trinity Mirror.
No, the piece that got to me was a report by that doyen of Fleet Street rectitude, Roy Greenslade, in his Guardian blog. He quotes David Lis, at Aviva Investors, as saying in the Sunday Times that “Its imperative that there is consolidation within the regional newspaper space. It simply has to happen.” We must listen to Mr Lis with respect: his company apparently own 10% of Trinity Mirror, whose shares have fallen two-thirds in value this year, prior to that buy back rumour. One wonders what his position is on the buyback, or indeed on the dividend (axed two years ago and unlikely to return), or the advertising trend at Trinity Mirror (down 11.1% on the half year) And he wants to buy more of that? Nothing braver has been said in any walk of life since Neville Chamberlain returned from Munich promising “Peace in our Time”!
Is it not yet apparent that the managers of the major regional press interests have done everything that capable and reasonable men can to save the ship? We have now had a decade of staff cutting, regional print centres to raise productivity and reduce costs, regional editorial services producing look-alike products in the towns and cities of Britain, and exodus from locality to create a minimum service level on the narrowest editorial presence, churning out doctored agency text designed to keep the ads apart on the page – until all of a sudden there were no ads. And the flight to the web, in the jealous editorial hands of the existing print papers, proved to be a real failure either to create something new and local or to extend the hallowed brands of the print world into web presence. Having once almost succeeded and then failed to persuade Trinity to buy Thomson Directories, and having seen them developing directories in Scotland in more recent years, I hoped that a penny had dropped, and that they were about to embark on a complete local advertising strategy online, something we often anxiously talked about years ago when Fish4 was being created with their support. But, no. Courage and convictios fell at the final hurdle.
So why, Mr Lis, are you persuaded that putting together one cost-pared declining business with another with the same problems makes any sense at all? There are few more cost savings to make. Advertisers will seek greater discounts across more newsprint. There are no competitive positions to close out – these papers are all local monopolies anyway. The trick that your company needs to perform is to invent the equivalent service values of the once popular local press in an online and mobile context. You need to do it, despite the disadvantage of starting in print, with these factors in mind:
1. The newspaper was always a partnership with the community – but newspapermen forgot that.
2. You cannot press a format onto a geography and call it a community.
3. Format is created by need and formalized by experience. Formats that outgrow needs have to be re-invented, bottom up.
So can you recreate the newspaper? No, but you can certainly create answers in digital media for issues of local and hyper-local communication, trade and exchange. Will they look like newspaper websites? Not at all – news is only important when other needs, which may include targeted news, are satisfied. Can you create environments that link whole communities? Of course, given time, but in some places it will be the schools, in others local businesses, in some sports, in others issues outcry (like high speed trains in Bucks) that will create the initial focus. Once the flame is going, feed it with tools and apps, manage it for the community and monetize it through eCommerce and sponsorship. And make it mobile from the first instance.
Meanwhile, readers of my letter to the CEO of Guardian Media Group will have recognized what is happening there. Apax and GMG declared a “special dividend” for EMAP, taking out a £100m benefit from a debt restructuring deal, presumably so that GMG can plug the hole in its finances arising from this years’ losses. They will not need reminding that even family silver can run out, and plugging losses does not secure a sustainable future.
Jun
30
Reach for the Sky
Filed Under B2B, Blog, Financial services, Industry Analysis, internet, mobile content, news media, Publishing, Reed Elsevier, Workflow | Leave a Comment
Ye Gods! This industry is changing so fast that it is almost impossible to leave the keyboard unattended for a moment. No sooner had I entered a plea in mitigation for the survival of the Guardian than I saw that Ascend (http://www.ascendworldwide.com/), a company that I have been following closely for many years, had been bought by Reed Elsevier, and that the SBB Group had been bought by McGraw-Hill. What is this? Strategic purchasing in B2B? Has the world turned upside down (or back up in the direction it was before 2007)?
No, my friends, there is no madness here, or if there is it lies only in the multiples paid. What we are seeing is a continuation of the trend we saw with Thomson Reuters: refocus on broad verticals, buy data, go for the workflow, forsake advertising, consolidate to the point of duopoly and seek lock-in through adding value in essential process requirements for end users. Result of success: increased productivity, enhanced decision making and better and less costly compliance.
So lets look at our two acquisitions. Neither is huge, but Ascend would be much the largest. This company was formerly the database built by an aircraft industry loss adjuster, and Lloyds Development Capital saw the opportunity to prize them apart and create, under a very effective new management team led by Gehan Talwatte (D&B, Hoovers) an industry database service for the commercial aircraft lease-hire market. Still sound a bit specialized? Well, over 90% of aircraft in the skies are leased, and due diligence demands that the market has the ability to know the flying life of every part in every plane in order to establish valuations. Ascend data feeds the workflow of pricing and term decisions around those transactions, and Gehan and his team have been tireless in creating ways, through technology interfaces and, of course, the release of APIs, to ease their content into the core workflow of a very valuable market within the aircraft industry. (Note for future use – the collection of data in the first instance was for a different purpose than the eventually successful implementation. This is very often the case, but usually ignored by managers who argue that markets for this or that dataset are too narrow to exploit. They are almost invariably wrong).
So then Reed bought this asset for RBI. This in itself deserves comment. Having sold Cahners and removed itself effectively (construction is the great exception) from US B2B, Reed Elsevier are left with the more successful UK and mainland Europe B2B assets. There, for many years, they have been concentrating on a few vertical markets and have closed or digitalized much of their advertising dependent output. In data services with transactional workflow implications, their ICIS service (http://www.icis.com/home/default.aspx) in industrial chemicals pricing is a world leader. And other fields of vertical specialization include property (EGI remains the beacon for “community”, organizing an interactive grouping of property developers, vendors, real estate agents, lawyers and surveyors long before community was a key word in the information industry lexicon).They are also the UK’s leading commercial jobs mart (TotalJobs) and have a big share in the horizontal market for employment law compliance (XpertHR), and it must be supposed that one day these areas too will recover. Finally, they put all the data derived from extensive holdings in the aircraft industry magazine world into FlightGlobal (www.flightglobal.com). Now that unit has a sharp edge, a raft of data for potential re-use and a real workflow integration exemplar, since it has Ascend. The execution is everything, but this is a smart buy for Mark Kelsey, Jim Muttram and their team.
And a just-in-time purchase as well. If this one had gone to IHS (Janes) or to McGraw- Hill then the balance of power in the aviation and avionics vertical would have begun to change.There may only be room for two of these three. The decision to buy is remarkable since most analysts are still working on a scenario where Reed Elsevier exits RBI completely, and some believe that this applies to Reed Expo as well. In the absence of white smoke from Trafalgar Square, it is hard to tell, but clearly an argument that Reed had to make this purchase in a very competitive strategics market has prevailed, and it could be that alongside it an argument for reducing the number of verticals but intensifying the growth by acquisition is also being accepted.
Certainly these events have impacts for McGraw-Hill. How many verticals can they be in? SBB Group is a UK start-up of 2001 in the steel pricing and analytics business. It has indexation ( www.thesteelindex.com) and pricing analysis, and sells both to producers/wholesalers/stockholders and to commodity analysts and traders. It thus supports the thrust at Platts, so long pre-eminent in oil and petrochemicals (but now having to suffer the indignity of seeing smaller upstarts like Argus Media nibble away at some of its prime positions) Other McGraw verticals also want to get to this workflow /embedded service concept. McGraw Construction Network was a good start in moving F W Dodge and Sweets away from look-up and into workflow (maybe a way of stopping current lawsuits would be to merge this with Reed’s isolated US construction efforts – now that would be the workflow of the industry!) McGraw’s major interests in aviation and avionics will undoubtedly feel the loss of Ascend. As indicated above, Reed have just evened up a three way struggle in this vertical.
So lets watch for more examples of this type as B2B changes its nature, turns into data and workflow, and the players who want to stay in the game in big verticals have to consolidate in order to become one of the 2-3 core services in the sector. And lets keep pondering on the nature of workflow, a world where all the information required to make a decision has to be gathered in one place and you can only usually deploy one solution at one time. As well as consolidation, I see data sharing and service collaboration where one powerful player decides with another to allow X to do the industry job, while Y concentrates on the financial markets and analysts. Except that the financial services players are playing in that latter workflow (Bloomberg v Reuters in carbon pricing is the classic). Going to be very competitive, these markets!
« go back — keep looking »