Former regional editor turned newspaper owner Chris Oakley ignited a lively debate about the future of the industry with a hard-hitting speech to the Society of Editors’ regional conference in Manchester last week.
Chris told the gathering that “time had run out” for big city dailies, citing the internet, multicuturalism, economic inequalities and the move to overnight printing among the reasons for their decline.
It prompted HTFP blogger Steve Dyson to posed three specific questions for Chris about the Birmingham Mail, which Chris both owned and edited when Steve was a young reporter there, before going on to edit the title himself under Trinity Mirror’s ownership.
Here are his responses.
My former colleague Steve Dyson posed three questions following my speech to last week’s Society of Editors conference. They deserve an answer.
1. Why speak out today, Chris? Don’t get me wrong – this is great stuff, and so much I agree on, not least your views on former evenings losing the plot by going overnight. But why now in 2012? What I mean to say is: why not then, back in 2009 in the Birmingham Mail’s case, when a debate of whether to go overnight or not was held? It would have been really valuable to have your views at that point. Or at any point during the industry’s hand-wringing on this and other issues you raise. Now provides good retrospective for ‘I told you so’ camps, but it would have been far more useful back when someone, somewhere might have listened.
On the general point, I have never put myself forward as a media commentator. Last week’s speech came about because I was asked to contribute a chapter to a book about the regional press (no fee, no royalties). The book, What Do We Mean by Local? (published by Abramis, price £17.95), and my chapter, started an online and in print discussion. As a result I was asked by the SoE to speak about the future of the regional press. I would not have sought a platform for my views but I am happy to expound them when asked.
By 2009, it would have been pointless to try to initiate a real debate about the overnight printing of the Birmingham Mail. Any internal debate that took place must have been purely cosmetic. Trinity had already run up large debts which needed to be serviced; large swathes of classified had disappeared online taking critical revenue with it; the economy was heading into recession resulting in further pressure on revenues.
Centralising printing at as few sites as possible brings immediate large cost savings and ensuring the press runs for 24 hours a day is the most cost-effective use of an expensive resource, even though it almost inevitably means that titles have to be printed at inappropriate times and with deadlines that will, over time, damage sales.
The die was cast when the debts were incurred for over-priced acquisitions on the basis that the advertising boom would last forever. By 2009, savings had to be found anywhere they could and overnight printing was an inevitable result.
2. What was all that stuff about alleged ‘systematic inflation of circulation’ in 1999? The then chief executive of Trinity Mirror, Philip Graf, made a statement to the Stock Exchange that circulation figures for the Birmingham Evening Mail, The Birmingham Post and the Sunday Mercury had been overstated for up to six years. This caused a huge problem in terms of revenue and confidence for the Birmingham titles, from which they arguably never recovered. Can you, Chris, who was in charge of the papers during the alleged period, shed any light on this now?
I can shed no light on the allegations of the “systematic inflation of circulation figures” in Birmingham, although I can certainly appreciate they must have damaged confidence and revenues at the titles.
I certainly never instigated any system of circulation inflation and if I had been aware that any such system was operating I would not have tolerated it for a single day.
If such a system was in fact operating, should a competent CEO have been aware of it? I can only say that in the six years I ran Midland Independent Newspapers it was subject to more independent investigations than any other newspaper group.
When we bought the titles in 1991, the private equity backers sent independent accountants into the company to conduct due diligence of every aspect of the company’s operations. They found no irregularities.
Three years later when we floated the company on the London Stock Exchange, the sponsoring merchant bank and the flotation stockbrokers sent independent accountants into the business to verify every claim made in the share sale prospectus – including circulation figures. They found no irregularities.
In 1997 when Mirror Group bought the titles, they commissioned independent accountants to conduct due diligence on all the company’s operations to justify the purchase price. They found no irregularities.
When Trinity took over Mirror Group, no doubt it also used independent accountants to carry out due diligence – although it may not have been as thorough as the previous investigations because MIN formed only the smaller part of the purchase. Apparently, they found no irregularities.
Of course, throughout the period the titles were subject to the six-monthly ABC audits. The circulation figures were never queried, the audit certificates never qualified.
3. One last question is over that initial move to floatation. I know that what’s happened since is nothing to do with you – you’ve played no part in the recent savage cuts in the industry. But from your initial floatation of the Birmingham papers as MIN I presume you had knowledge of the world of public limited companies and the FTSE, where the interests of the shareholder always come first. Looking back, do you now regret taking the Birmingham Post and Mail into a scenario where increasing profits year-on-year was always going to be demanded?
The management buy-out of MIN was funded by private equity backers. Those backers always look to exit a company and to get their money back, plus a profit, probably within three to five years. The exit comes by way of takeover by another company or by flotation on the Stock Exchange. We always aimed for the latter.
As Steve says, in the world of public companies the interest of the shareholder comes first. Are those interests best served by racking up debt and starving the company of investment or by following more prudent policies? Those shareholders in Johnston Press and Trinity who have seen the value of their holdings fall by more than 90% would undoubtedly opt for prudence.
But the City is notoriously short term and CEOs either resist or bow to pressure to follow policies which deliver short-term gains and City popularity but mortgage the future.
MIN walked away from over-priced acquisitions. It diversified into businesses such as specialist magazines, conferences and events to broaden the revenue base and make it less cyclical. But this was unpopular with the City because such businesses had lower profit margins than regional newspapers at that time.
But if the big groups had followed similar policies and resisted City calls for ever higher and higher profits and margins, they would have happier shareholders now.