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Neil Fowler: New opportunities for the new Johnston Press

NDFBack in 2010/11, former regional editor Neil Fowler spent a year as the Guardian Research Fellow at Nuffield College, Oxford compiling a lengthy report on the UK regional newspaper industry.

At the time he warned that the debt burdens hanging over some regional publishers would ultimately prove unsustainable and argued that they should be allowed what he called an “orderly default” on their debts.

Now, in the wake of Johnston Press’s re-emergence as JPIMedia following a brief period in administration last weekend, Neil revisits his arguments and assesses the opportunities for the new company.


It gives me no pleasure to say that I predicted last week’s maelstrom around Johnston Press in 2011 – but it has been coming a long time – and in clear sight, which is almost the biggest scandal of all.

My prediction was in one of my (more controversial) suggestions following my year as a research fellow at Nuffield College, Oxford, where I looked at the future of regional and local newspapers. The final document is at https://tinyurl.com/ybzqtv62 if you want a cure for insomnia.

I suggested that JP (along with the then Trinity Mirror and Gannett) should be allowed an ‘orderly default’ on its then debts, which could have meant more long-term value for those holding the debt, some value for shareholders, and a more robust future for its newspapers.

The recommendation was not to allow it off the hook in any way – or to forge a path for it to continue as it had been operating. But it was an acceptance for both JP itself and those who owned its debts that it was almost impossible for that debt ever to be paid off and to have any business of substance remaining.

(Trinity Mirror, now Reach, and Gannett have sorted their debt burdens, to a general extent, in different ways; TM by taking over Local World in 2015 and so diluting the ratios; Gannett by its demerger, also in 2015, when the publishing arm emerged debt-free.)

This radical reassessment of JP debt never happened then (the reaction among HTFP readers was particularly and predictably vitriolic, so I have my tin hat ready again) but here we are, seven years on, and it has happened, except it’s all been a little disorderly.

I appreciate that many pension scheme members and other stakeholders are unhappy about this move – but far better this route (albeit many years later than it should have been) than the alternative of the company crashing at some future point in to insolvency or receivership with all the associated horrors that would bring.

It was obvious in 2011 – in fact it was obvious in 2005 after JP splashed out on The Scotsman – that the debt was unmanageable and would lead to the company’s downfall.

The Internet was already bringing significant disruption to the regional and local news sector in 2005 (I was publisher of the Toronto Sun at the time and Craigslist already had 30,000 free classifieds, including jobs, for the greater Toronto area, and Gumtree and eBay were just beginning to warm up in the UK). The days of sky-high margins were clearly soon to be dispatched to the spreadsheets of history.

Yet successive managements at JP (and elsewhere) carried on as though some miracle would occur and that their head-in-the-sand style of management would somehow come good. The purchase of the i was a good example. Could the cash involved there have been put to better use at The Scotsman or the Yorkshire Post?

The JP executives and directors were supported in their folly by the City, media analysts and so-called financial experts, who lent the money, encouraged the expansion and so ensured that JP would eventually fall apart in the way that it has.

The end result has been this disorderly default as JP slipped in to administration, followed by the debt holders now taking over the company and formerly major shareholders clearly unhappy. Very few associated with this sorry story will come out with much of a reputation.

However, in this atmosphere of unhappiness the company has an opportunity to try some different tactics – or even change the whole strategy of the business – but will it have the guts or imagination to do so?

Seven years ago there was still some chance that managements and investors with nerve and imagination (and honesty over the real state of the sector) might have tried some different business models. To their shame they chose not to.

So the need for the Frances Cairncross Inquiry to be radical and far-seeing is now even more pressing. But it may be that the mistakes and omissions of the past, of which the whole sector is guilty, are too deep-seated to overcome.

However, there is this little window, seven years later than it might have been; the new owners and the management of new JP have created a genuine opportunity for change, with debt gone and cash available – but it must involve investment in people, products, ideas and marketing.

It would be good to see some genuine efforts by new JP to do this; to try charging for news (ask The Times, people, it works; The Guardian’s voluntary payments scheme looks promising; and Private Eye, The Economist, the FT and The Spectator are all doing ok with their different business models) – though to do that the quality of the offer will have to be improved dramatically if more revenues are to be attracted. Or re-invent The Scotsman as the national newspaper of Scotland, in a way that readers will be willing to pay for, both online and in print.

What is sure that more of the same will not work (I said those exact same words in 2011); if new JP just does that then the final day of reckoning has only been postponed. I remain pessimistic that anything meaningful will change. But I do so hope to be surprised.

* Neil Fowler edited the Lincolnshire Echo, the Derby (Evening) Telegraph, The Journal (Newcastle upon Tyne), The Western Mail, Which? magazine and was Publisher/CEO of the Toronto Sun. He was Guardian Research Fellow at Nuffield College, Oxford in 2010/11.

6 comments

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  • November 21, 2018 at 9:23 am
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    Regarding the Local Democracy Reporters scheme, the BBC said “To be awarded the democracy reporter contracts, the 58 successful news organisations had to pass stringent criteria which included financial stability”. Should JP have been eligible?

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  • November 21, 2018 at 10:14 am
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    Simply wonderful how this writer says that JP pensioners will be ‘unhappy’. He clearly has no idea about the vast ramifications because he just glosses over it and this is a story that will run and run, rather like his tedious article.
    It reads like it comes from someone who has plenty of time on his hands unlike JP journalists who have to juggle five jobs or more at once.

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  • November 21, 2018 at 10:16 am
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    With all due respect to Neil and his excellent research, anyone with any experience sitting in a JP newspaper office predicted this a decade ago, as comments on HTFP over the years have shown. Some of the things that happened on local papers because of central control from Edinburgh were ridiculous and gradually reduced the quality and sales. JP had it coming, but those who have suffered were their hard-pressed remaining staff. It is always that way in business, but the newspaper trade is an acute example.

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  • November 21, 2018 at 1:25 pm
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    Charging for news on quality nationals like The Times and asking for voluntary donations for The Guardian is all very well but which titles in the regional media are doing this successfully?

    I read The Guardian website every day, for free, I think I get a couple of stories a week free from The Times or Telegraph and wall-to-wall free access from the Daily Mail online 24/7. I definitely would not pay for my JP local paper website which is difficult to use on a tablet and full of charity press releases.

    To charge for content, you’ve got to have something worth charging for!

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  • November 21, 2018 at 5:10 pm
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    * AnneEditor: a very interesting point. Does the BBC now believe its financial criteria were stringent enough?

    * Northender: much of my pension is tied up with the Trinity Mirror (Reach) scheme so I have a profound interest in seeing the sector do well. My point in my ‘tedious’ article was not to dismiss the rightful concerns of those in the JP pension scheme but to say that receivership would have been much worse – and that there is now an opportunity for the company to try different tactics that may prove beneficial for those same scheme members in the future.

    * paperboy: I do not defend the JP management. Shareholders and lenders should have had a greater awareness of what was happening. They could have (should have?) encouraged the management to change – but the company was in a stranglehold of overbearing debt (from 2005) with nowhere to go so it would have been difficult. Now much of that debt has gone, there is a small chance to right matters.

    * ex-JP sub: I agree. That is exactly my point. The current business model reliant on low-yield intrusive online advertising and declining print sales based on fewer editorial resources cannot work in the long term. That’s why new JP needs to have a major change in direction.

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  • November 22, 2018 at 9:50 am
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    The real scandal is how Johnston contrived to jettison the pension fund, abdicating all its responsibilities and dumping the deficit on the taxpayer. This is not an acceptable route to survival for any newspaper business.

    In the first instance, Johnston massively overpaid for the RIM titles (formerly United), failed to carry out due diligence on the pensions burden and have been treading water ever since.

    In my view, JP bosses never had the experience or expertise to manage major big-city titles like the Yorkshire Post and Evening Post. They scaled down editorial operations and lost shedloads of readers (ABC figures are devastating) which in turn led to a crippling reduction in advertising revenues.

    They eventually took a wrecking ball (literally) to one of Leeds’ most prestigious businesses and demolished the iconic HQ. The lone YP tower on Wellington Street now stands as a stark epitaph to a once proud organisation.

    And many of the hugely skilled and talented journalists who helped build this empire are now shut out and left to rot in their pensionable years. Completely unacceptable.

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