A publisher has warned journalists it believes any strike by them will only cause “absolute minimum” disruption to their titles’ operations.
Reach plc has revealed it is “confident” about contingency plans it has put in place to cope with potential industrial action by around 1,000 editorial staff due to a pay dispute.
In a message to all staff, including possible strikers, Reach also confirmed this morning it will not be increasing its offer of a 3pc pay increase previously rejected by the National Union of Journalists.
Delivery of the memo, which has been seen by HTFP and is entitled entitled ‘NUJ pay dispute: employee FAQs’, comes after the group revealed earlier this week its profits had dropped by almost a third.
In a section of the ‘FAQs’ entitled ‘Isn’t industrial action just going to make financial pressures worse?’, Reach said: “The business has contingency plans in place in the event of any industrial action being taken and we are confident that any disruption to our titles will be at an absolute minimum.
“We have already gone into a lot of detail on our justification for the pay offer, which many colleagues have already accepted and received. Industrial action will not result in a further increase.”
NUJ members at Reach are currently being balloted on potential strike action over the current pay offer, which was accepted by staff at the company who are members of the British Association of Journalists bargaining unit.
Reach had previously put forward a proposal to enhance redundancy terms for some staff in a bid to end the dispute, but this was rejected by the union and the publisher has now confirmed the offer has been withdrawn.
The company said: “We offered enhanced redundancy terms, which would be a meaningful change to a large group of people, to the NUJ in an effort to resolve our dispute, largely because this was part of their original pay claim.
“As part of that discussion we let the NUJ know that we had paused recruitment and were shortly planning to open a voluntary redundancy programme and therefore many people could potentially benefit quite quickly from the proposals.
“Unfortunately the NUJ dismissed this offer straight away and so it is no longer on the table.
“As a result, there are no plans to alter any existing redundancy terms, in any way, for any Reach colleagues.”
Explaining why it will not be increasing the pay offer despite having “a lot of cash”, the group added: “We have to have enough cash to cover our liabilities, which include our pension costs, historical legal claims and a prudent reserve to cover market volatility.
“The current economic climate brings such uncertainty and rising costs, for example our newsprint costs rose by 54pc – likely to be approaching £40m more on newsprint for 2022 – that we have to be sure we have enough cash to protect the business now and for strategic investment in the future.”
The group’s statement has been criticised by the NUJ chapel at Reach national title the Daily Mirror.
A spokesperson for the chapel said: “All we want is the company to realise that the headline rate of 3pc simply isn’t enough to help support its staff through this unprecedented time, and to re-open a meaningful negotiation with the NUJ to bring this dispute to a conclusion.”
The full Q&A can be seen below.
NUJ pay dispute: employee FAQs
The Company is still doing well and has a lot of cash. Why can’t that be spent on giving employees more money in the pay review?
We have to have enough cash to cover our liabilities, which include our pension costs, historical legal claims and a prudent reserve to cover market volatility. The current economic climate brings such uncertainty and rising costs, for example our news print costs rose by 54% – likely to be approaching £40m more on newsprint for 2022 – that we have to be sure we have enough cash to protect the business now and for strategic investment in the future.
Why are you increasing the dividend? Why couldn’t that money have been spent on employee pay?
Our dividend is fundamental to why our shareholders invest in the company, which ultimately benefits everyone at Reach. Institutional shareholders invest on behalf of individuals, charities, pension funds, and employees, who are reliant on dividends as part of their income. Having a consistent and reliable dividend policy is a key part of ensuring that we’re supported by our shareholders – it helps maintain stability of ownership and consistent investor support for our strategy.
Why are profits down so far this year?
Operating profit in the half was down approximately £22m vs last year, with Revenue only slightly down (-1.6% vs Last year in total, with Digital growing +5%), the most significant impact was driven by increased input cost inflation. On a like for like basis, newsprint cost is up nearly 70% or £17m and this has driven the majority of the profit decline. Newsprint cost has been heavily influenced by the historically high price of energy we’re currently seeing (paper production is the 3rd highest user of energy after steel and glass). Profit performance also reflects the cost of investment in the Customer Value Strategy which is critical to transforming the business to become more digital capable and data led.
Why is the share price so low and what does this mean for our future?
The share price is never only a reflection of company-specific factors, particularly when we’re in a macro trough or at an economic peak. It’s pushed and pulled by much broader influences like interest rate moves, customer sentiment, employment levels…etc. The market is volatile at the moment with fears around the impact of the cost of living crisis affecting the value of all companies, particularly those seen to be closely tied to consumer sentiment and demand. Our experience is not standout – a number of other consumer/growth focused companies have seen similar relative reductions in share price since March this year (e.g. Future Plc, ITV). There is no question in the minds of our investors that we are delivering strategically and are a stronger, more sustainable business than we were three years ago. It can be expected that the markets and therefore the Reach share price will remain subdued until the market as a whole starts to recover.
Is the current Voluntary Redundancy exercise linked to the company performing badly?
In the current macroeconomic climate, this is a way of responsibly managing our costs that may also appeal to some of our colleagues who feel they might be ready to make a change and leave the Company by mutual agreement. The exercise allows us to begin understanding where there may be interest, which will help us look at our structures and balance skills and resources. We have to continue to deliver our strategy, recognising the growth of digital together with our commitment to print. On a separate but related note, we offered enhanced redundancy terms, which would be a meaningful change to a large group of people, to the NUJ in an effort to resolve our dispute, largely because this was part of their original pay claim. As part of that discussion we let the NUJ know that we had paused recruitment and were shortly planning to open a voluntary redundancy programme and therefore many people could potentially benefit quite quickly from the proposals. Unfortunately the NUJ dismissed this offer straight away and so it is no longer on the table. As a result, there are no plans to alter any existing redundancy terms, in any way, for any Reach colleagues.
Why does the Company always say how well things are going in their briefings to investors and shareholders, yet we are told that there is no money for a decent pay increase?
Our business is not impervious to the macroeconomic environment and we are facing a number of headwinds which we need to manage through proactively to maintain business momentum. Jim was expansive in the interim announcement around both what is going well as well where we have challenges as we go into H2. The current economic climate brings such uncertainty and rising costs, for example our newsprint costs (likely to be approaching £40m more on newsprint for 2022) that we have to be sure we have enough cash to protect the business now and for strategic investment in the future. We have to meet all our financial obligations to all of our stakeholders, including our commitments to our employees, pension funds, shareholders and historical legal issues. Striking this balance is very important to ensure future sustainability of our business – we have to anticipate and plan for challenging future scenarios to ensure we have the flexibility and capacity to continue to run the business profitably into future years.
Why are we still paying out for historical legal issues?
We continue to make payments in respect of historical legal issues as the Group has ongoing civil claims in relation to historical phone hacking and unlawful information gathering. If profits are down, should we reconsider the digital strategy? The digital strategy is critical to the long term success of the business. Even though we have a robust and resilient print business, driving the right investment to support digital revenue growth is critical to offset print revenue decline and maintain long term profitability and sustainability for Reach overall. The digital strategy is working and without that we would not have been able to offset some of the macroeconomic challenges we are currently facing.
Isn’t industrial action just going to make financial pressures worse?
The business has contingency plans in place in the event of any industrial action being taken and we are confident that any disruption to our titles will be at an absolute minimum. We have already gone into a lot of detail on our justification for the pay offer, which many colleagues have already accepted and received. Industrial action will not result in a further increase.
Sign up for our free daily email bulletin
Follow HTFP on Twitter
Got a story? Email the Editor at