“Well, they still make a profit”, said my friend. And indeed they do, but at what a cost! The few daily evening papers are now weeklies, and the weeklies are going free. Advertising and circulation are in monotonous annual retreat, and we were debating whether automated journalism, in the form of Narrative Science or Automated Insights, could be deployed to shave even further cost off these pared and scraped budgets. And would even that save them from joining Yellow Pages and telephone directories in the pulp recycling mill of history? Three hundred years almost exactly from the launch of the Daily Courant, I find this tinged with sadness… and anger at the gross mismanagement that speeded the demise.
An erstwhile colleague who does the numbers for a living provides this analysis of Enterprise Value:
Regional Press players (largest only, all in pounds sterling)
Trinity Mirror 308 m
Johnston Press 295 m
LocalMedia 150-200 m (based on current earnings)
Newsquest 400 m
In other words, an industry value of around 1.2 billion. Then he looked at the major classifieds players in the key regional press markets, and at their Enterprise Values:
Rightmove (homes) 3.36 bn
AutoTrader (cars) 3.86 bn
Total Jobs (now part of Axel Springer, so this is an educated guess) 800 m
In other words, the 7.9 billion pounds represented by these services is 6.5 X the regional press. And you can complain that we have left out Tindle or that the second or third level online services are not included, but it does not fundamentally alter the unarguable conclusion: the regional press has gone down the pan.
Perhaps that was inevitable. The tide of history. They did not see it coming. But the fact is that they did see it coming, they took very appropriate action, and still could not manage the outcomes. In 1995 my then company, EPS, was retained to come up with suggested solutions. This led to a project called AdHunter being hosted in our offices. The idea was to bring together online all of the classifieds from some 800 regional papers, comprizing 80% of UK regional press outlets. Within three years we had cracked the upload problems, built a database, and, with a brilliant management team, the project was launched on 13 October 1999, under its new title of Fish4 (Fish4homes etc). Within a year it was at least number 2 in these key markets, and probably the leading jobs site. I was still closely involved at this stage as Chairman.
Now stop history there for a moment, in the year 2000. If, as my analyst friend indicates, the regional press players, who had all invested both capital and content in this activity, had continued along this track for another fifteen years they would have had an asset, even if it was No 2 in these markets, worth around 75% of 6.5 billion. (And, with commiserations, he reminds me that the listing, when it came, would have yielded the Chairman 60 million!) So why did the newspaper companies fail to follow up this initial breakthrough and create a self-sustaining future online – or even turn into Schibsted or Axel Springer? Basically, for a few simple reasons which were not obvious at the time. They did not know who their customers were, they did not know anything about the behaviour of their readers/users beyond the fact of purchase. And they had no conception of who the competitors were, insisting to the bitter end that other newspapers, and especially their co-investors, were the old and ever present enemy.
This latter characteristic became the bane of my life as Chairman, and after five years I was glad to escape the board room wrangles about who was doing better than whom from the original deal. Investment decisions became trapped in jealous debate, with the farce factor re-inforced by the fact that all of these newspapers were local monopolies, fiercely guarded but without, except in three small towns, more than one newspaper in each community. But the obsession was the idea that a rival group might use the service to grow at the expense of the others: the threat of AutoTrader moving out of print, or their estate agent customers forming their own service, or of Monster eating their breakfast, seemed to be of no consequence alongside this fear.
And they did hate their customers. Estate agents and used car dealers and the jobless did owe them a living. I recall vividly one regional managerial grandee, when it was suggested that we might secure our positioning in the car market by distributing free software for managing inventory and uploading selected vehicles for sale to our site and the local newspaper, expostulating that all car dealers were crooks and criminals, and he had no intention of sanctioning investment to subsidize their nefarious practices. Estate agents were equally wicked, so it was a real shock that a service derived from the market – how come estate agents could collaborate and newspapers couldn’t? – eventually supplanted them. And they saw absolutely no benefit in the fact that an online searcher could search regionally or nationally to great advantage, and that selling this advantage to advertisers was worth a premium.
Only one “manager” of that period now remains in office, and that is the Chairman of DMGT, Jonathan Harmsworth, who inherited his father’s position during this period . He has arguably learnt the lesson, since he sold the group’s regional holdings and has concentrated his company in B2B data services markets. But I often think of Jonathan Turpin and his brilliant management team at Fish4, who were denied the opportunity to shine by obscurantist and blinkered investors. And of an industry which never did accomplish the re-invention of “local” in the network, a task which still remains to be achieved in a smartphone world. I am often told that it is the BBC who destroyed the regional press, or the advertisers, or even the government. But the truth is simpler: management climbed inside the bunker and pulled the roof in on their own heads.keep looking »