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THE BUSINESS MODEL for newspapers is “broken” and the only hope for regional papers may be in consolidating with bigger industry players, Celtic Media’s boss has said.
The publisher’s chief executive, Frank Mulrennan, today added that his company – which publishes seven regional titles and employs around 100 staff – “cannot row against the digital tide” and replace lost revenues from evaporating print sales and advertising.
He was appearing in front of an Oireachtas committee investigating the proposed sale of Celtic Media to Independent News and Media (INM). The deal has cleared competition hurdles but still needs to be approved by the government under media-merger rules.
Mulrennan, a former business and agriculture editor at INM’s Irish Independent, said there would be “well less” than €4 million left for him and other owners of the publisher by the time the sale went through. The full price for the deal hasn’t been disclosed.
“Since 2008, the business model in local newspapers I would have to say is broken. We almost went out of business in 2012 due to the weight of bank debts and continually falling revenues,” he said.
“Five years, later the reality is that we are facing a broken business model in terms of publishing local newspapers and, dare I say it, newspapers.”
Mulrennan and other Celtic Media executives led a €5.5 million management buyout of the publisher in 2012, however he noted that regional publishers in Ireland had suffered a 65% fall in print advertising and 35% fall in circulation revenue since 2008.
Concentrated ownership
Mulrennan joined INM chief executive Robert Pitt before the committee in defending the deal amid suggestions it would further concentrate media ownership in Ireland and could lead to a loss of editorial independence at the Celtic Media titles.
INM already owns the country’s highest-circulation daily and Sunday newspapers, the Independent and Sunday Independent, as well as national titles the Herald and Sunday World.
Its largest shareholder, Denis O’Brien, also owns Communicorp, whose stable of radio stations includes Newstalk and Today FM.
INM reportedly ran the rule over buying Newstalk last year, but balked at the deal – leading to a public boardroom spat between Pitt and company chairman Leslie Buckley.
Pitt today said his company, which is estimated to have a cash pile of more than €85 million, was “no longer” looking at buying radio stations on the island of Ireland.
Both he and Mulrennan claimed Celtic Media titles would be guaranteed their independence after the merger – although consolidation of some functions was likely.
Making it in digital
Mulrennan told the committee his company was “finding it awfully hard to make any news in digital” and it needed a larger partner like INM because of the competition online from the heavily subsidised RTÉ and global giants like Facebook and Google.
“The only future is through having a digital future and a marketing future, and that takes resources,” he said, adding that Celtic Media had put some properties on the market to pay a bridging loan ”because that sale has been so delayed”.
“We have put our Cavan and Navan newspaper offices on the market. We are going to put our Athlone office on the market.”
The company also had “serious misgivings” about the future of one of its titles, the free, Meath-based Forum, Mulrennan said.
“We are talking about a sale here that is less than €4 million. When you take off professional fees and (loan repayments) … well less. There’s nobody going away to the Bahamas, we’re turning up to work on Monday when the sale happens.”
The publishing group, which also includes the Meath Chronicle, the Westmeath Independent and Westmeath Chronicle among its titles, was put together for nearly €65 million in the early 2000s by a Scottish firm. Celtic Media bought the Connaught Telegraph out of liquidation in 2014.
Mulrennan remains the company’s largest shareholder, while one-quarter of its shares are owned by editors and other staff. Its latest accounts, to the end of 2014, show the parent company lost just over €100,000 for the 12-month period.
Written by Peter Bodkin and posted on Fora.ie
“Newspaper model is broken”, as the man says. Yet DOB keeps buying them up even though he knows they are eventually all going to go out of business without state support and trusts.
@Mr Snuffleupagus:
Ever heard of economies of scale?
@P.J. Nolan: Yes, ever heard of Rupert Murdoch? Seems DOB has designs on his empire and wants tp be as influential.
@Mr Snuffleupagus: The fact that a business man buys up something, does not mean its a good investment. Sean Quinn proved that. DOB knows local papers have some sort of future, a longer survival period. However they are all doomed. Just think about buying an Independent on morning after an earth quake of Dublin which damaged a house on shore with a crack. You see this on the news, movie footage and comment. Its on at 6pm, 9pm and on radio every hour. What possible news can the Indo advance. Their sales are based on re-asserting the mind. For slow learners. Individual journalists may be PO but they are told what to print and not to print
If local and regional papers didnt have chief executives i doubt there would be problems.
Sure they’d be raking it in if they didn’t have any of those pesky management types around the place!
Guess who was one of the Committee members? And no I’m not kidding. None other than Mr. Lowry himself.
@Eoin O’Súilleabháin: Taht’s a terror, are you sure?
Hmm, sounds suspicious.
What ever happened to them two who robbed the charity last year. Media blackout ordered by who. Irish people don’t forget
Newspapers are useless.first two pages are news (old) Then it’s lidl and Aldi ads
@Gerry Fallon: I went down to my local filling station and convenience News paper store Sunday evening. Heaps of newspapers left on the shelves. I asked the proprietor about sales. He said that very few are buying a Sunday Paper and that he cannot understand why they keeps sending them out and taking them back.
I say there is a delay between the public getting sick of bought up newspapers and them stopping buying them. But its is happening and its irreversible. We are looking at a future without newspapers. Who wants Lidl, Asda and Aldi adds. You have to dispose of the junk mail that comes with it. The glossy stuff will not burn.
They take them back because they get paid for re cycling the waste paper. Paid by the ton. 70% of distribution is not sold therefore it’s recycled with big profits.
Mr. Pitt should really have rescheduled with his proctologist.
Don’t buy papers, don’t vote until you have someone to vote for. Its that simple
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