Tag Archives: Guardian Media Group

Marc Reeves: Why is GMG selling the cash cow?

Marc Reeves, founder of the newly launched Business Desk West Midlands, blogs on news the Guardian Media Group is to sell Manchester Evening News (MEN) to his former employer Trinity Mirror:

[T]he key questions: what do GMG and Trinity Mirror get out of the deal? For the latter, I think it’s pretty clear. With declining revenues and circulation, another round of consolidation is probably an inevitable strategy for the biggest groups, whose scale demands  that de-duplicating resources and cutting costs are required to counter the exodus of readers and advertisers. There’s also a very handy strategic regional  fit for the Manchester titles alongside Trinity’s existing Merseyside titles.

For GMG, though, it’s less clear. Does the disposal allow the group to concentrate on the march towards digital dominance  spearheaded by the Guardian brand? Or perhaps GMG has just decided that the ‘cash cow’ role of the regionals simply doesn’t work any more in the new media economy, and it’s better off without the distraction. Whatever the case, my money is on a rise in the number of deals  amongst the major publishers following  the TM-GMG shuffle, as more try to optimise the geographical ‘sense’ of their sometimes disparate and accidental portfolios.

The acquisition of the Manchester Evening News by Trinity Mirror – publishers of my old paper the Birmingham Post – has baffled some of my former colleagues.

Why would Guardian Media Group, MEN’s owner, sell the very cash cow that existed only to keep the venerable – and loss making – Guardian newspaper alive?

Moreover, why would Trinity Mirror embark on yet another bout of corporate indigestion as they attempt to swallow yet another acquisition, with all the financial, cultural and managerial angst that goes with it.

I remember (yes dear reader, because I was there) spending many of the early years of this century as part of the team that was charged with incorporating the old Southnews group of weekly newspapers in London and the Home Counties into Trinity Mirror’s southern business.

That October 2000 acquisition came with a £285m price tag for around 60 free and paid-for newspapers (no one bought websites then – don’t you remember the dotcom bubble?). The deal announced this week, in which Trinity Mirror gets the Manchester Evening News, the Reading Post and a stable of other regional titles and websites for less than a fifth of that price. The Southnews deal came back to bite Trinity Mirror, as the early noughties advertising slump forced it to post a considerable write-down against the acquisition just a few years later.

Of course, the very economic foundation of the regional newspaper industry has shifted irreversibly since then, so comparisons are probably unfair.

However, back to the key questions: what do GMG and Trinity Mirror get out of the deal?

For the latter, I think it’s pretty clear. With declining revenues and circulation, another round of consolidation is probably an inevitable strategy for the biggest groups, whose scale demands that de-duplicating resources and cutting costs are required to counter the exodus of readers and advertisers. There’s also a very handy strategic regional fit for the Manchester titles alongside Trinity’s existing Merseyside titles.

For GMG, though, it’s less clear. Does the disposal allow the group to concentrate on the march towards digital dominance spearheaded by the Guardian brand? Or perhaps GMG has just decided that the ‘cash cow’ role of the regionals simply doesn’t work any more in the new media economy, and it’s better off without the distraction.

Whatever the case, my money is on a rise in the number of deals amongst the major publishers following the TM-GMG shuffle, as more try to optimise the geographical ‘sense’ of their sometimes disparate and accidental portfolios.

Full post at this link…

GMG sells regional media business to Trinity Mirror for £44.8m

Months of speculation about the future of Guardian Media Group’s regional media business is over – the group has announced today it will sell GMG Regionals to Trinity Mirror for a total consideration of £44.8 million.

Within the regionals group MEN Media publishes 22 titles in the north west of England, including the flagship Manchester Evening News; while S&B Media publishes 10 titles in the south of England, including the Surrey Advertiser and Reading Post. Both will go to Trinity Mirror.

Manchester-based TV station Channel M and GMG Regionals Woking titles will not be part of the deal, which is expected to complete by 28 March.

The deal also sees departures for GMG Regionals chief executive Mark Dodson and MEN Media chief executive Ruth Spratt. More significantly it marks the sale of the Guardian’s Manchester roots, as the paper was started in the city on 5 May 1821.

More to follow from Journalism.co.uk.

FT.com: Guardian considered six different pay models

This FT interview with Guardian Media Group chief executive Carolyn McCall reveals some  background on the company’s pay wall strategy. The company discussed six different models, including a pay wall, but McCall said there was no  evidence for the commercial success of pay walls:

“It is not really the way the web works. That is not to say there are not areas of specialist content that cannot be charged for,” she says.

Finally, this nugget:

Ms McCall dismisses the idea of any changes in the Guardian’s senior management – which is known to hold the firm view that freedom of news takes precedence over any business model – as “preposterous”.

Full story at this link…

Timesonline.co.uk: Guardian and Apax pledge fresh funds for Emap

Emap’s owners – the Guardian Media Group (GMG) and Apax – have pledged to pump more money into the publisher, the Sunday Times reports:

The pair are gearing up to support an acquisition drive with fresh funds after rejecting proposals to relax covenants on Emap’s £700m of debt because it would be too expensive.

Emap, which was acquired for £1 billion in 2007, warned in its last set of accounts of “significant doubt” that it could carry on as a going concern if economic conditions deteriorate or renegotiations with lenders failed.

Full post at this link…

How-Do: Could GMG sell Manchester Evening News to Trinity Mirror?

How-Do.co.uk exclusively reported this morning that Guardian Media Group (GMG)  is “believed to be in talks” to sell the Manchester Evening News to Trinity Mirror [Update: and the rest of GMG Regional Media, according to the Telegraph].

How-Do, the north-west based media site, has few details to date but promises more soon. It had not managed to obtain comment from either group. It reported:

It is being suggested that GMG Regional Media is to be sold off in a bid to save jobs and continue with the Scott Trust’s overarching objective of protecting the interests of national paper the Guardian.

A figure of £40m has been mooted for the sale, but, again, at the time of writing this could not be confirmed.

Full story at this link…

Update: As noted in the comments, it was the Telegraph which ran the story first ten hours ago –  for some reason its story didn’t show in Google News or a Bing web search (although it does appear in Bing News search). Apologies for the error.

Update: Internal memo says Observer closure ‘actively being considered’

In an update to this weekend’s reports about a possible change of format for Guardian News & Media Sunday title the Observer, Times Online is reporting on an internal memo from Carolyn McCall, chief executive of Guardian Media Group, suggesting the closure of the title is ‘actively being considered’.

The memo also reminded staff that the ‘core purpose’ of the Scott Trust, which safeguards the future of sister title The Guardian, was to secure the daily’s long-term future – not that of the Observer.

Full post at this link…

Jon Bernstein: What if the business model for news ain’t broke?

In what may feel like a twist of logic too far, there are a growing number of non-media companies who are adopting the Fourth Estate’s digital business model.

That’s the ad-funded, free-to-the-consumer model.

You know the one.

It’s at the root of the crisis afflicting the newspaper industry around the world, an industry which is trying desperately to make money online. Or at least not haemorrhage it.

To believe the unholy trinity that is News International, Daily Mail and General Trust, and the Guardian Media Group, the media model is unworkable, unsustainable and it’s got to go.

The three are not sure if it should be replaced by paywalls, micropayments, subscriptions or something else entirely.

But what they are agreed on is that it cannot be business as usual. Because that business is going under.

So why do we find the likes of Facebook, Digg and the mighty Google – and perhaps soon Amazon– adopting the ad-funded model to support services and software.

Take Gmail. It’s not a media entity, it’s email, but it is ad-supported.

One answer is that that advertising is the last, desperate (and largely) failing attempt to generate some money, given nobody wants to pay for their products. In short: free reigns.

On that latter point, Wired’s editor-in-chief Chris Anderson is likely to agree.

His new book ‘Free: The Future of a Radical Price’ – appropriately available to read and listen to online without charge – celebrates ‘freeconomics’, but has a much more positive take on its effect on the business world.

The reason, he says, people are convinced that ad-funded won’t work is because they are applying the conventional rules.

Offline – in newspapers, magazines, billboards, TV and radio – advertising is predicated on scarcity not abundance. Ad sales people trade on ‘space’ and the less there is the higher the yield.

So when there is infinite space online, their greatest selling tool disappears.

Right? Wrong.

Anderson argues that there is another kind of advertising which is epitomised by Google’s text ads:

“Google doesn’t sell space. It sells users’ intentions – what they’ve declared to be interested in, in the form of a search query.

“And that’s a scarce resource. The number of people typing in ‘Berkeley dry cleaner’ on any given day is finite.”

Google’s CEO Eric Schmidt – admittedly a man with a vested interest – estimates that the potential market for online advertising is $800bn.

“That’s twice the total advertising market, online and off, today,” notes Anderson.

So why is his tone at such odds with that of the media he is writing about?

Perhaps it has something to do with the production-cycle of book publishing. This book was in train before he had even finished writing the much-admired The Long Tail.

Clearly much of his thinking predates the collapse of Lehman Brothers which sealed our current economic fate.

His penultimate chapter, presumably added very late in the day and titled ‘Coda: Free in a Time of Economic Crisis’, is an acknowlegement of that, although not a denunciation of his core argument.

Just maybe, it’s the down-in-the-mouth media owners who are out of time, not Anderson.

Maybe this rush to find other ways to monetise will be a passing phase and when the economy picks up so too will online advertising revenues.

After all, what’s the alternative?

Pay walls may work for niche information but not for mainstream news and exclusives. That’s something that even the Wall Street Journal, poster child of the paid model, accepts.

Interviewed earlier this year its executive editor Alan Murray said:

“Look, if it’s a big news story, if we report a takeover and – we could hold that behind the pay wall. But if we do, BusinessWeek or someone else will simply write a story saying ‘The Wall Street Journal is reporting x’ and they’ll get all the traffic. Why would we do that?

“So if it’s that kind of a big, broad-interest news story, we’ll put it outside the pay wall and go ahead and take the traffic ourselves, thank you very much.”

Jon Bernstein is former multimedia editor of Channel 4 News. This is part of a series of regular columns for Journalism.co.uk. You can read his personal blog at this link.

Ad spend will bounce back, says Fry; multiple models needed, counters McCall

Amidst what was otherwise a fairly gloomy House of Commons select committee session on the future of local media in the UK [see Claire Enders’ prediction that half of the UK’s regional newspapers will close in five years and her comments on bloggers], Johnston Press chief executive John Fry remained staunchly optimistic about the cyclical/structural elements of the decline in local media.

While all members of the panel agreed that this was the worst crisis faced by local media in the industry’s history, Fry said the decline in advertising revenues for his group was more cyclical than structural.

“That implies that there will be a bounce in advertising when that changes. From here onwards we’re likely to bottom out. When the economy recovers we’ll see a recovery in advertising,” he said.

Guardian Media Group chief executive Carolyn McCall was quick to temper Fry’s optimism:

“I don’t believe the prospects for recovery, particularly in classified advertising are particularly strong. I don’t expect to see a great deal of those three big markets – I don’t think bounce is the right word – I think it will come back slowly, it will come back in a different form or shape,” she said.

“The structural change is too profound and the economic recession has just hammered it. Deregulation is one step towards helping. It’s not a panacea. It raises all sorts of important issues about jobs.

“One thing we’re going to have to face about this industry is that it’s going to be a smaller industry with less people in it. Consolidation will help because then the clustering of assets in the right place, will makes more sense, you’ll get more scale.”

All three panellists (Fry, McCall and Trinity Mirror’s Sly Bailey) taking part in the evidence session (which had earlier taken comments from Claire Enders and DC Thomson’s Christopher Thomson) supported consolidation and the relaxation of newspaper merger rules to help local newspapers.

Yet it was McCall again with the most sensible comments – a range of issues and possible solutions need to be considered: discussions about aggregators; consolidation; support for web development; the use of part-paid, part-free access; state-funding; and the problem of council newspapers.

The industry needs to move away from the display advertising model to – not just one business model – but lots of business models, she added.

If any of them can sustain quality local journalism, none should be ruled out, she said, echoing comments from the Society of Editor’s executive director Bob Satchwell to Journalism.co.uk last week.

MediaGuardian: GMG ‘set to report operating loss’

As reported by the Guardian yesterday: “Guardian Media Group is set to report an operating loss for the financial year to the end of March, the company said today.”

Guardian News & Media will reports a loss of about £35m in the year to the end of March 2009.

Full story at this link…

MediaGuardian: Anthony Salz appointed to Scott Trust

“The former BBC vice-chairman Anthony Salz has been appointed to the Scott Trust, owner of Guardian Media Group,” reports MediaGuardian. Salz, executive vice-chairman of the investment bank Rothschild, and also chair of the Media Standards Trust, will become one of ten directors for the trust.

Full story at this link…