Another challenge to the morning's positive picture of a booming newspaper industry came from Tim Bowdler, chief executive of Johnston Press. In a thoughtful speech, he introduced a dose of reality by saying: "None of us can be in any doubt that media landscape is changing... And I believe that changes are ubiquitous. It is an irreversible tide that means, wherever situated in the world, everyone will be required to act."
He outlined both the cyclical and structural trends that are adversely affecting his company, which publishes 318 newspaper titles, both paid-fors and frees, plus magazines and directories. After pointing to last year's £600m turnover, with £180m profit representing a 30% margin, he admitted that advertising revenues are now some 7% down year-on-year. "The impact on share price has been considerable," said Bowdler, exacerbated by "the amount debt we carry." Johnston Press has attempted to steady the ship by a rights issue plus selling off 20% of the business to "a strategic shareholder" (namely a Malaysian company, Usaha Tegas).
Added to this cyclical advertising problem are "structural challenges". He listed the growth of media outlets "all competing for attention of our readers", the decline in newsagents shops that is affecting home delivery and the marked decline of interest from younger readers. "Our readership is skewed towards the older generations", he said, adding that it might not be necessarily a bad thing because people are living longer and many of them are well off enough to appeal to advertisers.
Then he sounded a lengthy positive note by advocating that he was attempting to transform the business from a product-focused one into a customer-centric one. In other words, one in which papers will engage much more closely with their communities.
I liked the sound of that. It comes close to the ideas of those journalists who believe that a top-down relationship with an audience should be overturned into one that is bottom-up. Participation with citizens is the key. However, I still think - as Rupert Murdoch said last week - that reducing that 30% profit margin to one somewhere closer to 10% would also help. Investors may well not agree.
