Turbulent spell ahead for Irish Times Trust after Examiner deal
The latest takeover in the Irish media hasn’t stirred much in the way of good analysis, writes Liam Collins
THERE was a glaring, if not unexpected, lack of analysis of Irish Times DAC’s acquisition of Landmark Media Investments, the company behind the Irish Examiner newspaper and related provincial papers and radio interest, last Wednesday.
While it was hailed as a “once-off opportunity in a market that will definitely consolidate” by The Irish Times managing director Liam Kavanagh, the real reason for the deal only made sense in terms of The Irish Times protecting the printing contract it has for the Irish Examiner, which is selling more than 28,000 copies a day, six days a week and adds much-needed revenue to the bottom-line at The Irish Times.
Even with a significant write-down of Landmark Media Investments’ debt with Allied Irish Banks (AIB), The Irish Times’s rescue package brings it into choppy waters with the acquisition of debt and significant payroll costs of the 439 staff in the Irish Examiner and its various off-shoots, at a dangerous time for the print industry.
The directors of Landmark Media Investments put this challenge succinctly: “Despite the focus on editorial and marketing, circulation of the newspaper titles continued to decline and this is an industry trend that, currently, does not show any sign of abating.”
The Irish Times would boost its turnover of €82m with an additional €47m from Landmark, based on the latest accounts. But while the Cork-based company made a profit of €229,065 in the 12 months to January this year, it has managed to rack up accumulated losses of €19.7m in its short-lived existence. Even with a write-down of this debt, significant further losses could have a seriously detrimental effect on Irish Times DAC which returned to profit this year.
What was also interesting was the warm welcome given to the deal by Seamus Dooley of the National Union of Journalist (NUJ), even though the terms of the acquisition remain largely unknown.
Because it’s The Irish Times, it’s all right, seems to be perceived wisdom among the vigilant media commentators.
Mr Dooley foresees the acquisition leading to “synergies” between the two newspapers, something that in business parlance almost always stands for job losses and cutbacks of one kind or another.
From any standpoint, ‘synergies’, or whatever else you would like to call them, would seem to be the only options if the new entity is to survive in these turbulent times.
Equally enthralling are the commissars of the Dublin Print Group of Unions who have given a guarded welcome to the deal, not knowing the details but satisfied with assurances that all current agreements between The Irish Times and its unions will be honoured. But what if, as is often suggested, newspapers like The Irish Times drop the print edition on poor selling days such as Monday, Tuesday and Wednesday and concentrate on their digital product, where will the agreements with printing and electrical unions then stand?
The lack of analysis of The Irish Times’s acquisition of the Irish Examiner may stem from the fact that apart from those who actually finalised it, nobody knows the devil in the detail. As it goes through regulatory approval from the Competition and Consumer Protection Commission, the Minister for Communications and the Broadcasting Authority of Ireland, the finer detail should emerge.
The reality is that both newspapers have seen circulation and revenue continuing to fall as the expected arrival of serious revenue from online activities so far fails to materialise.
The Irish Times’s disastrous acquisition of myhome.ie for a reported €50m during the tenure of MD Maeve O’Donovan seriously depleted the newspaper’s financial reserves.
The Irish Times balance sheet indicates that it was €9m in cash and ‘cash equivelents’ and a note to the accounts says that it was listed and unlisted investments worth €12.8m.
That seems a slim enough margin with the yo-yoing between profits and losses in the past couple of years.
The Irish Times is also hamstrung by its muchvaunted status as a ‘trust’ which means that it cannot bring in new equity in the form of shareholders and will be relying on the support of its banks if things go wrong.
“We don’t underestimate the challenges ahead but this combination could underpin the future of two long-standing Irish-owned media organisations... that are like-minded editorially,” said Mr Kavanagh optimistically.
On the other hand, Landmark Media Investments’ track record wouldn’t inspire confidence. The Examiner went from being a very nice earner as Thomas Crosbie Holdings to a basket-case since dropping the ‘Cork’ from its title and going on the expansion trail to break into the ‘Dublin market’. This was compounded by a splurge on expensive provincial titles at exactly the wrong time.
Both seemed like a good idea at the time but proved very costly for its owners, the Cork-based Crosbie family, who saw their company go into receivership and, with last week’s deal, exit the newspaper business entirely after several generations. The Irish Examiner’s bankers have taken two hits in less than five years and are now obviously banking on The Irish Times to do a better job at managing the business.
As to its new parent, The Irish Times has so far managed to live on its financial reserves during the lean years. But this is a new ballgame and while it may buy time by copper-fastening the printing contract for the Irish Examiner, if sales and advertising revenue decline under the onslaught from unregulated online media in the current free-for-all climate, it may be in for a bumpy ride
The trust status of the newspaper, so beloved of the media commentators, could burst under the pressure.
‘In this freefor-all climate, this deal may be in for a bumpy ride’