Wednesday 23 May 2018

INM sees audience shift to online subscription model

INM to invest in its print titles, which lead the market, said chief executive Michael Doorly
INM to invest in its print titles, which lead the market, said chief executive Michael Doorly
Donal O'Donovan

Donal O'Donovan

Independent News & Media (INM) will move to a subscription model for online content, in a strategic shift that will include a focus on audiences in niche sectors and places, according to chief executive Michael Doorly.

However, he said the media business also plans to invest part of its €91.5m cash pile back into its portfolio of market-leading print titles, including the Irish Independent.

The shift to online subscriptions will be gradual and will involve new content and products, Mr Doorly said.

The recently installed INM chief executive said the company has no plans to close any of its print titles, which he described as the "bread and butter" of the business.

"The newspapers are profitable. Every single title makes a contribution," he said.

INM would look to buy more Irish print assets, but feels precluded from making acquisitions in the wake of the costly and lengthy process it faced in an abortive bid for regional newspaper business Celtic Media, he said.

Mr Doorly, who took over as CEO last October, was speaking after INM reported a profit before tax of €28.5m for 2017, on sales of €293m. The company's much-watched cash pile increased to €91.5m.

The directors are not proposing a dividend for 2017, but the group said it intends to make a "significant investment to reshape the business" and to deliver against a strategic plan.

INM is the country's leading media group, publishing titles including the Irish Independent, Sunday Independent, Sunday World and independent.ie. The latest financial results show net exceptional charges of €12.1m in 2017.

That included a charge of €1.5m relating to a severance payment to former chief executive Robert Pitt, who resigned last October in a move that ended a long-running boardroom row.

A €12.7m charge was booked in relation to the Belfast Telegraph masthead.

Impairments were partially offset by one-off gains, including in relation to the group's pension obligations.

The general outlook for the sector remains challenging, INM said.

"The outlook for 2018 is for continued difficult trading conditions within the media sector as key revenues - advertising, circulation and distribution - face further declines."

In response to those pressures, INM said its Board and management are currently collaborating with EY on the development of a strategic plan which will provide a roadmap for the future.

In 2017, INM appointed Michael Doorly as CEO and this month appointed four new non-executive directors, including UK media veteran Murdoch MacLennan - who was elected chairman by the new Board this week.

"These appointments bring a wealth of experience and expertise in the media industry and the wider corporate world, further strengthening and supporting INM's Board to ensure the Group is equipped to meet the demands of the rapidly changing industry," the company said.

The latest results show profits down 31.8pc compared to 2016. Total revenues fell 9.4pc. INM said reduced profits were primarily due to continued revenue challenges and increased libel and legal costs. Overall costs also fell, however, mitigating some of those impacts.

Revenue decline was primarily driven by a fall in total advertising revenues of 10.6pc, and a decline in circulation revenues of 8.4pc, which in turn impacted distribution revenues.

On a like-for-like basis digital revenues were up 1pc on the year, with growth primarily from classified businesses, including CarsIreland.ie - a unit where revenues increased by over 45pc on a like-for-like basis.

In terms of digital advertising, however, the company said Irish revenues will continue to be challenged by the domination of global platforms such as Facebook and Google.

Irish Independent

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