Wednesday 12 December 2018

'Examiner' woes that could sink 'The Irish Times'

What dangers await The Irish Times, caught between a rock and hard place as it considers buying the ailing Examiner title, asks Liam Collins

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Liam Collins

Liam Collins

There is a widespread view that The Irish Times is sailing perilously close to the edge with its 'exclusive' talks to purchase Landmark Media Investments, the disaster-prone publishers of the Irish Examiner newspaper.

Many believe the reason for this move is to hold on to the lucrative printing contract for the Cork-based newspaper.

This contract, even with its declining circulation, has been making a serious contribution to the Tara Street publisher's income since it was snatched from the wreckage of the Thomas Crosbie Holdings receivership in 2013.

Landmark Media Investments, led by Tom Crosbie of the Cork publishing family, is according to its directors' report "in the final stages of negotiating the sale of the group to an experienced company operating in the industry".

Despite a decline in revenues this year and the need, according to Irish Times managing director Liam Kavanagh to "look at our costs", the Dublin-based broadsheet is the suitor, although it appears only to be interested in the Irish Examiner, with other buyers sought for a string of provincial newspapers and several radio stations.

This is the second time that the Irish Examiner has failed in less than five years. When Thomas Crosbie Holdings (TCH) went into receivership in early 2013 the titles were moved into a new company, Landmark Media Investments, with the support of its banker, Allied Irish Banks, which was owed in the region of €15m at the time.

According to banking sources, The Irish Times is now "caught between a rock and a hard place" with the ailing Irish Examiner. Buying another broadsheet newspaper, or to put it less kindly, a daily provincial newspaper with daily sales of 28,000 and a large staff, is probably the last thing it really needs in what are trying times for the publisher. But spurning the offer could lead to the departure of the Examiner printing contract, which according to sources, could have a devastating effect on The Irish Times' own balance sheet.

While the editorial apparatchiks in The Irish Times are fretting about who will control the content, they appear unaware of the real danger that the purchase could bring for the 'mother ship' which shed a huge wad of its spare cash a decade ago with the disastrous purchase of for €50m.

According to recently released interim figures, The Irish Times' Designated Activity Company, which runs the newspaper, made a net loss of €1.2m in 2016 due to restructuring costs of €1.4m. But it made an operating profit of over €1m, compared with a loss of €1.1m in 2015.

The newspaper, which has 444 employees (according to its 2015 accounts, up from 423 the previous year), has become hugely reliant on the Examiner printing contract and buoyant property advertising to support its payroll costs.

But with newspaper sales falling by around 4pc a year, the purchase of the Irish Examiner could prove a defining move for The Irish Times, and disastrous if it gets it wrong.

With profits and losses fluctuating at approximately €1m a year, any unexpected events, like another property crash or a collapse in advertising revenues, has the potential to put the entire enterprise into a tailspin.

There is also a glaring contradiction in the strategy in buying into the Examiner's niche market. For the past five years The Irish Times has focused its energies and a huge amount of resources on a 'digital first' strategy, which its management now appears to be dumping for the short-term objective of protecting the print revenues from the Irish Examiner.

There are those who believe that there is a future for newspapers, just maybe not the mass circulation titles of the early 1990s - but then The Irish Times was never a mass circulation newspaper anyway.

To really protect that core business, The Irish Times management would have to face up to some very harsh realities, that it appears over-staffed for the production of one newspaper, it suffers from delusions of grandeur and has an over-reliance on the property market. According to the dismal figures filed in recent weeks for Landmark Media Investments for the year to December 2015, the business has been in trouble for some time.

That it is up for sale indicates - and that the position has worsened in the last 12 months - it was probably putting it mildly when the annual report said its bankers AIB "has expressed support for the proposed sale".

According to these figures losses of €57,089 (2014) widened to a staggering €14.9m to the end of 2015 on turnover of €48m.

Bank debt stands at €18.7m "payable on demand" and total liabilities for the group have risen to €20m.

The big questions around its sale are how much The Irish Times is prepared to pay for this basket case and how much the bankers are prepared to write off to get the deal over the line.

When asked about the purchase, The Irish Times managing director said, "there is a lot of water to flow under the bridge yet".

Things could well change, however.

Will Independent News & Media's new CEO Michael Doorly have a look at a move for Landmark? It could make a lot of sense for INM, the publishers of this newspaper.

Trinity Mirror may also be interested in the Cork-based title.

Whatever the outcome, life is about to get a whole lot tougher at The Irish Times.

The employees of what used to be the 'Old Lady of D'Olier Street' must be hoping that they are not swamped by the dangerous backwash from Landmark Media Investments.

Sunday Independent

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