At this time of year – in the UK at least – we hear a lot about the impending doom for a number of high street retailers (so far unspecified) who are struggling to pay their next quarterly rent bill even though their tills are stuffed with cash from Christmas and the sales. Therefore it’s a good time for landlords and (sometimes) banks to pull the plug. At least they’ll get some of their money back.
But 2013 but prove equally grim for a number of media owners, whose business models and asset base just aren’t up to coping with a rapidly-changing media landscape (chiefly the flight to the internet and growing commercialisation of social media) and a becalmed UK economy.
A reminder of their dire circumstances came in News Corporation’s filing that its print and publishing businesses lost $2bn last year. This information because public because News is planning to float off said businesses into a new listed company in 2013 (God help it, you may say).
The print side took a powder with the closure of News International’s News of the World in the wake of the phone hacking revelations. The NoW may have been a ghastly old rag but it was a highly profitable one, making about £40m a year. Its closure, with attendant legal costs, has cost over £200m so far.
And, as is usual with Rupert Murdoch and newspapers, the tidy-up required to float a separate print company means that expensively-acquired newspaper assets are regularly written down by huge amounts. The Wall Street Journal cost him about $5bn and now it’s in the books at about half that.
So we should take the $2bn with a pinch of salt (the previous year these businesses made nearly $700m) but it shows the problems prints is facing.
Which bring us to the Guardian and Trinity Mirror.
The Guardian is still bravely maintaining that it can continue as a broadsheet newspaper publishing on seven days (it also owns the Sunday paper the Observer) and keep up with the big boys in the hunt for website riches on a global scale. This now seems to require staff in the US and, presumably, other places too in the fullness of time. UK rival Mail Online is busily hiring hacks in America but its pockets are rather deeper.
So far the Guardian’s efforts have been supported by its investment in successful print and online used cars mag Auto Trader (of which it owns half) and the disposal of other assets acquired in the good (well, better) times. but there’s only so much family silver in the locker and 2013 may well force its management to consider a more radical solution, most likely a cut-down print version Monday to Friday.
But this would require a radical price overhaul, something the Guardian has been reluctant to do. Its weekday price is set to increase to a ludicrous £1.40p in January, the best possible way of deterring the younger readers it desperately needs if the print/online strategy is to hold.
As for Trinity Mirror under new boss Simon Fox (left) it at least manages to make money from its Daily and Sunday Mirror and People tabloid newspapers, even if the process looks like one of managing decline. Fox is trying to boost the group’s websites (quite successfully so far) but the whole company (which includes the Trinity regional papers) is valued at just £234m, better than under departed boss Sly Bailey but hardly a sign of confidence from the City.
It wouldn’t take much for confidence in Fox to wane as the UK economy continues to weaken and one of the Mirror papers’ advertising bulwarks – advertising by retailers – wanes with it.
A third title at Risk is The Times. This, the most venerable English newspaper, will be part of the new News Corporation print company, so its stupendous losses (equivalent to what the NoW used to make) will be much harder to conceal, even for an old buffer like Rupert Murdoch (he’ll be chairman of the new company too) who clearly regards it as a trophy asset.
Other media owners, in particular those in B2B, the old trade and techs dependent on pricey classified ads, will also struggle. So far ‘traditional’ media in the UK have survived the onset of the internet, although they’re bloody and bruised.
2013 may see one or more of the old punchbags finally knocked to the canvas.