Independent News & Media's (INM) chief executive, Michael Doorly, has insisted his management team "will not be distracted" from its task of returning the newspaper publisher to growth, as it remains locked in a legal battle with the State corporate watchdog over issues at the group.
INM reported on Friday that its pretax profit fell almost 23 per cent to €11.5 million in the first half, as advertising and print circulation revenue declined and it booked €1.9 million of legal costs, mainly associated with meeting requirements of the Office of the Director of Corporate Enforcement (ODCE) and a related judicial review into various allegations.
INM was informed on Friday afternoon that the president of the High Court, Mr Justice Peter Kelly, will deliver a decision next Tuesday on the ODCE's application earlier this year for court inspectors to be appointed to investigate matters at INM that were subject to a whistleblower complaint by its former chief executive Robert Pitt.
“We have not been distracted from the business and we will not be distracted,” said Mr Doorly, who became chief executive last October after Mr Pitt resigned. “We are rolling up our sleeves and getting on with implementing our corporate strategy.”
Data ‘interrogation’
The ODCE has claimed in court documents that a company controlled by INM's main shareholder, Denis O'Brien, paid a bill for an IT firm to access the publisher's computer network in 2014 without the board's knowledge. It alleges INM's then chairman, Leslie Buckley, a long-time associate of Mr O'Brien's, facilitated the "interrogation" of the data, including journalists' confidential emails.
The watchdog also claims Mr Buckley pressured company executives to pay a “crazy” price for Newstalk, a radio station owned by Mr O’Brien, in a deal that never went ahead. Mr Buckley, who stepped down from the board earlier this year, has said he will defend himself against all allegations.
INM said in its latest report that total revenues declined by 4 per cent to €95 million in the first half, driven by a 10 per cent drop in advertising sales across its print and online operations and a 6.2 per cent decline in circulation. Print sales had been dented as Storm Emma collided with the “Beast from the East” weather system earlier this year to hit print distribution.
Mr Doorly confirmed that the company is “moving ultimately towards a subscription model” for online content, but declined to give a timeframe.
“The sooner we can give our audience what they want and what they value, and the sooner we can create some value and introduce a subscription [fee], the better for the business,” he said.
Distribution revenues
However, the overall sales decline during the reporting period was partly offset by an 18.4 per cent increase in revenue from its newspaper and magazines distribution revenues, Newspread, which was helped by acquisitions.
Meanwhile, INM took another €1.3 million charge for restructuring, primarily relating to redundancy costs.
“Despite the challenges facing INM, the group generated a profit before tax of €11.5 million during the period, in line with expectations,” said chairman Murdoch McLennan. “Our balance sheet remains strong and we continue to explore new avenues to develop profitable revenue streams to support our core business.”
Cash on the balance sheet declined by 6.3 per cent during the period to €89.4 million.
The €99 million total sales for the first half of last year marked a restatement from the previously reported €141.3 million, as the company adopted a new accounting rule in January where the group now only recognises its fee for distributing other publishers’ newspapers and magazines as revenue, as opposed to the full selling price of the item. The move has had no impact on group profits.
