Independent News & Media says it expects to buy more print titles in Ireland as part of plans to grow the group.
INM chief executive Robert Pitt said the company intended to acquire digital businesses, but that it also believed consolidation in the newspaper industry would help extend the life of the print market.
“We think there is an opportunity for us to acquire print publishing titles,” Mr Pitt said, not ruling out national newspaper titles were they to become available.
“We mean this as a positive step for the market. The category has a longer term future than it would have if we didn’t take action,” he said, basing his remarks on the fact that larger companies tend to have greater economies of scale.
Print too important
“Print is too important. It’s too important to society, it’s too important to our retail partners, it’s too important to us, not to do anything about it,” Mr Pitt said.
The value of print is still understood by advertisers, he added. “People need to be in the paper, they want to be in the paper. It provokes a response.”
He indicated that the group would wait for titles to be put up for sale, rather than chasing them. “That will be something where the market will present the opportunity rather than INM being aggressive towards it.”
The group has appointed advisers to help it explore possible acquisitions in the UK, while it hopes to “quite soon” appoint a head of mergers and acquisitions.
INM is the publisher of the Irish Independent, the Sunday Independent, the Herald and the Sunday World, among other titles. Its largest shareholder is the billionaire businessman Denis O'Brien, who also owns radio group Communicorp.
In the declining print market, INM's circulation revenue fell 4.1 per cent last year to €101 million, according to the company's financial results published on Friday. The clear underperformer is the Herald, which saw its average sales drop 10.5 per cent to 44,317 in the second half of 2015.
Herald hopes
"The Herald is the one that is lagging behind," Mr Pitt said. "We would love to see the Herald doing better. However, we have to plan for that, and reinvest in the title."
The group would examine “the look and feel” of the product, he added.
INM’s digital advertising revenue, which increased 42 per cent in 2015, has become the key growth area for the business. But at €12.5 million, digital advertising still only accounts for 15 per cent of its total ad revenues of €82.9 million. The other €70.4 million in ad revenue is from print.
Mr Pitt said the group would need to buy digital platforms in order to bridge the gap. “I don’t think organic growth is going to get us there, because we are starting from such a small base.”
It is on the lookout for digital businesses “that already have quite developed propositions, businesses that already have trading behind them”.
He said it was not the size of the businesses that would determine INM’s interest, but the quality. “We will be very careful about how we spend shareholders’ money, because the future is not clear in digital.”
GrabOne shut down
INM last year shut down its consumer discounts business GrabOne because it could see no “long-term route to material profitability”, Mr Pitt said. “At the time GrabOne was set up, it was where the consumer was. But things move on.”
Its closure was “not a sign of disaster”, but a sign of INM’s flexibility and awareness of change in the market, he said.
Mr Pitt, who joined INM from Tesco in late 2014, didn’t rule out further restructuring or redundancies at the group, indicating that it would “always be looking at organising ourselves better”, making improvements to its titles and keeping costs in check.
Employees with a background in print are more than capable of driving its digital business, he said. “We don’t need to go out and find young Googly tech people. We have good people in this business.”
He also reiterated that INM has no plans to charge for digital content, other than for its photography archive, which it began putting online last year.
“We have no plans to put up a paywall, either a hard paywall or a soft paywall,” he said. Micropayments, such as those facilitated by the Dutch platform Blendle, do not work for breaking news, he said.
Despite the challenges in “keeping the newspaper category alive”, Mr Pitt said he would “much rather be a print publisher with a digital arm than just a digital start-up”.
