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Panpa Bulletin : May 2010
www.panpa.org.au The PANPA Bulletin | MAY, 2010 | 19 Why are we so averse to being diverse? NEWSPAPERS are increasingly looking at diversification. Good. But the important question is why has it taken a hundred years to get there? I'm not offering a lecture in "told- you-so!" or "hind-sight" strategy. But for the record, I've been arguing this point for 20 years. Now that structural change is af- fecting us as much as the economic cycle, it is well past the time to "find a new newspaper business model". This is no longer the motto-du-jour. It's time to find a whole new busi- ness; one that protects and nurtures. Rather than being the only asset, diversification is the route forward. And newspapers have plenty going for them in this. As the traditional newspaper prod- uct fragments, we are going to see the classified and other advertising verti- cals migrating into specific branded digital services. Newspapers were slow to realise this trend, but are now, encouragingly, recovering their posi- tion. So well-strategised newspaper companies should look forward to retention of the profits derived from their previous classified activities. So what are the options and where are the best examples? In Norway, my favourite news- paper company, Schibsted, is also aggressively expanding its activities. Originally a family trust, the com- pany was encouraged onto the stock market by their recently retired CEO, Kjell Aamott, with the provi- sion that the family retains a golden share which guarantees editorial integrity and excellence. The result is an extraordinary, diversified media group, with newspapers at its heart, and interests in a range of classified services, magazines, TV, and soft- ware services. Norway is the most successful newspaper market in the world, and Schibsted is by far its most dominant player. Fifty per cent of its profits come from digital activities. The Daily Mail Group in London, perhaps the most successful newspa- per publisher in Europe, today has only half its revenues from newspa- pers. It also has interests in financial services products, radio interests in Australia, and is one of the world's biggest event organisation compa- nies, with 300 major events in 30 countries. I've argued for a long time that newspapers should be moving into below-the-line [BTL] marketing. There is a strong fit with the core business, and has grown from 30 to 70 per cent of total communications expenditure in the last 20 years and in real terms is growing far faster than the internet. And guess who is benefiting? Our industry's master wizard, Rupert Murdoch. The BTL division is small, accounting for only 3 per cent of revenues, but it accounts for 9 per cent profits, over 30 per cent margin. As well as below-the-line op- portunities, other obvious areas for development are: locational and contextual marketing, exploiting newspapers' traditional local base, market research, and off the page retailing. The Guardian in the UK and the Irish Times offer one possible solution. As I wrote recently, the Scott Trust exists to guarantee the future exist- ence of The Guardian, and the Irish Times is similarly funded. The Guardian Media Group has expanded dramatically into radio, magazines, digital activities and data services, though it has recently sold its regional newspapers, which were under-performing, and reviewed the future of its loss-making Sunday newspaper. The idea that newspaper compa- nies could be owned by larger cor- porations, dedicated to distributing profits to supporting quality news is a very attractive option to me. But it requires two realisations. First, trusts can be dedicated to encouraging quality news and journalism; greedy shareholders cannot. Secondly, this process does not necessarily guaran- tee effectiveness and efficiency. The Guardian and Irish Times, are both truly world class newspapers. But in the case of The Guardian, it employs an implausible number of journalists for its size, and a few years ago the Irish Times was brought to its knees because an editor was given carte blanche to recruit with whatever resources he required. It took a brilliant managing director, Maeve Donovan, to bring it back to commercial reality. But the best solution is for newspaper owners to realise that news is a cher- ished necessity that can be converted into an alternative capital generator. The greener you think, the more your fi gures will be in the black. CMYK+GREEN. A formula that pays off for everybody Less paper waste, less ink, less alcohol, less energy, and less emissions all add up to greater economy. With CMYK+GREEN you achieve enormous cost savings in your pressroom and protect the environment at the same time. This formula is based on comprehensive technologies, processes, and innovations that we bundle under EcoLogic -- for green results that keep your figures in the black. WE ARE PRINT.® www.manroland.com Diversification ... Media mogul Kerry Stokes plans to merge the media company Seven Network with the mining equipment company WesTrac Chisholm Jim Chisholm is an independent media consultant, based in France. He can be contacted at firstname.lastname@example.org