There has been a small but, I hope, significant trend over the last few days. ‘Traditional’ UK consumer media companies have been announcing encouraging results – let’s hope the media recruiting follows. Today’s announcement from the Lebedevs that The Evening Standard has made a £1m operating profit in the last year was preceded a few days earlier by Briefing Media’s short blog on the fortunes of IPC, Dennis, and Haymarket.
Whatever its shareholders may think, News Corp continues to perform well; the announced retirement of Marjorie Scardino this month confirmed the quiet success of Pearson; DMGT continues to print money. The local newspaper business has been more challenging: but Johnston Press reported profits for the first half of the year, even before Ashley Highfield’s promising re-engineering was announced.
And re-engineering is the key. All of the above businesses have faced major challenges in the way they do their business. While the ES’s profits will be viewed with cynicism in some quarters, there is no doubt that the business is stronger for adopting a free distribution model. The magazine companies have profited by investing intelligently in online, killing struggling legacy products, and consolidating others.
The big beasts in the newspaper industry have each looked at their investment strategies with great intelligence – Pearson systematically turning itself into an educational publisher with a small news business over the last fifteen years, while News Corp has become a truly global player in broadcast, production and business information over the same period. DMGT has concentrated on its B2B properties, even while building the most successful newspaper website in the world. Others that have failed to seriously overhaul their business strategies – Trinity Mirror, for example – have suffered as a result of their lack of vision. Simon Fox’s recently announced new approach is bold, but he has inherited an unenviable legacy of ill-thought through policy and poor judgement from his predecessor. It will be a tough ship to turn around.
In his Briefing Media blog, Patrick Smith says that “the trick for consumer magazines right now is to maintain a profitable business at the same time as investing in new technology.” New technology is certainly part of the answer for all ‘traditional’ media companies; but far more important is having the courage to undertake a root-and-branch analysis of your business and what it needs to do to flourish.
The successful companies mentioned above have a very simple strategy: identify your user, and give them what they want in the format that they want. And if your current user isn’t profitable, find a new one. Congratulations to all of them.