Trinity Mirror move to digital focus means 40 fewer jobs

Trinity Mirror's move to a focus on a digital future will see 92 journalists losing their jobs in the company's regional newspaper business.

However, 52 jobs will be created  - 26 at the company's national operation and 26 in the regionals - meaning that the net loss will be 40.

The difference between the value of online advertising and that in the print medium is such that any newspaper company switching its focus from newspaper to digital must make huge cuts to its workforce.

In line with most companies, Trinity Mirror says that new, more efficient ways of working mean that cuts in the number of journalists does not necessarily mean a reduction in the quality of its journalism.

Can that be true? And does Trinity Mirror have any choice?

It is difficult to do direct comparisons with the past because of the number of acquisitions and disposals, but a measure of the collapse in revenues at regional newspaper companies can be found by looking at Trinity's annual accounts for 2000 and 2011 (the most recent available).

Total revenues in the regional business in 2000 grew by 3.7% to £424.7 million.  Last year, they fell by 8% to £139 million. In other words, two-thirds of the revenues have disappeared in the past 12 years.

Revenues have fallen by almost £286 million.  In the 'good old days', profit was £106 million - last year, it was just £16.9 million.

In lots of ways, £16.9 million profit is an amazing performance, but it shows the brutal depth of the cuts that have already been made.  I know the business has changed enormously over the past 12 years, but, if costs had remained at a similar level, the revenue fall of £286 million would have meant the company would have lost £180 million last year!

Add back the £16.9 million profit that the company made last year and you can see that the costs have come down by a staggering £197 million in just 12 years.

Of course, some of these costs will have fallen away naturally: if your circulation falls by 10%, you can print 10% fewer papers (in fact some Trinity titles, like the Newcastle Chronicle, have fallen by more than 50%); if you are selling far fewer advertisements, you can print far fewer pages.

But massive savings have come from reducing staff numbers in all areas of the newspaper.  According to the annual reports for the year 2000 and 2011, the number of people employed in 'production and editorial' has fallen from 6,898 to 3,001 - a fall of 57%.

Again, I have to stress that Trinity Mirror has made a number of acquisitions and disposals during that decade so we are not comparing like with like, but a fall of 57% does not feel out of step with my own experience in the newspaper industry over that period.

(For one view of what the drastic cut in the number of journalists has done to local (and, to a certain extent, national) newspapers, read Nick Davies book, Flat Earth News, which I have talked about on this blog previously)

And that brings me all the way back to Trinity Mirror's statement that changing the way staff work will mean that it can cut the number of journalists it employs without cutting the quality of its journalism.  More than that, while taking out another 40 editorial jobs, the company will launch a drive to increase and improve its digital offerings.

What are the changes that Trinity Mirror will make to create the spare resource to step up its digital work at the same time as further reducing its staff?    They are listed below.  For what it's worth, I think it will simply add to the downward spiral which sees falling revenues matched by cuts in the quality of the product, leading to further falls in revenue ... and further cuts in costs.

So, the changes:

• Closer working between the national and regional titles, with more content being shared across all of Trinity Mirror's newspapers and digital platforms. (ie fewer local stories)
• Greater emphasis on the production of digital content, including breaking news, pictures and video.
• A much enhanced focus in the regional titles on the curation of community content, which has already proved popular with readers. (Plenty of self-interest news)
• A shared content unit based in Liverpool, producing high-quality, non-local material for all of Trinity Mirror's regional newspapers and digital channels. (Non-local content for the local papers?  What could go wrong?)
• The creation of a number of new roles at the national titles for writers and photographer/videographers, plus a number of new digital roles. (92 jobs lost in the regional papers, some of the new jobs (26) going to the national titles, means that, in fact, the number of jobs lost in the regions is 66).  However, it does mean that there are 52 new 'digital' roles - jobs which Trinity Mirror thinks cannot be done by traditionally trained journalists - they want people with a wider skill set.

Does that make the decision to go 'digital first' wrong?  I don't necessarily think so - I don't believe that traditional print companies have much in the way of options.  They have to move more and more into digital: it's clearly where the future is.  From the point of view of journalists, those new offerings at a local level are always going to be a smaller business - we will never get back to the situation where cities like Leicester, or even Derby, can support 120+ journalists for a local news service.

The huge classified revenues that supported the cost of journalism have gone online and they don't require the expensive editorial costs to make them work (they sit on standalone sites like Jobsite or Rightmove).

That pretty much leaves the journalists on their own, trying to make a living out of news.  Perhaps people will pay, but not enough to support big numbers.  The newspaper companies will try to keep their papers going to bring in revenues, but without cuts, they would already be making a loss and, as Nick Davies points out, the big publicly quoted companies simply cannot stomach that.

Newspapers losing print revenue far faster than they can gain digital income

One of the biggest problems facing newspaper companies as they seek to move to a digital future is highlighted by a report published last year by the US Pew Research Centre.

In a study of 40 newspapers - based on data supplied and interviews with newspaper executives - Pew discovered that for every $1 gained in internet revenues, the newspapers were losing $7 in print revenue.

In an article published today, Pew says that the situation has got worse: "By the end of 2012, the numbers were considerably grimmer for the sector as a whole - $16 in print losses for every digital dollar gained."

"The case studies come from  "The Search for a New Business Model" released by Pew Research Center in March 2012," says today's article.

"Based on data provided by nearly 40 newspapers and interviews with executives at 13 newspaper companies, that study found that in general, the effort to replace losses in print ad revenue with new digital revenue was taking longer and proving more difficult than executives wanted."

Despite this fairly depressing outcome, the report did highlight what it thought was a few signs of hope with six 'outliers' either managing to offset print losses with digital gains, or at least coming very close to doing so.

However, even this glimmer of hope may have been extinguished.

"Pew Research tracked those outliers and found, as a reminder of the fragility of the business, that in the course of several months, two had suffered significant revenue declines and three others were part of a company undergoing a major organizational restructuring that made it difficult to draw conclusions about their economic health," says today's report.

Editor tells FT journalists he's cutting jobs to secure a 'world class, financially sustainable news organisation'

The Financial Times is cutting 35 journalists from its staff as it shifts to a strategy which puts the web ahead of its newspaper.

In an email to staff, editor Lionel Barber says that net reduction in editorial staff numbers would be about 25 people 'after the introduction of 10 more digital jobs.'

"We need to ensure that we are serving a digital platform first, and a newspaper second. This is a big cultural shift for the FT that is only likely to be achieved with further structural change," he said.

In an earlier message to staff, Barber had said that 2013 would test the newspaper's resolve to move further and faster to support top quality journalism in a rapidly changing media landscape.

"I now want to set out in detail how we propose to reshape the FT for the digital age. We need to do less in certain areas and more in others, we need to be much more nimble, and we need to reshape our teams.

"Today we have started consultations with the NUJ with the aim of opening up an initial voluntary redundancy scheme. The intention is is to reduce the cost of producing the newspaper and give us the flexibility to invest more online.

"Our common cause is to secure the FT's future in an increasingly competitive market, where old titles are being routinely disrupted by new entrants such as Google and LinkedIn and Twitter.

"The FT's brand of accurate, authoritative journalism can thrive, but only if it adapts to the demands of our readers in digital and in print, still a vital source of advertising revenues," he said in the email sent on January 21st 2013.

Barber revealed that a visit to Silicon Valley had convinced him of the speed of change, with competitors harnessing technology to revolutionise the news business through aggregation, personalisation and social media.  "It would be reckless for us to stand still."

"Of course, we must stick to the tested practices of good journalism: deep and original reporting based on multiple sources and a sharp eye for the scoop.

"But we must also recognise that the internet offers new avenues and platforms for the richer delivery and sharing of information. We are moving from a news business to a networked business," he continued.

The paper will now shift resource from night work and from print to digital.

"I am determined that we do everything we can to secure the FT's future as a world class, financially sustainable news organisation.

"Our earlier decisions to raise prices, charge for content, and build a subscription business have proven to be bold and wise.

"While many of our rivals have struggled to find a profitable business model, and have therefore announced heavy job losses, we have been industry pioneers. This is not the moment to falter," said Barber.

He is now seeking to introduce a number of changes aimed at reducing the resource needed to produce the newspaper so that, despite the reduction in staff numbers, more people can work on the web. Those changes include:

• Common ad shapes across editions to reduce the number of 'tweaks' made to pages
• A more common international edition with common fronts and second fronts (ie far fewer changes in editions)
• A restriction in the number of changes between two US editions
• A 'paring back' of the UK 3rd edition
• Tighter control of pagination (ie fewer pages)

"We must rethink how we publish our content, when and in what form, whether conventional news, blogs, video or social media," he said.

In common with all newspaper companies moving to a 'digital first' strategy - recognising that online revenues are almost always smaller than print revenues around news - the changes are designed to create savings, about £1.6m a year in the case of the FT.

"This will be an opportunity for all of us to think harder about a more dynamic and inter-active form of FT journalism beyond the printed word. This is vital to drive deeper engagement with readers and build our subscriptions business," he added.

Why does a digital-first strategy for newspaper companies always mean fewer staff?

This article is under construction!  I am trying to marshal my thoughts on the subject, but thought I'd put them out there in the hope of attracting constructive ideas and responses.  Please feel free to leave comments.

The FT is the latest in a number of newspaper companies to announce a digital-first strategy, shifting its focus from the traditional print product to 'a more dynamic and inter-active form of journalism.'

In an email to staff, FT editor Lionel Barber said the move would mean the loss of about 35 editorial jobs, although this would be offset by the employment of 10 more digital jobs. "We need to do less in certain areas and more in others, we need to be much more nimble, and we need to reshape our teams," he said.

This followed a trend that has been going on for some time now and comes fast on the heels of similar announcements by both Trinity Mirror and Local World, the new-formed company which recently bought Northcliffe from  DMGT and Iliffe from Yattendon, giving it control of titles such as the Leicester Mercury, Nottingham Post, Derby Telegraph and Bristol Post.

The issue facing regional and local newspapers has been more pressing than that faced by national newspapers because of the different make-up of their main revenue streams.

Most people tend to think the biggest issue facing local papers is the fall in readership.  That may be the case now, but it was not what plunged the industry into crisis in the first place.  Regional papers have been losing readers for several decades now and yet their most prosperous era was in the early 90s when advertising was plentiful and costs had come down through a combination of new technologies and smaller print runs because of the falling audience.

No, on the face of it, what threatened the very existence of local newspapers was not falling readership, but the sudden and complete migration of certain parts of their advertising revenues to the internet.

Traditionally, local papers have received a far greater proportion of their income from advertising than circulation revenue (perhaps as much as 60:40) as opposed to the situation in the national press where the position is reversed (possibly 40:60).

The threat to local papers has been exacerbated by the fact that the majority of their most-profitable advertising came from the main classified verticals: jobs, property and motors, the very advertising that works best online. As a result, this has been the advertising that has moved most quickly, and most completely, to the web, leaving the local papers with a massive hole in their budgets.  In the late 90s, some of the bigger regional titles were making anything up to £15m profit a year, but this was underpinned by recruitment advertising of a similar level.

Over the past decade, almost all of that recruitment advertising has disappeared.  I doubt now that any regional paper is attracting even £1m from jobs advertising.  Property and motors advertising has suffered in a similar way.

Not only has the advertising disappeared online - mostly to competitors - but that which the newspapers have managed to attract on to their own digital offerings, has been sold at a far lower rate than anything in the papers.  See my post on the Pew research into this.

With a limited appetite for pushing up the cover price of their newspapers, regional publishers have reacted by slashing costs to keep their newspapers in profit.

The most obvious place this has shown is in the number of redundancies in local papers.  These have come in all areas of the business, but the journalists have not been immune.  Newspapers like the Derby Telegraph would have had more than 110 journalists 15 years ago.  Larger papers - the Nottingham Post, the Leicester Mercury - would have had even more.  Now, they operate with perhaps half or even a third of that number.

Costs have also been cut by reducing the number of editions.  Almost all regional papers used to publish multiple editions, some based on geography (allowing greater coverage of each area), others based on time.  The first newspaper I worked on, the Grimsby Evening Telegraph, had a late edition that went to press at about 4pm.  Now, the geographic editions have (almost) all disappeared and most regional dailies print a single edition in the middle of the night so that it can be distributed with the national papers first thing in the morning.

With fewer journalists producing fewer pages in fewer editions, newspaper sales have collapsed.  According to HoldtheFrontPage, audited circulation figures for major regional papers looked like this in 1999: 

Wolverhampton Express and Star  183,759       
Manchester Evening News            173,179
Liverpool Echo                            155,920
Newcastle Chronicle                     107,511
Leicester Mercury                         102,640

By the middle of last year, those same titles were selling:


Wolverhampton Express and Star  100,244       
Manchester Evening News            78,984
Liverpool Echo                            80,762
Newcastle Chronicle                    49,199
Leicester Mercury                        45,465

That represents a fall of more than 50%.

The regional newspapers now find themselves caught in the perfect storm - key advertising streams have disappeared, they've responded by cutting the quality of their products and their readers have fled to the internet.

The affect on national newspapers has not been as pronounced simply because they did not have the same reliance on classified advertising as the regional papers.  But the latest circulation figures for national papers do not make good reading.

The Independent is down 34% in a single year - perhaps partly explained by the growth in its sister title, the i, which is up 20%.  Everything else is down: the FT by 13%, the Daily Star by 14%, the Sun 12%, the Guardian 11% and the Daily Mail by 7%.

So, although the nationals do not have the same reliance on classified advertising as the regionals, they are finding their key revenue stream - circulation income - under attack.

Which brings us to the FT announcement and why all newspapers are not only looking to digital for their future, but are having to do it with fewer staff.