While talk of a ‘changing media landscape’ is nothing new, declining newspaper circulation and television viewership caused largely by local radio, digital television and online media has undoubtedly made this an uncertain time for Ireland’s big media players. With the trend away from traditional media consumption patterns expected to continue into the future the country’s media groups are increasingly looking to expand and diversify to ensure they can weather any future storm on the horizon.
Despite being one of the most recognisable media brands in Ireland, The Irish Times Ltd. came to the verge of collapse at the start of the decade and was forced to shed 250 jobs and completely rethink its structure.
The reason for the crisis was a sharp downturn in advertising revenue coming from The Irish Times newspaper, which hit just after the company had invested £60m in new printing facilities. In the aftermath it became clear to management that it was no longer wise to rely on one product to maintain a healthy balance-book.
“After the difficulties in 2001 and 2002 we did a review of our business and it was very clear that there is a need for diversification for a business such as ours also with the very strong brand we have there was lots of opportunities to diversify” said Maeve Donovan, Managing Director of The Irish Times Ltd. “So we had the chance to be a lot more active in other strands of the media than we had been until then.”
Unlike other media groups in Ireland, The Irish Times Ltd. is run by a trust which is tasked with maintaining the editorial independence of the newspaper itself. Donovan said this was the critical point in the decision to diversify as multiple sources of income would safeguard the company’s main operation, The Irish Times itself, from advertising pressures in the future.
“What we realised after the difficulty some years ago, was that a key issue in underpinning its independence was its financial strength; the aim is to create a business strong enough to be able to support The Irish Times into the future” she said. “Our strategy is really about ring-fencing the newspaper with a series of highly commercial, effective diversifications.”
“Equally that doesn’t in any way mean The Irish Times can be run on anything other than good business lines too.”
As part of its attempts to diversify the company became part-owner of Dublin freesheet Metro, alongside Associated Newspapers in 2005. In 2006 it paid €50m for property classified website myhome.ie and invested in a new fashion magazine called The Gloss. This year it took a 43% stake in The Gazette Group, with the option to buy the company outright in five years time, and spent €1.5m on a 30% stake in entertainment.ie.
Of course The Irish Times is just one of many companies taking the acquisitions path with the most fertile grounds for these expanding media groups being radio.
Both Thomas Crosbie Holdings, owner of The Examiner and Sunday Business Post newspapers, and the UTV Group have put considerable investment into radio in recent years, with the latter seeing it become their biggest source of both turnover and profit in their latest accounts.
“There’s an opportunity [in radio] and there’s a lot we can bring to the market in terms of promotions,” said Anthony Dinan, Managing Director of Thomas Crosbie Holdings.
Thomas Crosbie Holdings first moved into radio as a consequence of its acquisition of The Western People newspaper in 1995, which had a 15% holding in MidWest Radio. In 2002 it was a partner in the setting up of Red FM in Cork and has since upped its shareholding there to 36%.
Since then it has had a hand in three unsuccessful youth radio licence bids and has a 22.5% share in another bid for a multi-city licence which the BCI has yet to decide on. Earlier this year it moved to take a majority shareholding in both WLR and Beat 102-103 in Waterford, both of which are yet to be approved by the competition authority.
“We’re in the media business and there’s more competition now than ever before,” said Dinan. “We recently divested ourselves of printing too so we’re focused solely on publishing and content.”
Within a similar time-frame the UTV Group has made itself a big player in both the Irish and British radio markets.
“Under John [McCann’s] stewardship of the group since 1999 we’ve looked to see what would fit us across other platforms, including print,” said Scott Taunton, Managing Director of UTV Radio GB. “Radio made a lot of sense considering our background; while it’s not the same as television there are similarities across the two.”
Taunton said the reason for the change in direction from television-only operations was because the writing was on the wall for traditional terrestrial broadcasters.
“With the advent of multi-channel terrestrial things were only going to go one way,” he said. “We’ve been extremely fortunate in that our market share has stayed quite strong while other areas of Britain have suffered, but if you look at UTV’s audience share over the long term it has been going down.”
The company’s first radio acquisition was of County Media Limited in Cork, which owned Cork’s 96fm and 103fm. From here it snapped up three other Irish stations, all complimented by the awarding of a new licence for the Belfast market. The company’s biggest step came in mid-2005, however, when it bought The Wireless Group which comprised of 16 local stations across England, Wales and Scotland and one national talk-based sport station. Since then it has added an Edinburgh-based sports station to the list, has taken a stake in a Liverpool operation and will launch a national digital talk radio station in the near future.
“We were long looking for a way into the British radio market but we couldn’t justify the prices of individual stations at the time,” said John McCann, the Group Chief Executive. “When The Wireless Group came up for sale the other media companies were otherwise engaged and we saw an opening, so we came in with a very late bid and snapped it up.”
But even radio-focused media groups are diversifying in different ways. Denis O’Brien’s Communicorp has grown from the single operation of Dublin’s 98FM in the early ‘90s to become an international player. It has 37 stations scattered across Eastern Europe and is already one of Ireland’s biggest commercial players. If its bid for Emap’s Irish stations is passed by the competition authority it will become the country’s second biggest radio group behind RTÉ.
Communicorp offered to pay €200m for control of Today FM, Dublin’s FM104 and Donegal’s Highland Radio in July, which went unmatched by rival bidders, including UTV.
“We only acquire items at the right price and to be honest I think Denis O’Brien was willing to out-bid the others at any price,” said John McCann.
UTV were expected to show serious interest in the three stations from the outset however two of the other prominent bidders, The Irish Times and TV3 were surprise entries which showed how valuable radio diversification has become.
“It was a unique opportunity that we felt we could not miss out on but unfortunately someone else wanted the stations a lot more than we did,” said Maeve Donovan. “We’re always willing to go for these kinds of unique opportunities and something like that won’t come on the market again for a very long time.”
The Irish Times has been showing an amount of intrigue in radio recently and has joined Thomas Crosbie Holdings in the four aforementioned licence applications, however it never held more than a 10% stake in each bid. Going from a minor role in a local niche station to complete ownership of the biggest commercial station in the country would have been a somewhat audacious move for the newspaper group to make but it too was unable to pay above O’Brien’s price to pull it off.
However while the move from one media platform to another is seen as a natural progression for many of Ireland’s media companies, some investments have been somewhat less obvious.
The Irish Times has been reaping the rewards of its large and at the time controversial investment in new printing facilities for a number of years now and is contracted to print the likes of Metro, The Mail on Sunday, The Sunday Star and The Galway Advertiser.
UTV, on the other hand, bought Direct Net Access before it had made any radio acquisitions and later re-branded it as UTV Internet. From here the company has developed a strong internet and telephony service on both sides of the Irish border; the company’s new media division also deals in web hosting, design and domain reselling.
“At the time that we bought into it no-one was entirely clear where the internet was going, we just knew it would be important,” said John McCann. “That division makes a healthy profit for us but it also cuts costs we’d otherwise have to spend on maintaining the company’s website and online content.”
The internet has become more important recently; where in Britain online advertising has begun to outpace print, Ireland is expected to follow. To that end it has become another area of interest for diversifying business, especially for companies with an existing focus on print.
“The internet is a major part of our business,” said Anthony Dinan. “We have a database and it’s important how we use it; if people choose to go electronic for their information we simply have to be there.”
Besides online version of its existing print operations, Thomas Crosbie Holdings has invested in a number of dedicated online websites under its Thomas Crosbie Media banner such as Breakingnews.ie, RecruitIreland.com and MotorNet.ie.
The Irish Times’ purchase of Myhome.ie was seen as a marker in the sand for future online acquisitions and the company has since phased out its previous classified property website, nicemove.ie, in favour of its far more successful counterpart. Further investment has been made in the company’s main portal, Ireland.com, to enhance its unique content and its 30% stake in Entertainment.ie shows it is still on the look out to make more moves online.
With all of these companies adopting an acquisitive in the last five years it is no surprise to see the likes of radio and local print operations consolidate, just as national print publications have in the past. There are currently 30 commercial radio stations in operation across Ireland, two of which are national. Should Communicorp’s bid for Emap and Thomas Crosbie Holding’s bid for WLR and Beat FM be approved nearly half of these will be owned or part-owned by just three companies; Communicorp, UTV Radio and Thomas Crosbie Holdings.
“There will always be room for independent players in niche areas but as the market becomes more competitive and expensive they will find it tough,” said John McCann. “It’s a very competitive market place now, though.”
Anthony Dinan feels that this kind of consolidation is nothing new to media, particularly in print.
“[Consolidation] has been going on for quite a while, for example we saw the print market reduce into maybe six main players around the time The Irish Press fell into difficulty,” he said.
One of the more interesting results of an increasingly active media sector is the amount of cross-pollination between media groups. Denis O’Brien’s ever-increasing stake in Independent News & Media has led to suspicions that he may launch a bid to acquire the print-based company, which would sit well alongside his radio operations.
Doughty Hanson, which owns TV3, recently bought a 20% stake in Setanta Sports as it looked to expand its operations here; this link is likely to have been of some benefit to TV3 when it successfully negotiated with the sports station for the terrestrial rights for the Rugby World Cup.
For companies making the leap from single service to multimedia, especially those with very localised beginnings like UTV or Thomas Crosbie Holdings, it is crucial point to maintain a local approach at all costs.
“The ITV group decided to re-brand its regions across the UK in a cost-cutting exercise but what it meant for viewers is that the station has now become just like any other broadcasting from London,” said John McCann. “We would save an awful lot of money if we took on ITV branding and dropped our localised content but I’ve no doubt that we’d lose a lot of viewership. I’d much rather invest the money into the station and keep our viewership figures high.”
With 15 local daily and weekly newspapers making up the bulk of his group, Anthony Dinan also sees the virtue in keeping things local.
“When you have a local crew that know the area and the people it gives you a breadth that can be very hard to compete with,” he said. “You support the community and make yourself relevant; not even radio can compete with that to the same degree because people aren’t going to want to hear hours of death notices read out every day and so on.”
An edited version of this feature appeared in Business & Finance Magazine on the 14th September 2009.