INM keeps operating profit at €32.7m, despite fall in revenues

Media group will make further cuts under ‘Project Quantum’ as advertising declines

Vincent Crowley, chief executive of Independent News & Media, at the publication of its financial results for 2013. Photograph: Alan Betson/The Irish Times

Vincent Crowley, chief executive of Independent News & Media, at the publication of its financial results for 2013. Photograph: Alan Betson/The Irish Times

Thu, Mar 13, 2014, 15:13

Independent News & Media (INM) made an operating profit of €32.7 million in 2013, as the group emerged from a major financial restructuring process and pointed to “significant investment in digital” in the year ahead.

Although the operating profit was in line with its performance in 2012, revenues continued to decline last year, dropping 6.6 per cent in 2013 to €322.4 million. However, this was offset by an identical €22.7 million reduction in operating costs, which fell 7.3 per cent to €289.7 million.

INM’s outgoing chief executive Vincent Crowley said the company would seek about €9 million in cost cuts in 2014 under plans code-named “Project Quantum”. This will involve a “substantial reduction in the subbing and production costs in our national titles”.

In January, INM announced the closure of the Dublin operation of Real-time Editing & Design (RE&D), the company to which it outsourced certain sub-editing functions, with the loss of 50 jobs.

Some of the savings will be reinvested in the digital side of the business, with new content initiatives planned for expected “to improve reader engagement and drive advertising”, Mr Crowley said.

Print advertising across the group plunged 11.5 per cent to €73.1 million last year, while digital advertising grew 12 per cent to €9.3 million.

This meant that total advertising revenues were 9.4 per cent lower at €82.4 million, although the rate of decline moderated over the course of the year.

Advertising revenues have fallen further in 2014, running down 2.8 per cent in the year-to-date, and Mr Crowley declined to make forecasts for the year as a whole, saying trends in advertising revenues were “too hard to call”, with good weeks followed by weeks that were “not so great”.

Circulation revenue fell 4.4 per cent to €107.5 million last year. But the INM chief executive said print newspapers remained “a very strong medium” and continued to be widely read. “I think we, as an industry, need to be more bullish about talking about that,” he said.

“We collectively need to be much more positive about print, because we still deliver huge audiences, week in, week out. That’s the message we’re taking to advertisers and we’re planning to take it more strongly to advertisers,” he said.

“That’s not to be in denial about how people are consuming news through different channels.”

A recently launched iPad app for the Irish Independent and Sunday Independent is “the beginning of our process to monetise digital content”, Mr Crowley added. The group is still learning about users’ propensity to pay, he said, and plans to change the pricing structure on the iPad edition.

He declined to specify how many people were paying for the iPad edition, suggesting it was “early days”. However, users appear to favour its seven-day package rather than buying one-off digital editions, he said.

Browsers of will not be asked to pay for access to its content. “We have decided for the moment not to put in a blunt paywall, because it’s just that - blunt.”

Mr Crowley hailed the “truly transformational change” in its balance sheet in 2014. The company, which counts Denis O’Brien and Dermot Desmond as its largest shareholders, saw its net debt reduced by €327 million to €95.3 million last year, following the sale of its South African division, debt forgiveness from its lenders and a capital-raising exercise.

The process to find a new chief executive is “well underway”, said Mr Crowley, who joined INM in 1990 and became its chief executive in 2012 following the departure of Gavin O’Reilly.

The company indicated in late February that Mr Crowley would be stepping down and that it expects to have the position filled by the end of May.