Irish Times Ltd records €1.7m operating profit
Company plans new digital approach as total turnover falls 6% to €85.5m
‘The Irish Times’ managed to slightly outperform the market in terms of advertising. Photograph: David Sleator/The Irish Times
The Irish Times Ltd recorded an operating profit of €1.7 million last year, down from €2.5 million a year earlier, as newspaper advertising revenue fell 6.1 per cent and revenue from circulation declined 3.9 per cent.
Total turnover, including its share of joint ventures, fell 6 per cent to €85.5 million, while costs were also reduced during the year, the company’s latest accounts show. Once finance charges and exceptional items are taken into account, the company’s total net loss was €779,973 last year. This narrowed from a loss of €1.9 million in 2011.
The company has no net debt, and the group balance sheet shows that its cash reserves stood at €11.2 million at the end of 2012, up from €10.3 million a year earlier.
“We are still unfortunately managing decline overall, and that situation is mirrored again this year,” said Irish Times Ltd managing director Liam Kavanagh.
“Both newspaper sales and advertising fell last year, although we managed to slightly outperform the market in terms of advertising,” he said. Since the end of the accounting period, the company has continued to outperform on advertising – in a declining market – but it has begun to underperform in the newspaper sales market, which is also shrinking.
“That is a challenge for us, and we would see that being really down to our readers transferring to a digital environment faster,” Mr Kavanagh said. The pace at which readers are adopting digital media “hastens our move towards a more balanced platform environment”, in which digital operations generate a greater share of turnover, he added.
Digital activities, which predominantly comprise digital advertising, account for 8-9 per cent of the group’s total revenues at present.
In 2012, the company continued its cost-reduction programme. The cost of sales fell 6.8 per cent to €54.6 million and administration expenses fell 9.9 per cent to €13.4 million, although distribution costs rose 8.7 per cent to €11.8 million.
“We are continuing to look at the nature and shape and structure of the organisation,” said Mr Kavanagh. The managing director said there was “no clear-cut decision” on the form and timing of the company’s plan to introduce charges to readers for digital content.
“There is just too much media that’s free, and we’re going to have to differentiate, or reduce the amount of media. The laws of economics are not going to sustain the level of media that’s there, with the economic situation that we’re in,” he said.
The company’s investment in a new content management system and a new subscription management product gives it “the platforms to build on”, he explained. “I think you are going to see us experimenting in some things over the next while,” Mr Kavanagh said.
A new tablet offering will be introduced shortly, replacing the existing ePaper, and will allow the company to manage its relationship with its subscribers directly, rather than using the third-party service Newspaper Direct.
The deficit on The Irish Times Ltd’s defined benefit pension schemes, meanwhile, was reduced by €15 million during 2012, following “a good investment performance” on the funds. The impact of the higher investment return was slightly reduced by an increase in pension liabilities due to a reduction in bond yields. Much of the effect of lower bond yields was in turn offset by a removal of a provision for discretionary pension increases.
The company is on track to meet the funding commitments it has made to the Pensions Board under its section 50 proposal, but has begun a consultation process with its group of unions in relation to the future of the scheme.
In 2012, the company employed an average of 447 people, down from 462 a year earlier. As of December 31st, Mr Kavanagh was paid a salary of €270,000. The editor of The Irish Times, Kevin O’Sullivan, earned €240,000, up from €220,000 at the same point 12 months earlier. The deputy editor, Denis Staunton, was paid €150,000.
Beyond The Irish Times, the group’s interests include property website MyHome.ie, a 50 per cent stake in magazine publisher Gloss Publications Limited and a 31.7 per cent interest in Entertainment Media Networks, the publisher of Entertainment.ie.
In 2012, The Irish Times Ltd had a 63.8 per cent share in Gazette Group Newspapers Limited. However, the local newspaper publisher went into examinership this year and the company no longer has any financial involvement in this business.