Debt by a thousand cuts at INM

 

AS HE SOLIDIFIES his control on the board of Independent News Media, Denis O’Brien inherits a company that, in the words of new chief executive Vincent Crowley, faces “challenging and erratic” advertising conditions, with visibility remaining “short and susceptible to influence by macro-economic factors”.

Most legacy media companies face similar problems. The difference with INM is that it’s carrying debt – €426 million of debt, as of December 2011.

South African shareholder activist Theo Botha from CA-Governance asked a blunt question at last Friday’s watershed agm: “Do you have a strategy in place?”

Or as another shareholder, recalling the days of fleetingly buoyant property advertising revenues put it: “Now how are you going to make money?”

The answer, in the first instance, appears to concentrate on “continued cost vigilance”. INM has shut its London office and will exit the lease from June 30th. Crowley’s former role, chief operating officer, will not be backfilled, while the head office will relocate from Citywest to Talbot Street. A redundancy programme at the Sunday World will see 15 staff leave and is “fully subscribed”.

Some holdings in INM’s media businesses in South Africa, Australia and India may yet have to be placed on the market to satisfy its bankers.

As for growth, INM is looking to digital: online and print activities on both the sales and editorial sides of the house are being merged, with the company “actively examining ways to enhance our online content”, according to Crowley. After rising 10 per cent last year, digital revenues at INM have increased 18 per cent in the year to date.

Crowley enjoys the confidence of O’Brien for now, but given that INM’s kingmaker used failure to grasp digital as a line of attack against former chief executive Gavin O’Reilly, he will be under pressure to deliver faster growth in digital revenues by the time next year’s agm comes around.