Media industry prepares to bounce back – but in what shape?

Advertising revenues forecast to grow in 2014, but it won’t be a bump-free year

New year, newish rules for Ireland's media industry as it adjusts to a reality in which a social media news agency (Storyful) can command a purchase price that is 24 times that of a national newspaper (the Sunday Business Post) and more than twice the asking price of a regional newspaper group (Johnston Press Ireland).

After some false starts – don’t mention the second quarter – the advertising revenues collected by print and broadcasting outlets rounded out the year on an upward curve, and some are predicting a bounce in business in 2014: actual growth, even, for the first time in five years.

If these positive forecasts prove correct, the money collected will give media groups something of a cushion as they figure out the future, and whether or not they are part of it.

The suspicion that a market the size of Ireland is over-served by media hasn’t quite gone away – there are, after all, only so many eyeballs to go around, and if new players have staying power, some of the old players might yet have to give way.

So who was it, at a December industry meeting to discuss broadcasting standards and how to improve them, that shared this? “Unfortunately, as for many media organisations, my role at the moment is making ends meet . . . Many organisations are straining to keep the show on the road.”


Obliteration
It was John Purcell, chief executive of KCLR FM and chairman of the Independent Broadcasters of Ireland (IBI), though it could have been any number of executives speaking. He went on to imagine a world in which indigenous groups had weakened to the point of obliteration.

“We’ll all be sitting here in 10 years’ time with a video link to San Francisco talking to Twitter’s global head of community engagement, or something like that.”

Ouch. There had been an interesting pause at the the independent broadcasters’ annual conference in April when a British local radio executive bragged that the number of full-time staff employed by his station didn’t even touch double figures. Every Irish station honcho in the audience seemed to be marvelling at this – some in disbelief, others in envy.

How many people do you really need to run a radio station? Or a newspaper? Or a television channel? Or a digital publishing venture? In 2014, more media owners may well be tempted to conduct this messy experiment, if they haven’t already begun doing so.

In the week before Christmas, Independent News & Media (INM) chief executive Vincent Crowley signalled that redundancies would be part of its cost-cutting agenda for the new year.

“I think, in any cost cuts, inevitably there are some headcount reductions that will arise,” were Crowley’s precise words.

INM will not be the only ones to go down this path. But for print publishers, redundancies are unlikely to be motivated purely by a desire to trim operational expenses. The frequency with which video production jobs are advertised by newspaper groups reflects the extent to which they are shifting resources away from print-related functions and towards digital ones.

Financial Times editor Lionel Barber bluntly spelled out the transition in an October memo to staff. What he dubbed "the 1970s-style newspaper publishing process" of multiple print editions was "dead", he claimed.

All change, then, though few newspaper groups have resolved the digital subscription versus advertising equation. In 2013, the much-heralded arrival of news website paywalls was derailed by a combination of uncertainty and events.


Year of mobile
It finally was the "year of mobile" – the year when digital media consumption had undeniably migrated onto smartphone and tablets. RTÉ's data neatly captured this other new reality. Almost two-thirds (64 per cent) of visits to RTÉ. ie now come from mobile devices, a share supplemented by handsome volumes of app downloads (including more than one million RTÉ News Now downloads).

RTÉ now likes to call itself Ireland’s national public service media organisation, though don’t be fooled. It still earns the bulk of its commercial revenue from broadcasting, and the majority of that from television.

And, as for television, pretty much everyone in the Irish industry adores quoting the reassuringly stable TAM Ireland / Nielsen statistic that Irish people watch an average of three hours and 35 minutes every day (or thereabouts, that's the November 2013 figure) of broadcast television.

So far, then, video-on-demand disrupters have not yet broken the business model – rather it is the border-crossing of traditional broadcasters such as Channel 4 and UTV that is poised to cause immediate competitive pressures for RTÉ and TV3.

But it won’t serve any media group to be complacent. In 10 years’ time, will the strength of the linear channel concept still be quite as assured as it is today? Just because the instinct is to say “Yes” doesn’t mean it isn’t a sensible move to prepare for “No”.

In 2014, perhaps more so than ever, it will be easier for Irish media brands to lose the loyalty of their audience than it will be for them to regain it.