For its burnt freelance contributors, the creditors' meeting for Post Publications Ltd, publisher of the Sunday Business Post, was marked by a depressing thought. Either its new owners were picking up a bargain at their expense or, worse, they weren't, and a national newspaper really was only worth that much.
In 2002, the now-defunct Thomas Crosbie Holdings bought the Sunday Business Post from British media group Trinity Mirror for €10 million. Fast-
forward through the "bubble" phase of the boom and out the other side to 2013, and the sum paid by Brindisi Ltd – the vehicle used by finance house Key Capital and former Independent Star managing director Paul Cooke to buy the paper – clocks in at €750,000.
They’re likely to invest more than this – around €1.2 million in total – by the time they are done reshaping the business for their purposes, but this was the upfront amount agreed with the examiner, Michael McAteer, in the dying hours of the time-limited examinership process.
“What I can say is that this was very much in the balance and that liquidation was looking like the most likely option,” the examiner told creditors of the delicate final days of his negotiations, which were also described at the meeting as having been “touch and go” and “perilously close” to collapse.
In the event of a liquidation, the Revenue Commissioners and Dublin City Council would have been the only creditors to get a cent. As it was, there was only enough cash for freelance contributors to get 15 per cent of the three months' of pay cheques owed to them, while other unsecured creditors (supplier companies) got just 2.5 per cent of their outstanding invoices.
Today, the Sunday Business Post will successfully exit examinership – the name given to the legal process where the High Court gives a struggling but viable company legal protection from its creditors. Its survival plan approved, the newspaper emerges in a hopeful and much better financial shape, with €1.8 million set to be knocked off annual operating costs.
Some 90 per cent of its costs are accounted for by three overheads: rent, printing expenses and salaries. The cost of leasing its premises on Harcourt Street in Dublin is set to fall by 70 per cent. The savings on the print contract will come in at €850,000 a year, while redundancies and a 6 per cent pay cut for employees are set to knock €500,000 off the wage bill.
This makes the company leaner, but it doesn’t, in itself, solve the problem afflicting the newspaper sector’s business model, or the difficulty in identifying and making the transition to a viable new model.
The events of the last few months, though far from surprising, are nevertheless disheartening for anyone who makes their living from journalism. The agreed cost-cutting and any subsequent slash-and-burn would be far easier for employees and contributors to swallow if they could be entirely confident that the newspaper’s new owners can keep the title afloat in the medium to long term.
Given Post Publications Ltd had been making an operating loss of €1.2 million, the planned savings should swing the company into profitability in the short term. Its fortunes depend on circulation. It is the level at which sales of the print edition plateau that will be “the key” to whether Brindisi Ltd can make good on its investment, the examiner told creditors.
Data from the Audit Bureau of Circulations for the second half of 2012 show that the Sunday Business Post sold an average of 39,416 copies a week. This figure is likely to have fallen about 10 per cent since then. Print circulation across the market has been on an unbroken run of decline since 2008. Assuming this trend continues, the Sunday Business Post's print sales may soon approach a "breakeven circulation", below which it will start to lose money again.
A reinvigorated digital strategy is expected to be to the forefront of the new owners’ plans for the company – as of earlier this year, the paywall on the company’s main “Sunday service” content had attracted only 1,325 subscribers. Finding a way to make more cash from digital will give the new owners more breathing space on print, allowing that break-even circulation point to slip lower.
As one creditor noted at last week’s meeting, €750,000 seems “very little” for a national newspaper. But we do not know yet what it is really worth – just that this was the most that anyone was prepared to risk.