MEDIA & MARKETING:LET US pause to consider the outlook of Gavin O'Reilly, media mogul, newspaper proprietor and investor in digital.
“It looks like a heart monitor here,” he said of a trend chart displaying Independent News & Media’s 2011 advertising revenues, week by week, at a press briefing in Dublin last week. Down, up, down, up, down, even further down . . . then a “marginally positive” trend towards the end of the year. “But I wouldn’t get carried away with that.”
It’s a fine art, talking up your company’s past performance, as every chief executive naturally seeks to do, while also managing expectations for the future, which only wise chief executives bother to do.
Advertising revenues at INM will be negative year on year, O’Reilly said, discounting the ungrounded optimism of others. “Not having a crystal ball, we do not foresee any uplift.”
Not being in possession of a crystal ball might be just as well for the embattled INM chief. For if he was, he might have to confront the alarming spectre of Jupiter and Mars rising in his orbit, threatening to cause chaos in his professional life on or around June 8th (the date of INM’s agm).
Jupiter and Mars in this metaphor are the twin constellations of Denis O’Brien and Dermot Desmond, controllers of 27.75 per cent of INM shares between them, who seem determined to conquer O’Reilly’s particular patch of the media universe.
“It’s sort of like the tide,” said O’Reilly wearily, when asked about O’Brien.
“I can get through a results presentation sometimes without talking about Denis O’Brien. Clearly that’s not going to be the case today. Denis O’Brien has been very vocal, particularly in the last six months, that he wants regime change at INM. It’s almost reminiscent of Mr Bush and Iraq.”
It’s ideological, commercial warfare, then. The Iraq soundbite duly featured in much of the next day’s media coverage, as O’Reilly must have known it would. There was a casual “I’m one of you” subtext in his address to journalists – anticipating questions, acknowledging that day’s Mahon-related workload and professing to spare the non-existent blushes of those present when he observed that INM is “self-evidently doing better than any other media organisation in Ireland”. (Or, as the Sunday Independent bluntly asserted in its headline, “INM is only media company to make a profit”.)
O’Reilly may not have a crystal ball, but there were times when he sounded like a talking Magic 8-Ball. Asked for his take on the Irish media sector’s fortunes, it was a case of “cannot predict now”. How much will INM earn in 2012? Reply hazy, try again. Any chance of putting a figure on the sum of debt the group will pay down this year? The Magic 8-Ball says: don’t count on it.
Without a doubt, INM plans to charge for online content. Giving away stuff free is "not exactly an inspired business model". At the half-year point, INM will charge for content "on one of our major sites". So is he hinting at an imminent Independent.iepaywall? Ask again later. "Over the longer term – and I haven't defined the longer term – you will not be able to get all of your content free on Independent.ie."
It needs the investment, frankly. “Not to downplay The Irish Times or the Examiner, but our real competitor and all our real competition is RTÉ,” he said. “For us to compete, we need to put more money into the digital product.”
A paywall won’t fundamentally change the economics of his business though. For that you need the less obvious engines of “real growth”, citing INM’s traffic-generating, Groupon-style deals business GrabOne.
In any case, he’s been talking about consolidation in the Irish market for years, “hoping that my comments would somehow be infectious and some of you would gingerly go off and die”.
Instead, the two casualties of the market in 2011 were the Sunday Tribune, of which INM owned 29.9 per cent, and the News of the World, which INM printed in Belfast.
Newspapers still enjoy enormous household penetration, he observed.
“Somehow that isn’t a sexy line any more.”
It hasn’t been for a long time, in fairness. For 2012, O’Reilly promised some equally unsexy things: “further diversification” in INM’s revenues, “product initiatives to bolster market share” and an “if it ain’t nailed down” approach to cost-cutting.
Keeping an even tone, he contended he wasn’t quite sure “what metric [Denis O’Brien] would be using from a financial
point of view to be disappointed with management”.
Performance metrics are, of course, largely irrelevant when the name of the game is control. The one metric that might count is debt – vast, stubborn quantities of the stuff still weigh on the company, further tipping the balance of probabilities in favour of a successful O’Brien power-grab.
Will O’Brien succeed in ousting O’Reilly at INM’s agm? Whatever happens, INM is unlikely to gingerly go off and die.
