Press Gazette has been trying to get an interview with Sly Bailey for five years – since she was made chief executive of Britain’s biggest newspaper publisher, Trinity Mirror.
But she has always avoided the limelight, saying that she preferred to concentrate on the job in hand.
Last month, something changed – and it is probably no coincidence that Bailey’s decision to finally say yes to a talk came just weeks after her company’s share price dropped to a Northern Rock-esque 42p (from more than £5 just a year earlier).
And days before 300 editorial staff on Trinity titles in the Midlands were made redundant and invited to reapply for their jobs.
The run on Trinity Mirror shares was fuelled by an erroneous report in The Times about its pension fund – and the price has since bounced back to above the £1 mark.
But there remains an overwhelming impression that the City doesn’t think newspaper companies have a future.
Bailey believes the analysts who are talking down media shares have got it wrong – and she’s come out fighting.
First off, she insists the current squeeze it is not the end of life as we know it for newspaper publishers – as the City seems to think – but just a cyclical downturn like many others.
In July, Trinity Mirror, which publishes five national newspapers and 200 regional ones, reported a ‘serious downturn in advertising’and profits down 16 per cent to £80.5m for the first half of the year.
But Bailey insists the money will come back: ‘If you look at what’s going on: inflation up, interest rates up, unemployment up, house sales down, house prices down, car sales down.
‘The economy is not in a good place and the performance of all consumer-facing media businesses is linked to the health of the economy.’
She adds: ‘We have survived two world wars, the Great Depression, the launch of multichannel television, the dot.com boom and bust of the late Nineties and we are still here.
‘The advertising downturn that we are experiencing now is substantially due to cyclical factors. Clearly, underneath that, media fragmentation is continuing and we are looking at how we can best position our businesses to take advantage of that and meet those challenges.
‘But it’s very clear. If you look at our numbers, we had ad revenue growth over the last quarter of 2007 and now we are in a decline along with everyone else –it is clearly down to overwhelmingly cyclical factors right now.’
Even in the regions? Where the big dailies have been losing sales at five per cent annually for some years now and where classified advertising markets are particularly vulnerable to the internet? ‘If you look at the key classified platforms of jobs, motors and property, they have always been leading economic indicators.
‘So if you go back to the ad recession of the early Nineties, you will see a similar sort of performance –it isn’t as if we haven’t been through this sort of cycle before.
‘When you have unemployment rising and the property market doing what it’s doing, then those will be affected by that in the ways that they always have been in previous downturns.
‘At the same time, we are clearly seeing continued media fragmentation and clearly there are challenges in that – there are challenges for audience, challenges for revenue and there are challenges for profit.
‘But we believe that working on the transformation of our business from a regional newspaper business to regional media businesses will position us to take advantage of new revenues when conditions improve.”
Bailey knows advertising –she’s spent a large part of her career selling it –and she is convinced that it will return to her company’s regional businesses. ‘Forget where it will go. Do we think that advertising revenue will come back? The answer is yes.
‘Looking at the Trinity Mirror portfolio, we are positioning ourselves to take advantage of those revenues when the cycle returns to healthier levels.’
She points out that Trinity Mirror reaches 40 per cent of all UK adults every week with its journalism and says that its regional businesses typically have more than 70 per cent penetration in their markets.
Trinity Mirror now has 60 companion websites for its newspapers and 100 of what it calls hyperlocal sites. It expects to make digital revenues across the company of £50m this year and wants to go from the 11.7 million unique users it currently reaches to 24 million by 2010.
‘If you look at our regional business now, for this year we expect to see 10 per cent of revenues and 14 per cent of profit coming from digital –I think what we are showing is that the business of regional media is very much alive,’Bailey says.
Isn’t replacing print revenue with digital revenue swapping pounds for pennies? ‘Eighteen per cent of regional revenues come from circulation –the majority comes from advertising.
‘If we can develop products and services that are compelling for our readers online and we can develop an engaged audience, then we can sell that to advertisers.
‘And I think the fact that we have a digital business that is running at north of 30 per cent margins shows that actually this is a business that we are building here.’
She adds: ‘Can regional newspaper journalism thrive in the digital world? We absolutely believe that it can.’
Shouldn’t journalists worry about that share price, though? ‘I would say no, don’t, because it doesn’t reflect the fundamentals of the business, it doesn’t reflect the strength of our newspapers, it doesn’t reflect our prospects and it isn’t reflecting our ability to invest in the business, which we are continuing to do.”
Five years ago, in Sly Bailey’s first ‘strategic review’of the company, she declared herself ready to tackle the ‘sacred cow of editorial costs”.
After successive cost-cutting programmes since then, in July she announced plans to slash another £20m from budgets.
Will this be possible, in the tightly run regional newsrooms in particular, without harming the very journalism Trinity Mirror’s business is based on?
‘The new £20m target that we’ve announced for 2009 is going to come largely from the benefits of the new operating model that we’ve put in. That’s a better technology-driven model which is driving changes to how we publish across editorial, advertising and production,’Bailey says.
She says that editorial director Alan Edmunds was the ‘visionary’behind creating a ‘true multimedia newsroom which is fit for purpose”.
And she adds that the cost savings across the group will come largely from implementing new content systems.
Bailey points to the converged Media Wales multimedia newsroom (see our report on pages 24 and 25) – comprising the Western Mail, South Wales Echo and Wales on Sunday – as ‘epitomising what we do”.
Faith in paper
Press Gazette spoke to Bailey before even more radical changes were announced in the Midlands on 19 August, where the Mail, Post and Sunday Mercury are being merged into one multimedia newsroom, with the loss of up to 65 jobs, after staff reapplied for their positions.
Perhaps surprisingly, given this, she does not rule out future print or paper launches. ‘I do think that we will continue to launch new newspapers and indeed we have been, particularly over the past 18 months.
‘I think there will always be room for good, innovative products that meet the needs of readers and advertisers.’
Is there really a long-term future for newspapers, and for regional daily newspapers in particular? ‘Without question. We do have to modernise and evolve, but that evolving is all part of ensuring that absolutely we have a future and that absolutely in this company we are focused on ensuring the health of our print titles into the next decade and well beyond.
‘When media fragments around us, we are still delivering critical mass –we are still delivering large numbers for advertisers. In the future, increasingly, we will do that across a combination of platforms rather than just in print.
‘Yes, the business will evolve, yes, the business will change. Do I believe that newspapers will be at the heart of this company for many, many years to come? Yes, I absolutely do.
‘Don’t write the obituary for print. I’m not aware that one medium has ever completely displaced another.”
Sly Bailey on the red-tops
Press Gazette asked Bailey whether she believes the Mirror titles and The People can have a long-term future when their circulations are declining. She says: ‘If you look at our nationals business, 56 per cent of its revenues come from circulation.
‘That provides it with an in-built resilience and a natural hedge against the ad market. These are very successful cash-generative businesses.
She adds: ‘We shouldn’t lose sight of the fact that in a fragmenting media world these remain very big beasts in the jungle. I don’t think we should forget that. Media is fragmenting around them.
‘Rather than being gloomy about the traditional red-top market, we should say these remain very big beasts in the jungle. They are very successful, they are hugely influential plus they have a really exciting digital future where, with the Daily Mirror, we are showing this can be a business online, not just a piece of vanity publishing.”
When asked if The People has a long-term future (it fell 13.2 per cent year on year to 639,546 in July), she says: ‘We’ve got a hugely talented editor in Lloyd [Embley], and a hugely talented team around him. The People is a profitable newspaper and I wouldn’t write it off.’
On circulation, she says: ‘I could make the Daily Mirror’s circulation pretty much anything you would like it to be. ‘It wouldn’t be about journalistic resource, it would be about cutting the price and gadgets and CDs and dream cottages and Princess Diana memorabilia and free china dinner services for every reader –and it means taking operating profit just to make a volume number which is then not sustainable.’
Sly Bailey on pay in the regionals
Journalists across the regional press are paid far less than workers in other professions – a situation which no less a cost-cutter than European newspaper mogul David Montgomery described as appalling.
Press Gazette asked Bailey to justify the fact that the minimum pay for qualified senior journalists on some Trinity Mirror weeklies is £17,000.
She says: ‘We are mindful. Our business thrives on that talent and attracting and retaining that talent, and as we evolve our business and become ever more multimedia it’s something that we are mindful of.’
When asked what advice she has for a journalist who wishes to survive and thrive in the new media era, she says: ‘I would encourage people to learn as much as they possibly can about all areas of the business. This is particularly important in the multimedia world we now live in, where a more collaborative approach is what’s driving our ability to innovate, invest and launch new products.”
Sly Bailey on the BBC
In keeping with every regional newspaper publisher Press Gazette has spoken to, one of Bailey’s biggest concerns for the future is the BBC’s plans to invest heavily in local web services.
The corporation is currently consulting on plans to spend £68m by 2013 on a network of 65 local video-led news websites. In common with other publishers, Bailey fears the move could seriously undermine the regional media’s transition from print to online.
She says: ‘A dominant BBC moving ever more into local media will limit consumer choice and it will restrict plurality. ‘Digital is not a nice-to-have –for the newspaper business it’s a key plank of our future.
‘We believe in healthy competitive markets, but it’s unhealthy markets with unfair competition which we object to.
‘Therefore there is very real concern about the BBC distorting what are growing but are still fragile, still embryonic, still very new, markets.
‘If they distort those markets and we are not able to invest in those markets then that will effect the future of regional media.
‘We all love the BBC, but I would suggest we wouldn’t love it quite as much if it was the only thing that we had.
‘My concern here is not theoretical; it’s about real businesses, real jobs and real people.’Describing the BBC’s power as ‘gargantuan’she says ‘their funding and their investment levels, dwarf what anyone else is able to do”.
She says: ‘If we can’t find an audience and we can’t get a return on our investment then we can’t survive in those new digital markets.”
Sly Bailey on the current downturn
When asked how bad she thinks the current media downturn is going to be, Bailey says: ‘I think the ad market will remain difficult potentially for the next couple of years, so I think we will have another difficult year next year and we are planning on running our business on that basis – hence the new cost-savings target that we’ve announced.
‘If you look at the trend analysis of when a downturn starts, how long it lasts for and when you would expect to come out of that – then I would expect that to be in 2010. So I think as we trade through 2009 we will start to see some improvement, and then come out of it in 2010.
‘I don’t think there’s any point in being gloomy –I think one has to be realistic and then say: ‘What is it that we can do about it? What’s in our control?’ and to ensure that we understand what’s going on in the market and that we are doing everything in our control to steer us through difficult times so that our portfolio is in the best position that it can be for when conditions improve.
‘I don’t think it’s very inspiring for the 8,000 people that work for us for me to walk around being gloomy.
What they need to see is that we’ve got energy, we’ve got ideas, we’ve got vision, we’ve got a plan and that we are getting on with doing those things that are in our control.’
When asked whether she now regrets the decision taken in 2005 to cancel spending on Christmas parties across the company, she says: ‘We shan’t be cancelling the Christmas party this year.”