Operating profits of newspaper businesses will increase by at least 50 per cent in the next five years but many titles, including the Independent, may not survive in the long-term, media analyst Jim Chisholm predicted today.
Speaking at the Society of Editors conference, in Stansted, Essex, Chisholm, of iMedia Advisory Service, disagreed with doom-laden predictions previously made by fellow analyst Claire Enders that around half of the UK’s 1,300 newspapers would go out of business in the next five years.
Chisholm, who has advised the Newspaper Association of America, claimed the figure was more likely to be around ten per cent as publishers were still able to strip significant costs from their businesses.
He said the recent decision by Trinity Mirror to take the Birmingham Post weekly was not proof that the newspaper industry was dying but that the individual title had in fact been “dead for 20 years.”
He said: “That newspaper has been a problem child for 20 years. It’s always been dead.”
Chisholm added: “I don’t believe that 50 per cent of papers will be dead in five years time. It might be ten per cent; it might be that a few move from daily to weekly.
“If you say we are going to decline [circulation] by eight per cent a year over the next five years, then circulation will still be 70 per cent of what we are now. And 70 per cent of what we are now is still far bigger than the average newspaper in Norway or the United States.
“Newspapers in this country can decline a long, long way before they become unviable.”
Enders, speaking alongside Chisholm, stood by her claim, adding that newspapers risked becoming “vanity projects” for rich publishers.
She said the commercial outlook facing the media was a dire picture the print industry was “unable to master.”
Chisholm disagreed and said regional newspaper groups were currently “suffering their worst period” but averaged a profit margin of around 11 per cent. “Our business don’t have a profit problem, they have a debt problem.”
He said: “My belief is that in five years time companies in this division will be, at worst, making 50 per cent more profit than they are just nowâ€¦because the cost base can still come down a long way.
“For every 1,000 newspapers produced in the UK it involves 50 per cent more journalists than in the USA. I know you’ll say to me ‘but American newspapers are crap’ but that is the case. We still have room for manoeuvre, news print consumption is going down exponentially.”
Cost could also be reduced further by falling paginations, reduced printing costs and the greater reduction of editorial production departments, he said, however cost reductions would not be sufficient to save all newspapers as many just do not have sufficiently large circulations to support their costs.
He said: “The Independent, I love it and remember the day it launched, but it is highly unlikely that it is going to survive. Not because it’s not a wonderful paper, and we all admire the O’Reilly’s for keeping it going, but it just can’t survive. It’s very sad.”