SBHD: Mirror Group must cut heavily from the Indie’s costs, but where will new savings come from?
Ian Jack has gone from the Independent on Sunday (IoS), Ian Hargreaves, editor of the Independent, is expected to go any minute. Observers believe 60 jobs will go at the two papers, sections will be cut and one editor appointed where there were two. David Montgomery has had managerial control for a week.
In his first year at Mirror Group, Montgomery cut £2m off editorial budgets, £14m from production costs and 600 jobs. Most notably, he axed 100 casual reporters in a single day and lost the editor of the Mirror and Sunday People.
The Ulsterman also changed the Mirror’s editorial line on the withdrawal of British troops from Northern Ireland.
All this from a man who declared The Indie’s independence would be sacrosanct when Mirror Group bought 30 per cent of Newspaper Publishing last year. Now his stake has moved up to 44 per cent and Mirror Group has assumed managerial control of the title, there are some worried journalists at Canary Wharf.
Mirror Group and Tony O’Reilly bought out La Repubblica’s stake and raised £20m extra equity for the ailing title with the understanding that a further £5m can be cut from The Independent’s operating costs.
To do that, Mirror Group has taken direct managerial control through deputy managing director Roger Eastoe. “The Independent didn’t have a lot of people there to start with. So it’s hard to see where new savings are to come from. There is already a target of reducing operating costs by £12m to £13m by the middle of the year,” says Kleinwort Benson media analyst Derek Terrington.
Terrington accepts that use of the Mirror’s presses and distribution, and sharing the rent, will enable Mirror Group to make the £12m cuts promised last month. But he doesn’t know what extra money could be left. Terrington expects the title, which made a loss of about £25m last year, to lose about £10m this year, depending on the vagaries of the newsprint market and price war.
It is the newsprint market that has driven Mirror Group’s decision to turn the Indie’s second section into a tabloid. Currently, there are 16 pages. As a tabloid, it may have to run to 32 on Thursdays and Fridays to carry listings and review editorial. However, it could get away with a 24-page section for the rest of the week, thereby saving paper.
The City still feels Mirror Group may be forced to scrap The Independent on Sunday, because a market so dominated by The Sunday Times has no room for four Sunday broadsheets. The poorest may have to go.
CIA Medianetwork director of press buying Greg Grimmer says it is ironic that the IoS is such an albatross for the group because it is the most highly regarded part of NP’s portfolio.
Grimmer believes a £10m loss for NP may be pessimistic. He believes the title will always pick up space when other newspapers are more expensive or have sold their best ad sites.
However, Grimmer is worried about any further cuts in the editorial product. “At the moment it’s not deliberately discriminated against, it’s just that if a planner doesn’t put it on the schedule no one ever misses it. Planners aren’t putting it on the schedule because it’s deemed to be unfashionable and in decline.”
For those worried about the paper’s independence, news came last week that copy was changed on an ad for the National Union of Journalists. A line urging people to write to Montgomery about trade union rights did not make it into print.