Going looks tough for Associated’s outsider

Daily Mail & General Trust has named its new helmsman for Associated Newspapers, recalling Kevin Beatty to the national press after a successful period shepherding DMGT’s regional company Northcliffe Newspapers.

Beatty, 46, was swiftly appointed following news that longstanding Associated Newspapers managing director Murdoch MacLennan had been poached by the Barclay brothers to become chief executive at their newly acquired Telegraph Group (MW last week).

Not all media observers expected the job to go to Beatty – many thought veteran Daily Mail managing director Guy Zitter was in the frame, especially as he was recently given the additional title of commercial director for Associated and was well-established at the company before Beatty came on board in 1996.

However, Beatty does have strong form at Associated, having held the positions of managing director at the Evening Standard and Mail on Sunday (MoS). He also has a good bond with MacLennan that goes back to the days when they both worked at Mirror Group Newspapers’ Scottish Daily Record and Sunday Mail. Beatty replaced MacLennan when he left his position as managing director of the Scottish newspapers for Associated in 1994. And later, MacLennan was responsible for bringing his former colleague into the Associated fold.

It’s possible that MacLennan recommended Beatty to the DMGT board as his replacement. In any event, the appointment is being seen as a smart political move by the board because Beatty is regarded as “neutral” – not attached to established Associated cliques or more recent senior appointees such as Evening Standard managing director Mike Anderson and MoS managing director Stephen Miron.

Beatty, who was born in Singapore but spent his childhood in Glasgow, faces some major challenges as he oversees a portfolio including the Daily Mail, MoS, Evening Standard, free newspaper Metro and Associated New Business, which includes Loot and the online sites.

The core Mail titles are regarded as being in good shape in a slowly declining newspaper market – profits at Associated rose &£14.4m to &£50.2m for the first half of the year. As one expert puts it: “There is not necessarily a lot of need to fix anything but equally [the Mail titles] must not rest on their laurels.” However, ad revenues for the MoS are thought to be weak and were down about 11 per cent last year.

The most immediate problem is the plight of the Evening Standard, which has seen circulation and advertising revenues plummet – DMGT admitted the newspaper lost &£10m last year and expects to lose another &£5m this year.

Anderson raised hackles by pursuing a policy of raising ad rates and pressuring agencies into long-term commitments (MW March 13, 2003). Classified advertising is also suffering – affected by the recent economic downturn – and for the first half of the year was down by 12 per cent. Media analyst Simon Baker of SG Securities adds that circulation is lagging behind a revival in the City’s workforce.

The Evening Standard also faces the potential threat of competition from an Express Newspapers free publication, if the Office of Fair Trading rules that Metro’s armlock on London Underground distribution is unfair.

London is regarded as an increasingly tough market for the Daily Mail, too. Baker suggests that Metro is having more of an impact on the sales of its paid-for brethren than initially admitted and there is also a suggestion that the compact edition of The Times may be luring some Mail readers away. Zitter’s new brief as commercial director is believed to include addressing all Associated’s London issues.

Meanwhile, Associated New Media recently launched websites for the Daily Mail and MoS, trailing other newspapers’ moves online by some years. However, the sites have been praised for introducing some innovation to online advertising in the size and positions of banners and skyscrapers.

No one believes Beatty has been parachuted in as a mere stopgap. MindShare press director Paul Thomas says: “I think it’s a long-term appointment because Associated tends to appoint from within.” A former Associated executive adds that those in company management “are always being groomed for a role”.

Observers point out that Beatty has earned his spurs and Northcliffe’s recent results for the first half of the year show operating profit up nine per cent to &£46.6m. It would have been more, but profits were “offset by lower contract printing margins as presses were being commissioned or refurbished”. Circulation across the regionals was up two per cent and underlying ad revenues up six per cent.

Beatty, who is allegedly teetotal and began his newspaper career in circulation at the Belfast Telegraph, is seen as having a breadth of experience across Associated products, having also worked on Metro and Associated New Media. He receives high praise from former colleagues and senior executives at rival companies, who describe him as “an all-round polished performer”, an operator who “understands the process and attention to detail” and “a blue-sky thinker, a very good analyst and back-room boy but not a front man”.

Beatty will presumably work more closely with DMGT chairman Jonathan Harmsworth, the current Lord Rothermere, than when he was at Northcliffe. One insider says: “There is a sense with the Harmsworth family that Associated Newspapers is a bit like a stately home – received in trust to pass on to the next generation in as good, if not better, state.”

Harmsworth is the fourth member of the family to hold the chairmanship of DMGT and at 36 is closer in age to the younger Associated executives such as Miron and Anderson. But one observer says, superficially at least, he is careful not to show favouritism.

A senior national newspaper executive says the jury is still out on whether Harmsworth has the grit and ability to be a heavyweight newspaper baron like his predecessors. One former employee says that he would “like to be seen as a serious heavyweight” but is not that talented and has “no natural affinity” with the newspaper business.

The greatest threat for Beatty could come from his old mentor MacLennan and a possible compact edition of the Daily Telegraph. MacLennan is thought to have been deeply involved in the failed DMGT bid for the Telegraph and will have knowledge of Associated’s business plan for the newspaper – information that could be put to good use by the Barclay brothers. Observers also expect him to take some key Associated people with him.

Given that the Telegraph and the Mail are more politically aligned in editorial tone than any of their competitors, if the Barclay’s do launch a compact version, a readership battle will be that much fiercer.

Beatty might be a neutral appointment but he is going to have to stamp his authority quickly to prevent internal turf wars while facing battles with increasingly aggressive rivals.