It has been almost three years since City AM’s launch and it has just recorded its first pre-tax profit, answering critics who back in 2005 claimed there was no room, nor need, for yet another free London newspaper.
In the six months to March this year the company reported a profit before tax of £47,000 and a 45% rise in total revenues to £3.5m compared to the previous corresponding period. The publisher’s co-founder, Lawson Muncaster, claims circulation is growing at 30% compared to a market fall of 5%.
It has been a year of much activity for the newspaper, which has focused on bending the ear of advertisers and agencies, launching a new website and introducing quick response codes to drive readers to the mobile platform.
The paper also brought a new editor on board in February – Allister Heath, who joined from The Business. He has been charged with injecting personality into the publication, which Muncaster says he has successfully done.
Quality of a paid-for
In fact, Muncaster is so confident in his product that he believes the quality of the paper is on the same level as its paid-for counterparts (he does not see the other freesheets as the competition). “The whole way of looking at free newspapers is poppycock. Every national paper has at least 20% of its circulation in bulks. So it’s not a difference about it being paid or not, it’s about creating a product people want to read, and that’s my focus,” he says.
Research it has carried out into what people think about its content, layout design and article writing, found that City AM recorded a score of five alongside The Daily Telegraph, while The Times and the Financial Times both scored six respectively. “If you put London Lite and thelondonpaper in that equation they would score more like two or three. City AM contains business, sport and news – it’s what I read about in The Sunday Times, but on a daily basis,” adds Muncaster.
In the latest Audit Bureau of Circulations figures, the paper reached it highest result: a 1.85% rise to 101,758 copies in May. Muncaster estimates saturation point for the title in London will be 150,000.
Steve Goodman, managing director of print trading for Group M, says its success is proof of how much potential there is in the free newspaper market. However, he cautions: “I would like to see more innovation among all the titles, and targeting different markets in different ways, thereby growing the industry rather than cannibalising what we already have.”
Carat press director Dominic Williams says City AM has a “very good sales team”, but does not agree that the quality of the paper can be compared to paid-for titles.
Many buyers are also eager to see more evidence of readers’ relationship with the freesheets. But Nicole Refson, head of marketing for News International’s thelondonpaper, says research has always been a “key” focus for the paper, citing two YouGov surveys with research panels of 1,000.
“We also have an exclusive contract with Network Rail stations and Canary Wharf and we know that almost 20% of people consciously pick it up,” she says.
Research is the key
Muncaster argues it has done more research “than any other start-up in this country” using ICD Research, and it is carrying out its third online panel survey this month.
And with talk of plans to further increase distribution in London this autumn, as well as setting out a plan to expand in other regions within the UK, Muncaster says talk of selling the newspaper are premature.
“Why would I sell a newspaper that’s just turned profitable and in a recession?” he asks. “Don’t you think I would wait a few years? Also, I’m a very young man. I still love London and I’m still having fun.”