Wittebroodsweken. It is the Dutch word for honeymoon. And it's over for Mediahuis, the Belgian-Dutch group that bought Independent News and Media (INM) earlier this year for €145.6 million. INM's staff are already restless, fearing more cutbacks.
When the Mediahuis takeover was announced in April, it was as if a cloud had lifted from above INM. The Irish company had spent the previous 2½ years pickled in rancour, embroiled in myriad disputes with everybody from State regulators to former executives and board members. It was not a happy place.
Under its old regime, dominated by INM’s former major shareholder, Denis O’Brien, the group had also pared back resources to the bone to stay profitable. Staff morale at the company wasn’t simply on the floor, it was on a subterranean sojourn, five floors below basement and still heading south. Nobody knew if it would ever be back.
Then, like the breaking of the dawn, along came Mediahuis. INM investors may have glanced truculently at its anaemic offer price, but the long-suffering staff welcomed the Belgian group’s arrival with thinly-veiled joy. It’s hard to veil your joy when the colour is rushing back into your face as you pray in gratitude at the bit of the sky where the clouds once were. INM insiders saw Mediahuis as ABOB (anyone but O’Brien), but also as a growing newspaper business that would protect the Irish group.
Mediahuis chairman Thomas Leysen swept into Dublin to spread the reassurance. Along with Gert Ysebaert, its chief executive, he held a briefing in a city centre hotel at which he extolled the Mediahuis vision of protecting journalism and investing in newsrooms. The INM journalists present must have felt like sending them kiss emojis.
Mood has darkened
Almost six months on from that encounter and the mood at INM has darkened just a little. It isn't like before, when the Eye of Sauron seemed to be embedded in a storm above Talbot Street. But the new owners are no longer a novelty after announcing this week the shutdown of INM's Citywest printing plant, with the loss of 84 jobs, and failing to quell fears at internal meetings over the prospect of further cutbacks in its news gathering operations.
Herein lies the quandary for INM, and all traditional media groups grappling with the bear pit of a market out there. There are no saviours. No Sugar Daddies or Mammies. No Abramovich types willing to write blank cheques to fund a return to the glory days. Newspaper businesses must save themselves and the ramifications of that effort will hurt. Leysen was always unlikely to lavish money on INM’s newsrooms.
In fairness, he never promised he would. He and his colleagues made the correct non-threatening noises when required. But Leysen also wrote a letter in May to INM’s previous investors, ahead of a meeting seeking approval for the deal. It indicated that Mediahuis would keep cutting costs in its newsrooms to stay profitable.
“Mediahuis intends to continue INM’s policy of managing [its] fixed cost base with a view to INM remaining profitable, combined with investments aimed at growing the ... business,” wrote Leysen. In business lingua franca, “managing” a cost base means keeping it in a headlock until it stops struggling.
“The gradual transformation of the news business from print to digital will require choices. Making the print operations more efficient will make room for the necessary digital acceleration. This strategy could result in a redeployment of INM’s fixed assets ... and headcount reductions in specific functions.”
Make cuts
There you had it: Leysen explicitly confirming that his group would make cuts at INM’s newspaper operation. The calm and dignified Belgian, who is also a significant shareholder in Mediahuis, may be ABOB, but he isn’t some spendthrift socialist. He is a banker, a member of the European Round Table of Industrialists and he has organised meetings of the Bilderberg free markets talking shop. He knows this game.
Leysen's viceroy in Dublin is Belgian journalism executive Peter Vandermeersch, INM's new publisher, who is responsible for driving through change at the Irish company while his wittebroodsweken disappears in his rear view mirror.
It was Vandermeersch who oversaw the compulsory sacking on cost grounds of a handful of photographers recently at INM, a move that seemed to rip the scales from the eyes of INM staff. Now it is shutting its printing plant – a plan first mooted under the previous regime – and Vandermeersch raised the hackles of staff at a meeting recently when he couldn’t make any promises over injecting further editorial resources or protecting the operations from more cuts.
Most controversially of all, staff fear that INM's €80 million cash pile will be leeched away to fund capital expenditure elsewhere in the Mediahuis group's operations in the Netherlands and Belgium.
Closure of Citywest plant
In recent weeks, the publisher got it in the neck at a meeting from other staff who were alarmed over the lack of new resources. At the very same time as Vandermeersch was announcing the closure of Citywest on Wednesday, National Union of Journalists members were debating a motion criticising management’s “disgraceful” and “degrading” conduct by imposing compulsory redundancies and walking those affected straight out the door on gardening leave in lieu of notice.
Staff are understood to be demanding that Mediahuis present an editorial investment plan, and they are also said to be seeking commitments over where the €80 million will be spent.
Vandermeersch is, like Leysen, said to be imbued with a very north European sense of geniality and calm. He even brings colleagues out to his home in Dublin 6 for briefings, away from the formality of the office. But friendly as the new owners may be, it sounds like staff at INM are shaping up for a battle. Plus ça change...
FOOTNOTES
- Brian Cowen wasn’t to everybody’s taste, but his tenure as minister for finance and taoiseach is remembered fondly in the craft beer industry, after he introduced tax breaks to help the sector. They even commemorated him with his own beer, Brian’s Brew. It’s slightly bitter, apparently, but ultimately it’ll get you where you want to go.
The recent news that Paschal Donohoe is to get his own brew, Paschal’s Pilsner, after his budget decision to keep in place much of the State support for the sector, shows that a trend has started. Pity it didn’t emerge earlier. Bertie Blonde? Ruairi’s Roggenbier? Charlie’s Cream Ale?
*****
- The WeWork debacle has opened up the debate once again about whether or not people spend too much time listening uncritically to the guff of self-proclaimed entrepreneurs, instead of scrutinising them and their ideas.
Personally, I’m immediately suspicious of anybody who self identifies as an “entrepreneur”. It suggests a level of self-love and admiration that makes my Irish skin crawl. I know that sounds mean, but I can’t help it – Dublin is not Silicon Valley, where you are likely to get high-fived before breakfast. Misplaced Californian cheeriness before morning coffee has kicked in could get you killed in this town.
Scott Galloway, a professor of marketing at New York University’s Stern business school, captured it perfectly this week on Twitter, when addressing the rescue deal for WeWork and the $1.7 billion golden goodbye for its hapless co-counder, Adam Neumann: “This is a disaster we’ll be teaching for decades in b-school. The idolatry of innovators leads to billion-dollar payouts while thousands of employees are scrambling to clean up the mess, knowing they have a 1 in 2 chance of being fired.”
Less idolatry, more scrutiny.
