Printing headline profits in the local papers as costs fall and revenue rises

More than 650,000 regional newspapers are sold in the Republic each week - 100,000-plus more than the daily sales of Irish national newspapers.

Advertising revenue has been growing against the background of an agreement between trade unions and the Regional Newspapers Association of Ireland which is resulting in substantial cost reductions.

Advertising and editorial copy which formerly could only be inputted by designated staff may now be inputted by clerical staff or can be directly introduced into the newspapers' computer systems along ISDN lines, via e-mail, or from floppy discs. Many of the newspapers have in place agreements which management in national newspapers would dearly like to negotiate.

At the same time, pay rates in provincial newspapers are significantly lower than in their national counterparts. "You'd want to be an idiot not to be making money if you owned any class of a regional paper," said one industry source. "They're creaming it."

Advertising revenue in the sector last year, excluding sales of classified ads, was just under £40 million (€50.79 million) or one-quarter of the non-classified advertising revenue of the Irish daily and Sunday newspaper sector (£161 million).

"Dublin advertising executives who 10 years ago would have to send a number of separations on several different trains to place an ad with us, can now send it down an ISDN line," said an executive with a newspaper in the south-west.

Advertising spend on regional newspapers has been increasing in recent years at a faster pace than with other media and it is now greater than the advertising spend in the radio sector. Most regional newspapers sell for 90p or £1, making for total weekly sales revenue of approximately £600,000.

Profitability means that the four main newspaper groups involved in the sector are all anxious to expand. These are: Independent Newspapers; Thomas Crosbie Holdings Ltd; the Mirror Group; and Scottish Radio Holdings.

The Independent group, which currently produces more than one in seven of all provincial newspapers sold, believes that the Competition Authority will prevent it buying any new titles. Despite this constraint the group is determined to do all it can to fend off rivals and grow its market share, as the dispute concerning the Kerry-based Kingdom newspaper shows (see accompanying story). The other three groups involved in the provincial newspaper market are keen to make acquisitions. The buoyancy of the sector and the presence of the four competing groups means the owners of independent operations who are willing to sell out are being offered high multiples of their annual profits. "Owners are being offered 15 to 16 times their earnings," said Mr Anthony Dinan, managing director of Thomas Crosbie Holdings. "In my opinion it's a good time to sell out."

However, many independent operators instead of selling out, are building their businesses into substantial companies. The Meath Chronicle and Cavan and Westmeath Herald, based in Navan, Co Meath and run by the Davis family, now has a printing press comparable with those of the national newspapers in capacity if not speed. The company invested £3 million in its printing press in recent years and prints about 60 titles a month. A £200,000 replacement colour unit has been ordered which will increase colour capacity from six to eight broadsheet pages. Managing director Mr John Davis says his company is the only one in Ireland or Britain where pages go direct from the computer to the plates on the printing press.

Other substantial printing operations have been built up by the Connaught Tribune, Galway, which prints about 10 titles and the Midland Tribune, in Birr, Co Offaly, which prints Ireland on Sunday and 15 regional titles. The Kerryman, in Tralee, also prints a range of titles. It recently began printing the Westmeath Examiner after that newspaper closed its printing press in Mullingar with the loss of 16 jobs.

Many of the regional newspapers date from Land League days and were established to support Parnell. The typical model was for the paper to be family-owned and to have its own printing press. Developments such as that with the Westmeath Examiner mean proprietors often now find themselves not only with a profitable business but also with valuable properties they no longer require, because they have outsourced printing.

The outsourcing means that bigger and better quality colour newspapers can be produced, one of the principle factors behind robust sales. However, it is the April 1998 agreement between the Regional Newspapers Association of Ireland and the Graphical Paper and Media Union and the Irish Print Union, which has "revolutionised" the sector, according to an industry source. "It is a charter for revolution."

The agreement opens: "It is agreed that the full utilisation of the capabilities of new technology is vital for the future of the Provincial newspaper and printing industries. Accordingly all parties to this agreement accept that technology will be used in the most effective way possible, so as to ensure the future viability of both industries and to safeguard employment."

The agreement between the unions and the association has to be negotiated at each particular newspaper or newspaper group, but is being steadily implemented throughout the sector. In return for the complete surrender of control over who inputs advertising and editorial copy, the unions received the 2 per cent increase payable under phase 2 of Partnership 2000 and a doubling of pension benefits.

It is against this background that the four well-resourced groups involved in the sector are pursuing expansion. The Independent group's regional newspaper sales are understood to have grown by almost 15 per cent in the past five years and exceeded 100,000 per week some time last year. This means the group currently holds about 15 per cent of the market.

Independent Newspapers first got involved in the regional newspaper sector in the mid-1970s. Its ownership of the People newspapers, which includes the Bray People, the Wicklow People and the Wexford People, and the Drogheda/Fingal Independent newspapers, based in Drogheda, Co Louth, means it has strong titles all along the east coast. The Kerryman has very strong penetration in Co Kerry, and has a sister paper, the Corkman, in Co Cork. The People titles sell about 40,000 copies per week, the Drogheda titles more than 20,000, and the Kerryman/Corkman, in excess of 30,000.

Thomas Crosbie Holdings Ltd, which owns the Examiner newspapers, owns the Western People (circulation more than 20,000), based in Ballina, Co Mayo, and the Waterford News & Star (circulation 14,000), based in Waterford. "There is a great niche there for local newspapers that the national newspapers and local radio can't reach," said Mr Dinan. "We are making no secret that we are in the market for more acquisitions if we can get them."

The Mirror group owns most of the provincial newspapers sold in Co Donegal. It bought the Derry Journal, the Donegal Democrat and the Donegal People's Press in October 1998 for £18 million. Asked if the group were interested in buying other titles Mr Martin Gower, managing director of the Mirror group in Ireland, said: "Absolutely yes. We would be very interested."

Scottish Radio Holdings, which owns 22 per cent of Today FM and which is based in Glasgow, bought the Leitrim Observer for £1 million last year. The company also owns Downtown Radio and Cool FM in Northern Ireland, as well as the Morton Newspaper group which has about 20 titles in Northern Ireland. Mr Richard Findlay, chief executive of Scottish Radio Holdings, said if there were "sensible acquisitions" available in the Republic "we would look at it. We would be keen to continue to expand our operations." He does not believe £1 million for the Leitrim Observer, which has a circulation of 10,000, is excessive. "We've never knowingly overpaid for anything."

Mr Seamus Dooley, an officer with the National Union of Journalists who has been involved in negotiations with many of the regional newspapers, says there is a change in the sector from being one owned by "gentlemen" to one run by "hard-nosed" businessmen. There is a feeling abroad that many traditional owners will sell out to the better resourced groups. "There are third generations involved who do not have the same emotional attachment to the newspapers." Also many independent operators feel they will not be able to compete in the long term against better resourced, group-owned titles. "The fear that they will be wiped out is not an irrational fear."

Meanwhile, the Dundalk Democrat, (founded October 1849, circulation 16,000) still carries nothing but advertisements on its front page.