Analysis: Padraig Yeates, Industry and Employment Correspondent, examines the financial consultants' report commissioned by the group of unions at The Irish Times
Even after financial advisers to the Dublin Print Group of Unions finished their detailed presentation on the problems facing The Irish Times yesterday, there were some staff sceptical that things were not as bad as they seemed. There was an even larger number who were sceptical the pain would be shared equally, a point one speaker made from the floor to applause.
The figures should speak for themselves. A company with costs of €75.68 million in 2000 saw them soar to €92.44 million 12 months later. Revenue fell over the same period by almost €6.35 million to €93.71 million. That was just about enough to keep the books in the black.
Over the next three years, however, annual costs are set to rise to €114.66 million by 2004, while revenue is forecast to level out at €88.88 million, or less. The key projections are those for 2002, when costs will rise by €10.28 million to €102.72 million and revenue will fall by €8.89 million to €84.82 million.
What is more, some 48.8 per cent of operating costs in the past year were accounted for by wages. Even without the last 4 per cent pay increase due under the Programme for Prosperity and Fairness, not to mention further pay agreements, the percentage of costs attributable to wages is set to rise.
In their report for the Dublin Printing Group of Unions, Farrell Grant Sparks and Paul Sweeney and Associates describe the overall cost increases as unsustainable. At the same time they say cost cutting cannot be separated from company restructuring.
The report calls for a clear division of the role of the Irish Times Trust and the executive board of the Irish Times Limited, which runs the newspaper. The trust should adopt a more strategic role, ensuring the newspaper meets its wider public obligations, while the Irish Times Limited concentrates on ensuring the newspaper's commercial viability. Ironically, the report says the trust could perform its task more effectively if its membership had more media expertise.
The report is also critical of day to day management at the newspaper. "In recent years in The Irish Times the commercial function has not been effectively exercised," it states. "Even if the cost reductions sought are achieved, the absence of reform of the corporate governance of the Irish Times will ultimately undermine them."
These are harsh words that will tend to confirm the view of many staff that responsibility for the present crisis rests firmly at management's door. But the report is quick to remind unions of external economic realities that cannot be ignored. In fact one of its authors, Mr Greg Sparks, told yesterday's meeting that the company should probably have signalled the need for cutbacks six months earlier.
Another of the authors, Mr Paul Sweeney, counselled staff to adopt "a forward-looking approach and not look backward and bash people over the head". The changes in the membership of the trust, and the fact that the new managing director, Ms Maeve Donovan, has already accepted in principle the need for an independent remunerations review of senior management salaries, are indicators that the management is taking criticism of past performance seriously.
But further changes, including worker representation on the board, may be necessary if the unions are to buy into a very painful rescue package. The unions themselves have an uneviable task. On the one hand they have to negotiate a redundancy package that is good enough to avoid the problem of compulsory layoffs. On the other hand they have to ensure those remaining have decent pay and conditions.
Where the job cuts fall could also influence the shape of the package. But the report does not give detailed figures on savings from different departments. This is something the unions will ultimately decide. The report is clear on the need for a speedy agreement. With current losses running at over €1.27 million a month, the longer it takes to cut a deal, the bigger the bank loan needed to pay for it.
On the positive side the report states that, "the financial fundamentals are strong" and "The Irish Times is a strong quality brand, which provides Irish society with an authoritative view on Irish and world affairs".