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Michael Johnston discussses the possible merger of The Scotsman with The Herald

By The Drum, Administrator

July 17, 2008 | 5 min read

With a recession looming the subject of merging the Scotsman and Herald in order to streamline their backend functions is on the agenda again. The Drum meets Scotsman MD Michael Johnston to get his views on the controversial subject.

“The Scotsman and The Herald both have very strong, emotional positions in the fabric of Scottish life. They are successes because of their personalities. Any move from an operational point of view that resulted in the loss of the two personalities of the papers I think would be a bad thing,” he told The Drum.

Clearly merging the two distinct brands could cause untold damage to both, but Johnston however does acknowledge the legitimate business case that has been advanced previously, and does agree that, even though the Scotsman is run efficiently, there would be a range of cost benefits that would result from an overlap.

“From a point of view of bringing them together and taking advantage if the combined reach, then there are clearly things you could do. It is possible there would be efficiencies, because the back office side could be streamlined, in things like finance and IT,” he says.

“Clearly, the fewer systems you have the easier it is to run your business, with narrower, deeper knowledge. The production function could be streamlined, and also some of your front-facing functions. Dealing with sophisticated national advertisers, you would potentially have one point of contact, dealing with key accounts. They could be managed in a more joined up way.”

Despite acknowledging the evident overlap benefits, Johnson remains convinced that the brand identities of each of the two titles are too strongly identified with their constituent readership that a merged title would be rejected by both, rather than embraced.

“The readership loyalty is completely tied to the brand promise, and the brands are phenomenally strong,” he says.

“You would have to be very careful about what the synergies were. There would be certain commercial advantages to the reach of both titles, but it is very important that you maintain the brand promises of both titles. I don’t think you would want to create a single title. I wouldn’t feel comfortable about that,”

“A single title proposition, I am absolutely convinced, will not work. You have to have products that meet expectation. Unless you can carry your readers with you, you can’t deliver a commercial business, because you won’t be delivering response to your advertisers, and that is what your commercial customers want. They want to reach communities and have resonance with them.”

Amid reports of further tumbling of the share price, down from 562 pence to 33.5 pence in three years, Johnson is unconcerned at the further possible threat posed by the opening of the local government recruitment portal, the prospect of which reportedly prompted The Herald to write down its advertising revenue forecast by 20%. Since the portal opened last month however, Johnson has seen little impact, claiming both that it is missing its target mark, and predicting that the wider economic outlook will impact on local authority job opportunities as much as it will commercially.

“The local authorities are feeling a chill wind, just as we in the commercial world are. Edinburgh City Council for instance will be more concerned about its funding prospects over the next two years than focusing on its recruitment strategy with regards to the portal,” he said.

“COSLA understand the importance of the Scottish press, weekly or daily. They appreciate that they need to go for a mixed approach; you cannot have all your eggs in one basket. It is very unclear what their strategy is. The portal is up and running, and the they have talked about how they see it as an important tool for recruiting quality people, and for improving what they say is a poor image of the local authority as a career sector. But I don’t know what their marketing plan is. Within the media it is a badly kept secret, but the people they are targeting have absolutely no idea it exists,”

“It may work in the short term for people already within the public sector, but it certainly is not going to bring in the talented browsers they have told me they are seeking. I wait with interest to see how they propose to move forward. If they want to build a world class brand that says the Scottish local authorities are a leading career opportunity, they have a lot to do.”

The recent strategy of driving traffic through the website continues to be a crucial part of Johnston’s vision, and he remains convinced that the print platform – despite gloomy concerns that the last Scotsman would roll off the presses early as 2018 – will be at the heart of the Scotsman brand well into the future.

“Our strategy is a total audience multiplatform strategy. We do recognise the challenges of print circulation, but digital audiences have grown very strongly, so we see it as a mixed approach. Print still remains a fundamental, powerful, responsive part of the media mix. Our customers want a digital element and want an offline element.

The audience of The Scotsman, taken across the platforms is greater than it has ever been.”

Don’t miss the next issue of The Drum to read Steve Walker’s, managing director of News International Scotland, thoughts on this issue.

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