Why Johnston Press is beginning to look more like Johnston Digital
Johnston Press has been in the headlines over the last few days – first of all it was redundancies at papers such as The Scotsman which made the news, now it’s the announcement that five of its daily papers are to go weekly, and speculation that the company may even drop the word ‘press’ from its name, which has drawn attention.
Is Johnston Press becoming Johnston Digital?
Last week Gordon Young gave his analysis on the changes at Johnston in this piece for The Times.
Why would Ashley Highfield, one of the most respected figures on the UK digital scene - having held high level jobs at Microsoft and the BBC - accept one of the toughest jobs in newspapers as Johnston Press CEO? That is a question that has exercised media pundits, even more so now that he has hit the headlines again by announcing a spate of editorial redundancies across the group including that of John McLellan, editor in chief of The Scotsman.
On the surface Highfield's appointment made sense from a Johnston perspective. The 2nd largest publishers of newspapers in the UK, its business was built along traditional publishing lines - highly dependent on local classified, recruitment and cover price sales to service its massive debt.
But all of these revenue streams are under attack from the world of online. Rightmove and LinkedIn are just two sites that have rendered recruitment and property sections a shadow of their former selves.
So if you can't beat them, why not join them? Hence the appointment with someone of such a distinguished digital pedigree - he was even named the Sunday Times Digital Innovator in 2003.
But the problem is from Highfield's perspective is that he arrived at an operation with cash reserves, employee morale, industrial relations and even its share price at rock bottom. In fact the only indicator on the up was its level of debt.
As a result he has little room for manoeuvre. One digital industry myth is that successful online strategies can be implemented on the cheap. Well they can't. The research and development phase can be time consuming and the investment in infrastructure huge. However, the cost of either generating or repurposing content - particularly in an organisation like Johnston with hundreds of separate titles - can be bigger still. This will all take money Johnston currently does not have.
Some say Scotsman Publications is a microcosm not only of the challenges facing Johnston Press, and its sprawling empire, but the newspaper business as a whole.
It paid an eye-watering £160m for the business back in 2005. Since then the circulation of The Scotsman, its advertising revenue and the value of the business have fallen off a cliff - the paper's circulation is thought to be around the 35,000 mark.
Meanwhile, its Scotsman.com website, although doing well in terms of traffic, is not yet generating strong revenue.
Given this scenario, it would seem logical to redeploy resource from the traditional business, with its falling audience, to the online operation, where there is room for growth.
It is not yet clear if this is the method behind what the NUJ at least would consider madness. But there is no doubt if this Scottish institution is to survive - which many see as vital as the Scottish independence debate develops - then it will need to break through on the digital front. And to do that resource will need to come from somewhere.
Meanwhile, many in traditional newspapers people will take it as a sign that if even John McLellan, one of the most respected editors of his generation is not safe, then nobody is.
But the row the redundancies have generated illustrates just what a tough job Highfield has - and he will need to crack a lot more eggs in order to make this particular omelette.