Do media companies have to go bust before they can reinvent themselves?

In a new weekly column, Briefing Media co-founder Neil Thackray gives his take on media business strategy and who is going in the right direction.

A couple of weeks ago I chaired a panel session at the wan-IFRA conference for European newspaper folk in Zurich. Amongst others, the panel included John Paton of Journal Register Company. His newspaper business was once described as the worst managed media company in America. Paton took the job on as the business emerged from Chapter 11 bankruptcy protection.

With nothing to lose he attacked the task with almost revolutionary verve. “Put the digital people in charge of everything,” was just the beginning. Collapsing his costs by 15 percent, both through overhead reduction and a switch to open source and cloud-based software for media production and general office tasks, made a difference too.

Advertising opportunities

Making an unequivocal strategic call to monetise his audience with advertising dollars gave a definitive focus to the commercial challenge. “I am the anti-paywall guy,” says Paton. He argues that there is a trillion-dollar ad market out there and his business has to work out a way of getting a good share of it. That’s much more likely to succeed, he argues, than trying to get a share of a paid content market which is not yet proven to exist in a scalable way.

What is right for the Journal Register is not right for all, but what is clear is that by taking a clear and aggressively brave strategic stance, Paton has turned his business around. Once again it is a profitable and growing.

Would Paton have been courageous enough to take this approach if his business had not already fallen into the abyss? He is honest enough to say he is not sure, but what he has achieved is testimony to decisive and radical thinking.

Lessons for UK media

Contrast that with recent news in the UK media scene. Is these examples of radical strategy or conservative attempts to preserve the existing models?

– UBM is continuing its piecemeal sell-off of its remaining print assets having offloaded its music and entertainment group to Intent Media just months after selling The Publican to William Reed.

– Reed Business Information Loading... companies reed-business-information has been letting titles go in a series of small transactions (most recently Computer Weekly to Techtarget) and either closing (Personnel Today) or reducing frequency of others.

– Emap is reportedly reviewing its publishing operations with titles such as Local Government Chronicle and Nursing Times Loading... products nursing-times supposedly dropping frequency from weekly to monthly, and others perhaps facing an online-only future.

– Centaur Media has just announced the closure of New Media Age Loading... companies new-media-age as a print title and a proposed sale of
some engineering titles and its logistics market portfolio, as part of a group-wide restructuring. My colleague Patrick Smith has more on that.

– Guardian Media Group Loading... companies guardian-media-group has admitted publicly that running out of cash is a realistic scenario unless something is done now. So from now on The Guardian will be “digital first” to harness the commercial potential of web publishing and minimise exposure to costly, declining print. But Is this enough? David Worlock, one of our expert contributors and a sage commentator on these things, thinks not.

There is a pattern here and it contrasts sharply with the approach at The Journal Register. Every media company knows the past is never coming back and that only a radical approach will build a sustainable future. But I am wondering if the execution remains too half-hearted to deliver sustainable long-term growth and profitability.

In Zurich I asked the executives in the room to raise their hand if they thought their own organisation was being radical enough. Just two hands went up.