You know when people said the transition to a multichannel, digital-led publishing environment wouldn’t be easy, they weren’t joking.
Underlining this point is Future, which has today informed 55 staff that their roles are being eliminated as revenue stalls and costs remain too high for a business moving to a leaner, less print-intensive model. It’s unclear whether these are voluntary or compulsory cuts.
Future flagged an accelerated restructure as part of a profit warning in July, when the company admitted it would miss 2013 financial targets partly due “weakness in the games market”. The plan is to save between £2 million and £2.5 million in the year to July 2014. The statutory staff consultation period of 30 days is due to start next week.
Games site MCV has the full memo from CEO Mark Wood, which reads:
“Why do we need to restructure the business? Future is in many ways leading the digital revolution in print media. We are internationally recognised for our achievements. But that transition has no tried and tested roadmap and the journey won’t necessarily be easy.
“Two key factors underpin our current situation: Revenues are coming in below target in certain areas [and] the cost base is too high for the changing shape of the business.
“Where revenues are declining we simply have no option but to look at reducing costs. In July we began a recruitment freeze and we decided to defer the annual pay review. I also tasked the Management Board with looking for other cost savings and headcount reductions – trying always to utilise vacancies where we can.
“Since then various savings have already been achieved by reducing manufacturing and property costs, restructuring some business practices (for example Pre-media) and reducing management costs (for example the recent announcement that publisher roles have been removed and restructured). We have been reducing staff numbers by not replacing vacancies and minimising unnecessary external costs such as travel.
“Today we will begin the next phase of restructuring in a series of targeted areas which, I’m sorry to say, will result in some existing roles being made redundant.
Future told us in an in an emailed statement:
“As we announced in July, we are restructuring Future in the UK to adapt it more effectively to the company’s rapid transition to a primarily digital business model.
“Future is now seen as a leading player in the digital media revolution and approaching 60 percent of our advertising now comes from digital markets. As Future becomes an increasingly digital business, we need to reduce costs and staff levels devoted to print products and downsize back office and support activities.”
So while it’s not good news for those affected, this won’t be a shock to Future investors and the company is keen to stress to us that this is part of the plan. Other cost-saving measures include a shakeup of management teams – including the eradication of the publisher job title – and the removal of some vacant job roles.
The company has won many plaudits and awards for its approach to tablet and web publishing, but its bedrock is still print and it faces significant challenges.
In the 10 months to July 31 this year, Future made:
— Digital revenues up 24 percent year on year
— 60 percent of ad revenue is now digital
— Tablet edition sales up 50 percent
And yet overall revenue is up just 1 percent to £76.2 million, despite those digital gains, which gives us an idea of just how print-centric the business still is.
Future’s growth in tablet publishing is tangible – it is having a positive effect. It’s push into web publishing, to capitalise on smartphone growth is wise. But let’s not underestimate the size of the challenge still facing all print publishers.