IFRA

WAN-IFRA: It has been just a few months since the announcement of WAN and IFRA coming together as a combined organisation, but what is your barometer, your gauge for measuring how it's going?

O’Reilly: I think you have to look at this from a customer perspective; by that I mean participants at the events, newspaper companies themselves, and the trade suppliers. They have necessarily been looking for some consolidation in the businesses because they are contributing to both IFRA and WAN. So it's about achieving efficiencies for our customers in these tight economic times and streamlining the services WAN-IFRA provides to the industry because there was clearly some duplication of efforts. With any merger there will be teething troubles – it's difficult to bring two organisations and cultures together but from a management perspective there is a clear willingness to ensure the merger is a success and benefits all our members. I think you have to look at the merger independently of the economics, both of our industry and the global economic recession whether combined or separate we would have had to contend with a tough time for all of our customers. No question. But IFRA specifically can be happy with the turnout for the Expo in Vienna. Yes, numbers are down on previous years but they are better than internal projections so we have had good support from the industry.

WAN-IFRA: What do you think would be some of the top priorities of publishing executives coming to the show in terms of investigating solutions or services?

O’Reilly: Every company is having to contend with dramatically reduced revenues and that puts the focus on operating costs. A lot of the exhibitors are presenting to executives business process improvement opportunities, particularly editorial systems and how they interface with web management systems. I think there is a huge priority and focus on how we can do what we're doing better but more cost-effectively. There's also the recognition that the darkest days for advertising are over – it's still tough but not getting worse and some markets are beginning to show improvement. So the pace of the improvement is going to be of great interest to every publishing executive, therefore the second thing that people are going to be focusing on is how you can actually generate more revenues as we see improvement. Even if the recovery is modest in the ad market, executives want to ride that wave.

WAN-IFRA: Speaking of the recovery, what's your prognosis for 2010, especially here in Europe?

O’Reilly: Different European countries will run at different speeds but most forecasters now seem to be suggesting that there will be some growth. I think it will be fairly limited and the year will be challenging, but I think we can expect some improvement and ultimately this is a confidence game – if people feel the world will be a better place tomorrow then marketing departments expand. Since the economic crisis started, a lot of companies trying to contain their costs looked to the marketing budget in the first instance. It's so often the easiest to cut because it's discretionary. Ultimately for companies it doesn't matter whether they make bricks or computers or fast food they are going to have to have a strategy for growth going into 2010 on the back of improvements in the economy and they are going to have to invest more money in advertising. So the question is where are they going to spend those ad dollars? Newspapers are ideally positioned for that.

I don't mean property and recruitment – those areas will remain challenged and you're not going to get back to the heights of 2004 or 2007, but you are going to see spending and retailers now are progressively using the press more than they have previously. Typically, retailers like supermarkets have been very much geared to TV in the first instance but the challenge for TV is that the market is fragmenting at such a pace. Think about how many TV stations there are and think how many there were 10 years ago. So while papers can't be seen as a boom volume business, nonetheless the audience we deliver as publishers is contracting at a lesser rate than so many of the other media platforms out there who are subject to incredible fragmentation. There are new specialist TV stations starting every week, and while media buyers say they can buy around media fragmentation it's still true that if you can deliver a stable reliable demographic on an efficient cost-per-thousand basis, advertisers will be attracted; which is why you're seeing retailers move to print.

WAN-IFRA: Obviously you've been a big advocate for the power of print… How do you think newspaper publishers are dealing with the daily dilemma of catering to that traditional print audience while addressing a readership that wants their products in digital form exclusively?

O’Reilly: I don't think consumers only want content on digital. At the end of the day, as publishers we have to be agnostic as to how people consume; we shouldn't be tied to print or online and we shouldn't be seduced by technology. We need to remember that it all starts with the consumer and there are consumers who one day want it on PDA and next day might want it in print, so I look at the opportunities online for publishers to extend their audience – not as a means of replacing the print audience. If you look at the numbers papers still deliver, they are far in excess of what online is currently delivering.

Most consumers go online to do something (to book a ticket, or send email, or visit ‘entertainment’ sites) and they may get information media when they're there. What's frustrating is that there is rarely intelligent research on exactly what people do when they're online and how they consume media. There is no question that when they're online they may get into media to get news and information, which is where publishing groups have to up their game. If you look at what broadband has really delivered [however] it is an alternative broadcast media for the future – the YouTube generation – and that I think is both a challenge for publishers and a major opportunity. Some publishers are rising to that and others need to increase their efforts because you can't suddenly tap into a market that may never have had exposure to print.

Going back to print for a second [let's examine] the idea that newspapers are dying… I've heard that for 15 years and yet when you look at online consumption patterns for papers there are three things that retard underlying circulation growth:

One is consumer apathy – are we producing products relevant to our customers? The publishing industry needs to ask ourselves that every single day.

Secondly, online strategy – if we are replicating everything we do in print online and giving it out free of charge? You don't have to be Einstein to realise that's not going to have a positive effect on paid-for sales. So we need a strategy grounded in commercial logic which is why you're increasingly seeing publishers around the world saying 'our content has value and we need to find a way to ensure consumers understand that, so not unreasonably we're asking them to pay for it.'

The third point I'd say is that for newspapers, you look at a lot of European markets and the paid-for circulation sales are down dramatically, but free papers are not. So looking at underlying readership trends of newsprint products, if you include the free papers you find that newspaper consumption is relatively stable if not up in some markets.

[Of course] free papers are totally dependent on advertising and at this particular time that's challenging, so you're seeing a lot of free papers revisit their business model and look at consolidating with other free newspapers. Some have gone out of the market, but I think the idea that nobody reads newspapers anymore... well 1.7 billion people every single day are reading a newspaper and if you include online... you can increase that dramatically.

WAN-IFRA: Your own company is in the news quite a bit with the latest restructuring deal. How has that positioned Independent News and Media to better deal with the future?

O’Reilly: Obviously the company faces the perfect storm. Non-existent credit, tough markets, and an advertising recession. We've dealt with recession before and remember we are in 10 different countries. In previous years, while some markets have gone down others have been up; in this case you've had all markets down. One thing which has weighed heavily on sentiment and share price has been the outstanding payment to the bondholders. In the normal course of events we would have been able to refinance that with relative ease, but in a global credit crisis it's not possible. So restructuring puts to bed the uncertainty over the future of the company and allows us to continue to do what we do; drive the business forward in challenging markets. We announced the restructuring and signed an agreement with the bondholders, so from the management perspective we have a very simple job which is to continue enhancing the business, expanding, and looking at international markets. We see the success strategy as one of diversification of revenues and we want to expand in markets where there is real potential in newspapers and in publishing [generally].

The restructuring takes away all the uncertainty and drama – and this industry loves writing about the industry itself. Our competitors love the dramatic headlines but the reality is less dramatic than it's presented. [chuckles] But then I would say that.

WAN-IFRA: Going back to WAN-IFRA, how has your time as president of WAN impacted your everyday job?

O’Reilly: I think it's been an extremely useful networking forum in terms of investment opportunities and sharing experiences. It's put me into touch with suppliers I might not have been otherwise, especially on the online side.

It's extremely useful for my colleagues from every market. Getting ad managers and commercial directors and editorial people meeting others from the industry who are experiencing a lot of the same challenges and looking for opportunities is truly beneficial to business at a number of levels. As obviously are the mandates of WAN – the issues of press freedom literacy, young readers and the other issues like sports rights and ACAP.

[With ACAP] We're trying to ensure that publishers can influence the way content aggregators use content. Whether they are freelance or staff, our journalists are an investment by media companies and for us to do that in the future we need to be confident we can recover the cost of that investment.

The thing about online is that it is so much of a free-for-all. Look at every website, whether for a newspaper or a TV site and it will have some lawyer who has written terms and conditions telling you what you can or cannot do with that site. The problem is that a spider from Google or Yahoo or another aggregator doesn't know how to read that legal contract. So ACAP is about putting into computer language the terms and conditions that publishers are prepared to accept. It is hugely important that we as publishers stand up for the rights of our journalists and that we preserve the value of our content.