There’s light at the end of the tunnel – and it probably isn’t the headlamps of an approaching train. With Cleggy having done the right thing and thrown his lot in with the party that won the greatest share of the popular vote, it looks as if the UK has a stable Government, and one committed to reducing the country’s deficit. Which is good, and bad, news for publishers.
It’s good in that the overriding essential for businesses to invest – whether in launches, acquisitions or product enhancement – is forward visibility of economic, fiscal and regulatory conditions. The more we think we know, and the more confident we are, about likely trading conditions in one, three or five years’ time, the easier it is to write a business plan that speaks of future payback of investment made today. And, for the economists and financiers among you, the lower the discount rate that must be applied to any projected future cashflows.
It’s bad news, though, for those b2b publishers that derive much of their income, directly or indirectly, from a public sector that benefited from unprecedented investment/was indulged (delete according to political preference) under New Labour, as I predicted in InPublishing last year. Employment levels and capital expenditure, both of which translate to advertising streams for many media owners, are likely to be scythed. And regional newspaper publishers risk losing their one lifeline, the supposedly independently funded news consortia, the trials of which were to have been anything but independently funded. New Secretary of State Jeremy Hunt is supportive in principle, but only if they can live on what they kill, which they probably can’t.
For consumer magazine publishers, normality beckons. After a fallow period, IPC, Bauer and NatMags are all rumoured to be working on high-profile launches and the first two at least are in the market for acquisitions, despite the former’s announcement of a review of its long specialist tail and the latter’s review of the future for TV Quick. While there are rumours that the coalition Government might extend VAT to newspapers and magazines, rather than increasing the rate at which it is levied, the former remains a formidable lobby – and, cynically, political force – so executives are hoping the feared levy won’t materialise. Meanwhile, private sector-oriented business to business publishers are seeing recovery as inventory levels and recruitment activity improve.
The mood among online publishers continues to be divided between those whose model is predicated on static display advertising (dinosaurs) and those who are developing more sustainable revenue streams such as affiliates, video and, where appropriate, paid content. Many are developing iPhone and iPad apps, though the early adopters are finding that development costs are high, learning curves are steep and user numbers are often disappointing. In the ‘pad sector especially, better to wait until the platform war has been won before investing, I’d say. Finally, with both national and regional newspaper publishers increasingly aware that their plight is terminal rather than cyclical, those with the means to acquire are keen to replace their dying revenue streams with vertical classified sites, the trading of which is positioned to benefit from economic recovery.
But the big picture is one of cautious optimism. At the time of writing it looks likely that the one big cloud on the horizon, a sovereign debt crisis provoked by Eurozone defaults, is blowing away from us, not toward; provided this trend continues, the next 12 months should be a good time for measured, well planned launches, product development and mergers and acquisitions.
