JOHNSTON Press, one of the largest newspaper groups in Britain with a stable of 200 titles including the Yorkshire Post, Scotsman and national daily the i, went into administration last week.
The management of the business will give you two reasons for why that happened – Google and Facebook.
In my opinion the reasons are a lot older than an internet search engine and a social media platform.
It is simply down to greed and incompetence.
How can you stand still as a business, fail to embrace a strategy for the future and then blame those that have innovated and been entrepreneurial for your demise?
The sad thing is, it was all so predictable.
Saddled with £220m of debt which needed repaying by next summer, Johnston Press, whose stock market value had plunged to just £3m, had been vainly searching for buyers for its titles.
It quickly realised it would never raise enough from the sale of its once prized assets to pay back the US-based hedge fund Goldentree Asset Management which effectively had a vice-like grip on its short and curlies.
So late last Friday afternoon it announced it was entering into a pre-pack administration deal and by Monday morning a new business emerged called JPI Media which was now owned by the US bondholders who in return had ditched £135m of the debt, extended the deadline for the repayment of the remaining £85m until December 2023 and pumped £35m of extra funding into the business.
Of course shareholders got nothing.
But then, if, like me, you once held shares in JP and had seen them reduced to coppers, it wasn’t a shock.
The value was squeezed out of that company by successive management teams over the last 15 years.
Except the deal also saw the Johnston Press pension scheme jettisoned and left in the hands of the Pension Protection Fund.
Those in the scheme will lose between 10% and 20% of their pensions.
When this kind of corporate skulduggery was carried out by Sir Philip Green and Mike Ashley journalists rightly exposed it.
Instead staff at the newly-created JPI Media just breathed a sigh of relief that they still had their jobs.
Oh, and they also took to social media to thank people for their support and to urge them to buy newspapers and take out advertising and sponsorship.
That is not so much a business plan as a beggar’s charter.
JPI Media’s chief executive David King has hailed a bright new dawn following the pre-pack deal.
They used to describe such a deal as a “phoenix from the flames”.
In this case it is a phoenix which has had a good stuffing and has its tale on fire.
Because despite shedding a chunk of debt, getting some new investment and divesting responsibility for its pension fund, I don’t see what’s changed for the business.
It is still led by the same people who lack any kind of vision for the future other than cost-cutting.
Indeed, it was King who was responsible for negotiating the loan deal with a consortium of investors led by Goldentree which Johnston Press never had a cat in hell’s chance of paying back.
The company’s new owners couldn’t be blamed if they decided that new leadership is required.
Deluded souls within JPI Media will tell you they have a grand digital strategy and make serious revenues from their online presence.
One visit to any one of the group’s websites shows you all you need to know – overcrowded pages which take too long to load up, are badly laid out and swamped with irritating advertising and pop-ups surveys.
They are a dog’s dinner.
And it isn’t like Google and Facebook sneaked up on the regional media which bleats about unfair competition from the online giants.
They have had more than 15 years to prepare themselves.
My God, I’m not Mystic Meg or a futurologist but I saw it coming and left to launch a digital media venture over 11 years ago.
And while those who work in regional newspapers will tell you they have embraced digital, they are kidding themselves.
Take the regular double-page section of the Yorkshire Evening Post which focuses on the digital sector in Leeds.
It isn’t posted online.
Which means that digital agencies and entrepreneurs who are featured have to post photos of the newspaper pages on their social media feeds rather than a link to the YEP website.
What those running regional newspapers have failed to grasp is that what the public say and what they do are often not the same.
Of all those people who plaintively cried out in support of local newspapers when Johnston Press went into adminstration last week – how many actually buy them, or even advertise with them?
We are all as bad – bemoaning the lack of support for high street retailers and then ordering on Amazon.
If it can happen to House of Fraser, Maplin and Toys R Us then why are newspapers immune?
JPI Media might promote itself as a champion of communities which is great.
But it isn’t a social enterprise, it is a business, albeit a badly run one.
And no amount of bleating about unfair competition from the BBC, Facebook and Google will hide the fact that this is a business with very few ideas and if it is not careful, not a very bright future.
Mind you, there was one piece of positive news for the Yorkshire Post last week.
I noticed that its journalists’ appealing tweets following the administration of their parent company got a very positive response from some, including many people in public relations who pledged their support.
Those badly written press releases will be a great help.
TAILOR extraordinaire James Michelsberg popped into my office for a coffee last Friday morning.
Given the Platform office building above Leeds station is a bit of a digital and tech hub where sartorial elegance is about as scarce as water in the Gobi Desert, Baron von Michelsberg, wearing a wide brim brown fedora, double breasted cashmere overcoat and clutching a tightly rolled umbrella caused a few gawps.
I think he would have caused less of a kerfuffle if he had turned up naked.
Have a great weekend.