Tribulations at the Tribune
The Sunday Tribune has lost well over £lm. since it started publiication in November 1980 and it needs a further £lm. at least to continue in existence from next September onnwards. But its publisher, Hugh McLauughlin is confident not alone that he can raise sufficient cash for the Sunnday paper but that he can raise a few, million more for a daily paper to begin publication in the autumn.
McLaughlin has proved that there is a niche in the Irish market for a quality Sunday newspaper - the sales figures of around 130,000 per week and the advertising revenue of around £20,000 per issue testify to that. What he has not proved however is that he and his team on the Tribune can deliiver quality goods and that he can keep costs low enough to give the paper a realistic chance of survival.
The negotiation of the deal with Smurfitt's in April of last year seemed to secure the future of the paper, for the Smurfitt empire clearly had the capital to feed The Sunday Tribune with sufficient working capital until it began to stand on its own feet. But the losses which the paper began to incur daunted even the Smurfitt outfit and when they burnt their fingers baddlyon another publishing venture, Vission, they began to look with jaundiced eyes on The Sunday Tribune.
The real problem for them was that they had no expertise in publishing. They were unhappy with the quality aspect of The Sunday Tribune but they didn't know what should be done about it. They were also unhappy with the paper's sniping at close Smurfitt associates - but that seems to have been a factor of less significance than has been suggested.
Neither did they know how to deal with Hugh Mcl.aughlin's flamboyant style of management. He adhered to no agreed reporting procedures, he opperated more on instinct than on fine accountancy calculation and he ran the day to day operation of the newsspaper company without regard to the management structure which had been agreed when Smurfitts took over 50% of the enterprise.
It was not that there was any illlwill between the Smurfitts people and McLaughlin - indeed they were in a certain awe of his energy and personnality - it was more that he didn't fit in with their way -of running things.
It was when he proposed to solve the high overhead costs of running the Sunday newspaper by producing a daily paper as well that they began to run really scared. Most accountants would look askance at the proposition that one solves overhead problems by extending the size of the operation.
The rationale in McLaughlin's eyes of a daily paper is that it will cut down the unit print costs of the Sunday to competitive proportions. Until now the Sunday paper has had to carry the entire costs of the Sandyford printing works which McLaughlin established on starting The Sunday Tribune and into which he installed a £lm. plant which, theoretically, provides colour and mono printing facilities for newsspapers at a speed and efficiency unnmatched by any other printing press in the country.
The weekly costs of printing The Sunday Tribune in its present form is around £35,000 - this includes the binding. Mcl.aughlin obviously hopes that the greater utilisation of the printting works will considerably reduce this cost, probably by around £10,000 per issue. This saving is highly questionnable however because there would be no saving on wage costs in the printing process and there would be little savving on the overhead costs - i.e. rent and the capital costs of the machine.
But it wasn't only because they questioned the figures on the unit cost savings that the Smurfitt organisation ran scared at the proposal to go daily. ·It was also because the suggestion begged several other questions which . they believed were not being answered satisfactorily. These included: could they get the right editorial team togeether, would-there be sufficient adverrtising to support such a venture, could they involve the right managerial team to run both the daily and weekly enterrprises etc.
Clearly the Smurfitt answer to these questions was in the negaative. It was this factor more than any other which led Smurfitts to withdraw from the entire enterprise.
While Smurfitts insist that they did not incur a loss on The Sunday Tribune, this insistence is probably conditional on the survival of the paper and, perrhaps, on the launch of a new paper which would be printed on the Sandyyford printing works now owned entireely by them. The deal between Smurfitts and McLaughlin seems to have been a straight exchange of 50% of the pubblishing company for 50% of the printting company, giving McLaughlin total control of The Sunday Tribune and Smurfitts total control of Sandyford Printers. There also seems to have been a cash transaction .however, of around £200,000 from McLaughlin to Smurrfitts and McLaughlin also passed over his remaining 50% share in Gemini Publications - a London based commpany which publishes Parents magazine, the 50% shareholding being valued at £500,000.
One of the problems which Smurrfitts identified, the need for a new management team, is one of the crucial problems facing the company and there is doubt that this can be solved effectively. McLaughlin's own managerial style makes it difficult to recruit top-level management, for he tends to want to act as managing director himself rather than let anoother person get on with the job.
He did manage to recruit a top rate managing director, Roger Bannon, who had been an accountant with Coopers and Lybrand, when the newsspaper started in November 1980. However, he alienated Bannon, who left in February of this year. McLaughhlin then promoted Jim O'Shea to the position of general manager, presummably thereby leaving open the posiition of managing director until someeone more suited comes along.
Another problem is in advertising sales. Again McLaughlin managed to recruit a first rate person to take charge of this division, Noel Hynes, who had been media director with Peter Owens Advertising Agency. Hynes was alienated however as well, and he also left earlier this year. This leaves the management structure in a shambles and unless this is cleared up then the prospects for the paper's survival remain in doubt.
Then there is the problem of escaalating costs. From the outset of the operation these were allowed to get out of hand and the weekly costs of the paper are now in the £55,0000£60,000 region. Of this the printing and binding costs amount to around £30,000, staff costs are running at an incredible £ 18,000 and a large part of the rest is attributable to editorial costs, other than staff costs, which have also got out of control.
There is a staff total of 70, which is very considerable, given the nature of the operation and its stage of developpment. There are a total of 30 journaalists on the staff and many of these are paid well above the odds prevalent in other newspapers in Dublin. This would have been containable were these journalists producing quality editorial of a kind which would push sales rapidly upwards. However, a number of critical mistakes have been made in editorial staff appointments, which make the improvement of the newspaper in quality terms and in the short term very difficult. In reality, only Geraldine Kennedy, the paper's political correspondent, is providing the kind of material which the paper requires. Des Crowley, the financial editor, is obviously very talented as well but he has had to battle for his editorial freedom with management - before, during and after Smurfitts' involvement.
The editor, Conor Brady, was clearrly an inspired choice for he has the stature and experience to edit a quallity newspaper. However, his apprennticeship in The Irish Times probably served him badly for this enterprise for he has become used to editorial "fat" and has done his share to import this into The Sunday Tribune. He has also been hampered by the current weakness of the management team. He has become involved in areas of the newspaper's operations outside the editorial and this has distracted him somewhat from his primary responsibiility.
A large part of the printing costs are expended on the colour magazine which has proved somewhat of a dissaster editorially. Again critically wrong appointments were made in this area but, more importantly, there doesn't seem to have been a clear idea from the outset of what the magazine was supposed to be doing. It did generate considerable advertising revenue in the period prior to Christmas - some issues carried advertising in excess of £25 ,000 - but for the most part it has been a very expensive drain on the company.
Executives in the paper believe that it contributed to the circulation rise from around 85,000 in April of last year to about 130,000 now and fear the circulation consequences of dropp-
ing it at this stage. However, the weight of evidence in favour of getting rid of it now seems persuasive, especially as much of the advertising it carries could be incorporated in the body of the newspaper itself.
Given the editorial, management, and cost control problems which The Sunday Tribune is struggling with, it seems bizarre for McLaughlin to be contemplating launching a daily newsspaper. He seems genuinely determined to do it however, and is confident of being able to raise the funds needed to keep The Sunday Tribune on the rails and to start a daily. He himself must be drained almost entirely of the £1.4m. he got for his shares in Indeependent Newspapers - his payoff from his shareholding in The Sunday World, which of course he launched with Gerry McGuinness.
He hasn't yet decided whether the new paper should be a down-market rival to the Irish Independent and the "popular" British papers or whether it should be an up-market evening paper to compete with the down-market Evening Press and Evening Herald. Either way he is going to have diffiiculty in recruiting the right editorial staff, as he has had difficulty in getting the right managerial team together.
Apart from that, the finances of such an operation are daunting. The print costs alone of such a venture would be in the region of £10,0000£12,000 daily. Revenue from sales with a circulation of 80,000 and a cover price of 20p. would be no more than £8,000. Then the staff costs would be very high, given four day weeks etc. - he would need an average revenue in the region of about £1 0,000 daily - i.e. £3,120,000 annually. In the present recessionary conditions this seems unrealistic. But McLaughlin has managed to pull many rabbits out of hats in his day and this may be no exception.
In addition there is an outstanding debt owed by McLaughlin to Smurfitts. Neither side will disclose the extent of this debt nor the terms of its repayyments. Neither is it clear whether The Sunday Tribune company or McLaughhlin personally owes this money.
Also involved in the deal is a printting contract between The Sunday Triibune and Sandyford Printers. The conntract is at present on a cost plus basis, which means that The Sunday Tribune is currently paying over the odds for the printing of the paper in order to cover the printing company's overrheads. The contract has been signed on a seven year basis and includes the stipulation that if McLaughlin starts a daily paper Sandyford Printers will do the printing.