By Dominic Ponsford
Journalists at Scotsman Publications (TSPL) may be reassured that
new owners Johnston Press will not be seeking to make its usual big
profit margins at its latest titles.
The Scotsman, Scotland on Sunday and Edinburgh Evening News were sold on 20 December to regional press giant Johnston for £160m.
Johnston has a reputation for running its newspapers on tight budgets.
But
chief executive Tim Bowdler told Press Gazette that sufficient cost
savings to satisfy shareholders could be found elsewhere, without
cutting editorial.
Bowdler said: “I don’t think it’s relevant to
think in terms of Johnston Press margins when you think about The
Scotsman as a business. There’s a big difference.
“In 2004, The
Scotsman made an operating profit margin of 12 per cent compared to the
mid-30s for Johnston Press – but that isn’t a relevant issue.”
He
added: “There are no plans to cut the number of journalists or to
restructure the newsrooms. The first thing we want to do is talk to
editors and staff and understand better their views about this business.
“These
are great titles and strong brands, both in print and online –
Scotsman.com is probably the leading online news provider in Scotland.”
Scotsman publisher Andrew Neil said the offer from Johnston was a speculative one.
Explaining
why it was accepted, he said: “The purchase price of £160m is almost
twice what we paid for the newspapers in 1995 (£85m) and, at 16 times
2005 broad operating profits (Ebitda), is a particularly good price in
today’s bracing newspaper climate.”
He added: “Newspapers are
under all manner of well-known threats, and size is important in
meeting them. TSPL is a smallish company and we wanted to expand in
Scotland to give it the scale to compete and grow.
“But the
attitude of the political establishment during the takeover battle for
the Glasgow Herald and its sister titles – that under no circumstances
would we be allowed to buy it – seriously curtailed our ability to grow
to the appropriate size in Scotland that would allow us to deal with
threats as various as the internet and the growing Scottish editions of
the London-based nationals.”
The sale of The Scotsman by parent
company Press Holdings leaves publisher Neil in charge of three titles:
financial paper The Business, arts magazine Apollo and The Spectator,
as well as women’s interest website Handbag.com.
He said several millions of the proceeds of The Scotsman sale would be used to develop Handbag.com.
Press Holdings is owned by the Barclay brothers who bought Telegraph Group for £665m last June.
Neil revealed to a press conference that The Business would have to show signs of making a profit within a year.
He
said that it is on course to lose £3.5m this year and said: “If we
can’t get it to break even, or close to breaking even, then what is the
point in continuing?”
Neil suggested that the sale of The Scotsman leaves the Telegraph free to compete more aggressively in Scotland.
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