Financial
Times: ‘We are facing daunting conditions’
Warning
of ‘tough times ahead’ as UK newspaper industry hammered by
advertising slump.
By ALEX SPENCE
4/22/16, 1:01 PM CET Updated 4/22/16, 7:09 PM CET
LONDON — The
Financial Times is braced for “daunting trading conditions,” its
managing editor has warned, in the latest sign of the severe
challenges hitting the U.K.’s newspaper industry.
Newspapers including
the Guardian, Independent and Times have announced drastic moves in
recent weeks as they search for ways to secure their futures amid
vast changes in media consumption. The FT, which appeared to be
better positioned to weather the storm than many of its Fleet Street
peers, is also feeling the squeeze.
“We are facing
some daunting trading conditions in 2016,” the managing editor
James Lamont warned FT staff this week in an internal memo seen by
POLITICO.
Despite its
high-value readership, the financial newspaper has not been immune to
the painful trends afflicting its general-interest rivals: Print
advertising has had another bad start to the year, while the digital
news business is also proving to be precarious.
The FT’s
commercial team is “braced for tough times in the months ahead,”
Lamont said.
The memo indicated
four areas where costs will be cut back: There’ll be a delay in
filling job vacancies. Travel and entertainment expenses will be
slashed. Casual staff will only be brought in when “strictly
necessary.” And there’ll be more pressure to streamline
production of the print edition.
“It’s far better
to take precautionary measures than find ourselves playing catch-up
later in the year if the trading conditions do not improve,” Lamont
said. “We will review our performance at the end of the second
quarter.”
The warning will
raise eyebrows elsewhere in London media circles, since the FT had
been perceived as one of the leaders among the traditional newspaper
businesses at repositioning itself in a rapidly-changing landscape.
With the advantage
of a well-off audience and specialized financial content, the FT has
been able to build a base of paying digital customers — and reduce
dependence on the print versions — more quickly than its
general-interest competitors. While most newspapers still rely on
their print editions for the majority of their income, even though
they’ve built big online readerships, the FT now gets as much
revenue from its digital products.
According to figures
released last month, the number of digital subscribers reached
566,000 last year, driving an 8 percent year-on-year increase in the
FT’s total paid-for sales to 780,000.
Even then, the FT
isn’t immune to the challenges battering the rest of the news
industry.
Print advertising
has “been far softer than expected in the first quarter of this
year,” Lamont said in the memo.
Some of that is
because companies are jumpy about the potential impact of the
upcoming European Union referendum and the U.S. Presidential
election, which is making them delay spending decisions.
More worrying for
the publishers in the long term is that some of the downturn is
because companies are pulling out of newspapers altogether, putting
their money into other formats such as the Internet and TV. The fear
is: Many of those companies won’t come back.
This year’s print
advertising slump mirrors a sharp, unprecedented fall in the first
half of 2015, which analysts at Enders attributed at the time to the
sector hitting a “structural wall.”
Between 2010 and
2018, the press’s share of U.K. display advertising will have
fallen from nearly 30 percent to under 10 percent, Enders said. That
represents hundreds of millions of pounds of income flooding out of
the market, while print circulation revenues are also falling.
Publishers have been
desperately trying to make up for the shortfall through their web
editions, but that, too, is a tough business. Google and Facebook
take by far the largest share of spending on online advertising,
leaving publishers to compete with a vast array of other sites and
services for what is left. A growing number of users are adopting
software to block advertisements.
“Some of our
traditional peers in the UK market have announced hefty redundancies
and a retreat from print in recent months,” Lamont said, referring
to the Guardian, which is cutting about 250 jobs to stem heavy
financial losses, and the Independent, which closed its print
versions last month.
He added: “In the
digital realm, you will have seen last week’s [reports] that
BuzzFeed had slashed its revenue forecast in half for 2016.”
The FT’s editor
Lionel Barber and chief executive John Ridding will meet staff next
Thursday to give an update, the memo said.
Authors:
Alex Spence
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