world newspaper congress 11: session finance, gregor waller
TRANSCRIPT
63rd WORLD NEWSPAPER CONGRESS
Session: FinanceTitel: How do we get through the next crisisSpeaker: Gregor Waller
Vienna, Reed Messe Wien
Mark your calendar
64th WORLD NEWSPAPER CONGRESS19th WORLD EDITORS FORUM
www.wan-ifra.org/kiev2012
How do we get through the next crisis
Some Landmarks
Gregor Waller
Consultant and Entrepreneur Principal Consultant at Frenemies Consul7ng, a WAN-‐IFRA ac7vity
www.wan-‐ifra.org
2015 2014
The double dip “monster” (recession) that will hit the world economy 2012 will bring Europe’s newspaper publishers in the red figures* – it even can get worse
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis* 2
Large Newspapers >200k
2013 2012 2011
-‐1%
-‐10%
-‐20%
-‐2%
-‐10%
-‐40%
-‐3%
-‐10%
-‐30%
-‐4%
-‐10%
-‐30%
2015 2014 2013 2012 2011
-‐1%
-‐10%
-‐20%
-‐2%
-‐10%
-‐40%
-‐3%
-‐10%
-‐30%
-‐4%
-‐10%
-‐30%
2015 2014 2013 2012 2011
-‐1%
-‐5%
-‐2%
-‐10%
-‐3%
-‐5%
-‐4%
-‐5%
Midsize Newspap. > 100k Local Newspapers <50k
EBITDA
RE
VENUES
CirculaIon Display Ads Classified Ads * Average of 4 newspapers in each class
2012 the „2. Exitus“ will begin: Discerning the “prepared” potential winners of the Digital Trans-formation from the “passive” stakeholders “at print speed”
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis 3
Shareholders suitable for financing the
transi7on into the Digital Age
Top Management capable of managing the
transi7on into the Digital Age
Editors in Chief willing and capable of
transforming a „print-‐culture“ editorial in a digital editorial
§ No evaluaIon of digital editor § No best pracIce learning trip § I hire a digital deputy chief ed. § Conference @ 10 – no metrics
§ Digital all-‐channel workflow § Customer & compeIIon focus § „get digital or get out“ § Commercial whilst integrity
§ Focus on dividends/noninvest § No cooperaIon with dislikes § AUachment to CE, CEO, long-‐term companions (legacy)
§ Commi_ed to a Ime of invest § Digital in all top posiIons § OK to deep cut layoffs § OK to „digital overhead“
§ Avoidance of cannibalizaIon § No digital experiment budget § „Passive“ digitza7on approach § No digital restructuring plans
§ All “Head-‐of” must be digital § Best PracIce Restructuring § Coop-‐Network with publishers § Digital Think Tank
Unable for challenges of Digital TransformaIon
PotenIal Winner of the Digital TransformaIon
Take Over Targets 1: How to identify newspapers with bad management
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis 4
1. LiUle RESTRUC-‐TURING in the past
• Li_le or no significant RSTRUCTURING PROJECTS in the past 5-‐7 years • No / li_le BENCHMARK PROJECTS in the past 5-‐7 years
2. No clear DIGITAL STRATEGY executed
• No DIGITAL STRATEGY FOCUSSING company ac7vi7es into the Digital Age • Li_le / No EXPERIMENTING with KEY ELEMENTS of media Digital Strategy
3. No vision for DIGITAL EDITORIAL
• Editor-‐in-‐chief is NOT the DRIVER of the digital transforma7on • No CRITICAL MASS of 20% DIGITAL EDITORS
4. No DIGITAL edi-‐torial WORKFLOW
• NEWSROOM & WORKFLOW do not allow to serve ALL digital channels • Editorial has no strategic CONTENT PLANNING strategy – linked to online
5. No DIGITAL PRO-‐DUCT STRATEGY
• Digital Product Diversity is neither strategized nor implemented • Paid/Free Content debate is not decided
6. No DIGITAL SALES know-‐how
• No ACTIVE SALES FORCE– integra7ng digital products & know how • “Space” selling rather than SOLUTION, TARGET GROUP selling
Take Over Targets 2: Newspapers with pure advertising based digital business models are „easy prey“ for investors leveraging targets via Paid Content
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis 5
week 51/09
week 10/10
week 20/10
week 30/10
week 40/10
week 01/11
week 13/11
120.000 subs 3,99 €/mo
244.000 subs 15 $/month
Paid Content works
2012
# of free apps 30,000 -‐-‐-‐
CPM/month (30 views) 100 € 100 €
Price/month -‐-‐-‐ 15,99 €
300,000 -‐-‐-‐
50 € 50 €
-‐-‐-‐ 24,99 €
OVERALL REVENUES p.a. 1,08 m€ 0,89 m€ 5,4 m€ 12,15 m€
2022
# paid apps (15% of free) -‐-‐-‐ 4,500
Digital ad revenues 1,08 m€ 0,16 m€
Paid Content revenues -‐-‐-‐ 0,73 m €
-‐-‐-‐ 45,000
5,4 m€ 0,81 m€
-‐-‐-‐ 11,34 m €
BUY ANY „FREE-‐PHILOSOPHY“ newspaper & LEVERAGE it by over 100% by introducing a smart PAID CONTENT model
Free Paid Cont. Free Paid Cont.
> 100%
Abendbla_.de 7,95 €/mo & Morgenpost.de 5,95 €/mo
If today we had the market penetration of tablets we will have in 5 to 10 years, no western newspaper CFO would give an OK to a new print plant with circulation dropping at least 50% in the next 10 years.
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis 6
50 cent 200 cent Printed sheets
40%
50%
100%
Total Cost o
f owne
rship AmorIzaIon period 20-‐28 years
80 cent 130 cent
Output (mio sheets) 4.000 3.000 2.000 1.500 1.000Salaries (m!) 200 m! 200 m! 200 m! 200 m! 200 m!Invest (m!) 30 m! 30 m! 30 m! 30 m! 30 m!Variable cost/sheet (10 ct) 800 m! 600 m! 400 m! 300 m! 200 m!Total cost of ownership 1.030 m! 830 m! 630 m! 530 m! 430 m!Cost per sheet 0,26 ! 0,28 ! 0,32 ! 0,35 ! 0,43 !
22% 28% 37%Progressive Preissteigerung
Next Steps?
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis 7
1. Shareholders
• Work out Digital Strategy • Work out a Restructuring plan and project • Work out Transforma7on Cost • Get an o.k. to cooperate with other newspapers • Do a manager appraisal • Discuss the key necessity of an editor-‐in-‐chief truly understanding digital
2. CooperaIon-‐Network
• Found a joint M&A unit • Found a joint IT-‐unit (backend IT & produc7ve IT) • Found a joint service unit
3. Steps
• Work out your Digital Strategy • Scope and Cost of Transforma7on • Shareholder ok to Digital Strategy & Digital Transforma7on
• If “no” – convince them to sell NOW • Pimp the bride (execute restructuring) – you have to do it anyway • Look for investors that understand both the opportuni7es of the Digital Transforma7on and the “7me to invest”
2011-‐10-‐14 WAN-‐IFRA Finance Session -‐ Thesis 8
Thank you for your kind attention!
Gregor Waller Digital Age Consul7ng / Entrepreneur Associated Principal Consultant Frenemies Consul7ng, a WAN-‐IFRA ac7vity Digital Age ConsulIng Hoeltystrasse 17 22085 Hamburg Germany Phone: + 49 160 90.410.654 eMail: [email protected] Twi_er: wallergreg