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SPECIAL FEATURE: Something lost, but something gained
Thursday, March 07, 2013
The history of commerce is littered with the skeletons of failed enterprises which once seemed to be the immoveable objects of commercial and technological life.
By Tim Vaughan, Editor
Those of a certain age will remember when Pan Am and TWA girdled the earth; when Polaroid cameras were the height of technological chic; when Roches Stores was a staple of our city’s streets; when a DeLorean car seemed to be a bright symbol of the future.
All gone in their original form.
There are multiple reasons why companies falter and fall in the commercial bear pit. Sometimes it is because of corporate malfeasance (Enron, Barings Bank); sometimes because their markets have transferred elsewhere (Kodak); sometimes because they are led by egomaniacs (the Maxwell Communications Corporation); sometimes because their costs constantly outstrip their sales (Waterford Wedgwood); and frequently because they have moved too slowly and too far behind the requirements of their markets, customers, and technological reality.
Being an old organisation with fine traditions and legacy, or being a shiny young and cool company, offers no protection if fault lines run through the underlying trading model. And failure, despite the human toll it produces, is a matter of regret, not shame. If Ireland is to recover from its financial woes then it requires that corporations and business people improve their performance and results.
It is with regret that we witnessed the departure from the stage yesterday of one of the most famous names in the nation’s publishing history, Thomas Crosbie Holdings, an organisation which over 171 years in various forms has provided remarkable service to its readers and advertisers and accomplished much which should make a credible argument for the cause of press freedom and diversity of opinion during good years and bad.
Landmark Media Investments Ltd, the new parent company of the Irish Examiner and its sister titles, is committed to taking the difficult decisions necessary to reorganise and modernise all our operations, to maintain publication, and to provide a platform for our readers and customers now and into the future.
In the past five years no obituaries have been scribbled more frequently or feverishly than those of the death of newspapers. But their demise, to paraphrase Mark Twain, has been greatly exaggerated. Some will fail and some will flourish. Their fate lies in their hands.
More than 80% of Irish adults still read a newspaper, one of Europe’s highest percentages. In addition, publishers and editors sit above a rich lodestone of local content and community knowledge, loyalty, and contacts that, if appropriately mined, can secure a profitable future.
That this future will involve integrated and open communication across all print and digital channels and the establishment of direct relationships with friends, followers, critics and enemies is beyond argument.
Yesterday’s restructuring announcement is the first step in a process which will change and improve our services to you and build on the support and loyalty that you have generously shown to us for decades past.
Historic day, sweeping change
The outlook for the Irish Examiner and its parent media group is positive, writes Business Editor, Conor Keane
YESTERDAY was a dramatic day in the Irish newspaper industry, as the Irish Examiner’s parent company, Thomas Crosbie Holdings (TCH) went into receivership.
The historic development was part of a sweeping restructuring of the TCH media group.
Within hours of receiver Kieran Wallace of KPMG being appointed to TCH, the bulk of its assets, including newspaper titles, were sold to Landmark Media Investments Ltd (LMI), which is 100% owned by Tom Crosbie and his father Ted, for an undisclosed sum.
LMI will now publish all the newspapers that were in the TCH stable, with the exception of the Sunday Business Post.
The Post will make a High Court application later today to have an examiner appointed.
While LMI will keep the Irish Examiner and Evening Echo in the ownership of the Crosbie family — which has owned the newspapers for over 140 years — the titles will now be owned by a smaller family grouping. Former TCH chief executive and chairman Alan Crosbie, and ex-board member Billy Crosbie have chosen not to become investors in LMI.
Like most media organisations, TCH suffered as a result of the economic downturn since 2008, when advertising nose-dived in the recession. Similarly, the Irish Examiner and the Evening Echo occupy high-rent offices in Cork’s Lapp’s Quay, since the sale of their Academy St offices in 2006.
The once highly acquisitive media group had not made a profit since 2007 and was unable to reduce bank debts of more that €27m owed to AIB and Ulster Bank.
AIB had its loans secured against the bulk of the group’s other newspaper titles, all of which also went into receivership yesterday, with the exception of the Western People; the Nationalist and Leinster Times; the Kildare Nationalist; the Laois Nationalist; and the Roscommon Herald; which have also been bought by LMI.
It is expected Ulster Bank, who are owed €7m, will exercise its right to take control of the Thomas Crosbie Printers (TCP)-owned print premises in the Cork suburb of Mahon, over which it holds security. The building is leased to Webprint Concepts, which until yesterday printed all TCH titles, including the Irish Examiner, Evening Echo, the Sunday Business Post and other regional titles.
Yesterday’s move ends months of speculation about the future of the titles in the group which also includes the Waterford News and Star; the Enniscorthy Echo; New Ross Echo, Gorey Echo; and Wexford Echo.
Subject to approval from the Broadcasting Authority of Ireland (BAI), Landmark Media Investments Ltd intends to purchase TCH’s shareholding in Waterford radio stations WLR FM, and Beat 102-103 FM, Cork’s Red FM, and Midwest Radio in Mayo.
TCP, which is insolvent, is to be liquidated. With the receivership of TCH there will be significant debts due to trade and other unsecured creditors which will not be paid in full.
The closure of TCP and TCH will result in the immediate loss of up to 12 jobs.
Printing of the titles is now being carried out by the Irish Times at its Citywest printing facility outside Dublin. Webprint Concepts in Cork has printed the titles since 2006. Webprint will be among the largest unsecured TCP creditors — owed close to €1m.
Staff at the newspaper businesses protected under Transfer of Undertakings regulations which were sold to Landmark Media Investments Ltd will retain their existing salaries.
However, the company is expected to seek further concessions from staff — in a bid to bring costs into line relative to revenues — in negotiations next month.
The new company’s main banker, AIB, has agreed to provide funding for the business, including restructuring and specifically identified investments in the business.
This will include new editorial content management and production systems for the group’s titles to replace and upgrade its existing systems. It will enable the introduction of state-of-the-art facilities for digital age multi-platform publishing, and the implementation of the Irish Examiner’s digital strategy.
The commitment of banking support and investment will be welcome news for staff following months of unsettling speculation about the future of the Irish Examiner and its sister titles.
It intensified at the beginning of last month when, out of the blue, former Green Party leader and one time environment minister John Gormley (@JohnGormley) tweeted: “Looks like the Examiner will be going into examinership. I hope it survives. It’s a fine newspaper.”
The company refused at the time to comment publicly on Mr Gormley’s tweet, which was later deleted from his Twitter timeline.
However, a major shake-up of the TCH and its media assets has been on the cards for some time. The company has to date sought and received wage cuts of up to 15%, a pension contribution “holiday”, the elimination of a profit share agreement worth up to €3,000 per person per year, and cuts to expenses, as it endeavoured to regain profitability.
Similar to many companies with defined benefit pensions, its DB scheme is in deficit, to the tune of approximately €12m
Last March, staff rejected management’s request for a further 5% pay cut and since then have been waiting to see what the next move would be. The answer finally came yesterday.
TCH ending up in receivership is a long way from the heady day Celtic Tiger years when, under the leadership of managing director Anthony Dinan and chairman Alan Crosbie, the company was Ireland’s fast growing media organisation acquiring a newspaper almost every year in a buying spree of media assets including radio stations.
In 2005, TCH was worth an estimated €350m-€400m when Irish and UK media assets were selling for spectacular sums.
This was the pinnacle of the Celtic Tiger years and newspaper acquisitions directly mirrored what was happening throughout the Irish economy, particularly in the building industry, with seemingly never-ending boom-time spending fuelled by cheap credit.
In one 2005 deal, the UK’s second largest local newspaper publisher, Johnston Press, paid €138m for the Leinster Leader Group, which included the Limerick Leader. Three years previously, TCH pulled off what was considered a coup by acquiring the Sunday Business Post from Trinity Mirror for €10m, beating off competition from Rupert Murdoch’s News International.
In 2004, TCH paid €10.3m for the Roscommon Herald and two years later bought the Wexford Echo group of newspapers from the Buttle family for €15m.
The following year, with increasing UK publisher interest in Irish newspapers, Mr Dinan was asked if TCH was for sale. He said it was not and stressed the group’s commitment to expansion: “Rather than be acquired, we are acquisitive. The healthy results across the group’s portfolio of businesses means that TCH is well placed to continue the acquisitive path.”
In less than a decade, the company had moved from having three titles, the Irish Examiner, the Evening Echo and the Waterford News and Star, to owning 18 newspapers, including titles in Northern Ireland and The Irish Post in London. The group entered 2006 debt free, in large part due to sale of its Irish Examiner premises in Academy St.
But there were question marks in the industry about TCH’s acquisition strategy, particularly as the group did not acquire leading market titles.
The group’s acquisition drive resulted in its owners, the three strands of the Crosbie family, sharing ownership of some of their titles for the first time.
TCH managing director Anthony Dinan was given a shareholding in new acquisitions.
This continued up to 2004 when the Crosbies bought out Mr Dinan’s interests in numerous newspapers, giving the company 100% ownership of all subsidiaries bar TCH Recruit Ireland.
As TCH invested millions in acquisitions and their development, some company insiders were dismayed that there was inadequate editorial investment in the company’s cash generators, The Irish Examiner and Evening Echo, which were delivering significant profits each year, until the international and domestic economy started to turn sour after 2008.
The company has not recorded a profit since the previous year, when it made after-tax profits of €11.03m on turnover of €113m, with 761 people on its payroll.
From entering 2006 debt free, in large part due to the €36m sale of the Irish Examiner’s Academy St offices, TCH had total bank debt of €27.7m at the start of 2011.
Four years later, in May 2010, Anthony Dinan rocked staff when — after being at the helm since 1995 — he suddenly retired and was replaced by Irish Examiner CEO Tom Murphy.
That year, TCH wrote down the value of a number of media brands acquired over the previous 15 years by €30m and recorded a pre-tax loss of €38.2m (2008 €3.5m) for the 53 weeks in the year ended Jan 3, 2010.
His successor as TCH group CEO, Mr Murphy, moved quickly to close or sell-off perennial loss making titles, closing The Irish Post and The Kingdom, and disposing of the Sligo Weekender and the Newry and Down Democrat at significant losses.
Furthermore, he put the TCH flagship headquarters — an imposing former bank on Cork’s South Mall which cost €3.6m to purchase and another €3m to refurbish — up for sale.
He reduced costs further by implementing significant headcount reduction and relocating other TCH staff into the nearby offices of the Irish Examiner and Evening Echo.
The flagship HQ became the location for TCH’s spectacular annual dinner, hosted by Mr Dinan. Speakers such as humanitarian and rock star Bob Geldof, comedian John Cleese of Monty Python and Fawlty Towers fame and former British primer minister John Major were hired to deliver the after-dinner speech.
Controversial author Jeffrey Archer was the celebrity speaker at the last TCH gala dinner in Mar 2009. The following year, with the recession biting deep and advertising revenues in the Irish media continuing to fall, the new group CEO sought further cost reductions and pay cuts.
At a private meeting with workers he outlined how the company was dealing with its banking debt, its future plans, and that it was seeking substantial costs cuts from suppliers, including Webprint Concepts, printers of the newspaper titles.
While the dramatic fall in advertising revenues due to the deepening recession accounted for most of the group’s financial woes, part of its troubles can be traced back to the decision to outsource the company’s printing in 2006 and the sale of the Irish Examiner/Evening Echo offices at Lapp’s Quay in Cork city centre.
Over the past 18 months, there were extensive negotiations between TCH and Webprint to achieve significant reductions in print costs, and while the printers agreed to some reductions it was considered inadequate by an increasingly financially troubled TCH.
Similarly, efforts to obtain a rent reduction in its ‘upward only’ leasehold interest in its Lapp’s Quay offices were unsuccessful. The building which houses the offices was built by Howard Holdings and is now in Nama.
The poor economic environment continued to make things worse, as the media, nationally and internationally suffered major reductions in advertising and circulation revenues.
In the US and the UK, hundreds of newspapers, including many leading and long-established titles closed, as readers migrated to their online platforms based on costly content created by professional journalists, but made available free-of-charge online.
Similar trends beset the newspaper industry in Ireland, resulting in the closure of the Sunday Tribune and falling circulation for most print titles. TCH titles were similarly not immune to the fallout from unprecedented economic decline and consumer desire for free online content.
Similar to all Irish newspapers, advertising revenues continued to fall and total company sales fell from €113m in 2007 to €71.8m in 2010, according to the last set of accounts filed by TCH.
Despite the cost cutting and wage reductions, with the combination of very high debt levels and contracting revenues, something had to give, and it gave yesterday with the appointment of Kieran Wallace as receiver to TCH.
However, with the restructuring of the company and the commitment of support from AIB, group CEO Tom Murphy is confident about the future.
“We have great titles and now we have the opportunity to put them on a strong financial footing to grow and develop, and meet the many challenges of a multi-platform media environment,” said Mr Murphy.
New group chairman, Tom Crosbie, said the changes put the business on a firm financial footing.
“We have some great brands, whether newspapers, radio or online and although the media industry is highly challenged I know that there is a media future.
While I regret the circumstances that led to this change and indeed the job losses, the reality is that with this deal we have the ability to turn the business around and make it great again,” he said.
TCH employees to keep conditions
By Conor Keane
Workers transferring from Thomas Crosbie Holdings to the new owners of the Irish Examiner and Evening Echo will retain all their existing employment terms and conditions, Landmark’s CEO Tom Murphy assured staff at a briefing yesterday.
Mr Murphy said the 554 people employed in the businesses being acquired by Landmark Media retain their terms and conditions under transfer of undertakings legislation. However, 12 staff employed by Thomas Crosbie Printing and others areas of the business will lose their jobs as TCP is liquidated. TCP was the print procurement arm of TCH.
TCP is applying for a liquidator to be appointed, and has ceased trading.
A further 76 people employed by the Sunday Business Post will continue in employment as the newspaper is expected to trade under the protection of the interim examiner, if appointed by the High Court.
In a statement from Landmark yesterday, the financial restructuring, which has been carried out with the support of the group’s banker, AIB was summarised as follows: A receiver, Kieran Wallace of KPMG, was appointed yesterday to TCH and other Group companies. The Irish Examiner, Evening Echo, Waterford News & Star, and the Wexford Echo were purchased by Landmark Media Investments Ltd. In addition, TCM, the digital and new media business, and Recruit Ireland, the recruitment business, have been acquired by Landmark Media Investments Ltd.
The Nationalist series, Western People, and Roscommon Herald have been purchased by Landmark Media Investments Ltd. through share sales.
The statement also disclosed that Landmark intends to purchase the radio shareholdings of TCH, including WLR, Beat 102FM and Red FM, subject to BAI approval.
In a statement, AIB said it has agreed to a request from Thomas Crosbie Holdings Ltd to appoint a receiver to AIB’s secured entities in the group as part of a restructuring process.
“In parallel, AIB has agreed to extend significant additional refinancing facilities. The refinancing is being undertaken to aid the future viability of the business and to help sustain it over the longer term,” AIB added.
Landmark Media Investments Ltd is currently named Bontury Ltd and is in the process of changing its name.
Crosbie family at helm over five generations
By Conor Keane
Five generations of the Crosbie family have guided the fortunes of the Irish Examiner in its various guises for most of its 171-year history.
Originally called The Cork Examiner, the newspaper was founded by MP and barrister John Francis Maguire in 1841. The first issue hit the streets of Cork as an evening newspaper, publishing three days a week, on Aug 30, 1841, and from its inception was an advocate of constitutional nationalism.
In 1842, Thomas Crosbie, a 15-year-old from Ardfert in Co Kerry, whose formal schooling ended at the age of 13, joined the newspaper’s staff and he turned out to be a gifted newspaper man, quickly ascending to the position of editor.
When Maguire died in 1872, Crosbie, as the surviving partner, became the proprietor, paying a pension to Maguire’s widow and supporting his late colleague’s children.
Thomas Crosbie’s ability as a journalist soon came to the attention to the owners of The Times of London, who offered him the post of leader writer on a salary of 700 sovereigns a year.
However, the offer was withdrawn when his would-be employers discovered Crosbie was a Roman Catholic.
Nevertheless, he persevered in journalism, installing modern printing processes, including linotype machines, stereo machines and a rotary printing press, in the mid 1890s.
Under his leadership The Cork Examiner expanded from three evenings to six mornings a week in 1858, and he launched The Evening Echo in 1892 and The Cork Weekly Examiner in 1896.
Thomas Crosbie died in 1899 and his descendants continued to own and play a role in the running of the paper, with fifth generation member Tom Crosbie becoming chairman of the company that now owns the Irish Examiner and Evening Echo.
Throughout the early 1900s the newspaper was no stranger to the fallout from political ferment. In 1919, an advertisement seeking £250,000 to finance the Sinn Féin state was published and the newspaper was suppressed for two days by the British.
In a complete reversal of positions the following year, the printing presses were attacked by members of the anti-Treaty IRA, forcing the newspaper off the streets for four days.
Nearing the latter end of the last century, in 1996, in a move to broaden the newspaper’s readership, its title was changed from The Cork Examiner to The Examiner.
In 2000 it became the Irish Examiner, and since then has developed a respected national profile and influence.
Former Irish Examiner chief executive Ted Crosbie said the newspaper had: “Survived the Famine, World War I, the War of Independence, the Civil War, the Great Depression of 1930, de Valera’s Economic War of the mid-30s and World War II and several recessions. Such resilience will manifest itself again and the Examiner and Echo have a bright future.”
New chairman Tom Crosbie said yesterday’s developments gave the company a fresh start and he had every confidence in CEO Tom Murphy and his team in guiding the business through difficult times.
172 years in the news
*1841: On August 30, The Cork Examiner is launched by barrister and MP John Francis Maguire as an evening newspaper, publishing three days a week.
*1842: Thomas Crosbie joins the staff at the age of 15.
*1858: The Cork Examiner becomes a morning paper, publishing six days a week.
*1872: Editor Thomas Crosbie takes over the ownership of The Cork Examiner after the death of John Francis Maguire.
*1892: Thomas Crosbie launches the Evening Echo.
*1896: Thomas Crosbie launches The Cork Weekly Examiner.
*1899: Thomas Crosbie dies, leaving business to his son George.
*1920: The Cork Examiner printing presses are damaged by anti-Treaty IRA forces and did not publish for four days.
*1976: The Cork Examiner becomes first Irish newspaper to install web offset printing.
*1995: Thomas Crosbie Holdings, acquires controlling interest in Western People Group in Co Mayo.
*1996: The Cork Examiner is rebranded as The Examiner, and the Sligo Weekender is acquired.
*2000: The Examiner is rebranded the Irish Examiner.
*2000: TCH buys the former AIB bank building at 97 South Mall, Cork for £2.83m.
*2002: The Sunday Business Post is acquired for €10m.
*2004: The Roscommon Herald is acquired for €10.3m.
*2006: The Irish Examiner offices are relocated to City Quarter, Lapps Quay, Cork, after 165 years in Academy Street in Cork City centre.
*2006: TCH paid close to €15m when it acquired the Echo Group of newspapers in Wexford.
*2006: Printing operations are outsourced to Webprint Concepts.
*2007: TCH acquires a 75% stake in radio Stations WLR FM and Beat 102-103 for €14m.
*2010: TCH disposed of the Newry Democrat to the Alpha Newspaper Group, owned by former Ulster Unionist MP John Taylor and his family.
*2011: Thomas Crosbie Holdings closes The Irish Post in Britain and The Kingdom newspaper in Killarney.
*2013: Thomas Crosbie Holdings goes into receivership on March 6. The bulk of the assets are bought by Landmark Media Investments, owned by Tom Crosbie and his father Ted Crosbie. Two former shareholders, Alan Crosbie and Billy Crosbie, cease to be involved in the publishing business.