Joint Committee on Communications, Climate Action And
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Joint Committee on Communications, Climate Action and Environment ______________________ Submission by Independent News & Media plc ______________________ 6th February 2017 Independent House, 27-32 Talbot Street, Dublin 1 | www.inmplc.com EXECUTIVE SUMMARY 1. Independent News & Media plc (“INM”) has been invited to address the Joint Committee on Communications, Climate Action and Environment in relation to the media merger examination of the proposed acquisition of CMNL Limited (“CMNL”), formerly Celtic Media Newspapers Limited, by INM (Independent News & Media Holdings Limited) by the Broadcasting Authority of Ireland (“BAI”). 2. The agreement for the sale and purchase of the entire issued share capital of CMNL Limited by INM was executed on 2nd September 2016. In line with the media merger requirements detailed in the Competition Acts 2002-2014, INM and CMNL jointly submitted a notification to the Competition and Consumer Protection Commission (“CCPC”) on 5th September 2016. On 10th November 2016 the CCPC determined that the transaction would not lead to a substantial lessening of competition in any market for goods or services in the State and the transaction could be put into effect subject to the provisions of 28C(1) of the Competition Acts 2002-20141. 3. On 21st November 2016, INM and CMNL jointly notified the Minister of Communications, Climate Action and Environment of the Proposed Transaction seeking approval and outlining the reasons why the Proposed Transaction would not be contrary to the public interest in protecting plurality of media in the State. On 10th January 2017, the Minister informed the parties of his decision to request the BAI to undertake a review as provided for in Section 28D(1)(c) of the Competition Acts 2002- 2014. 4. INM believes the Proposed Transaction will deliver a positive outcome for CMNL and its titles for the following reasons: The positive determination by the CCPC following a detailed review. The Proposed Transaction will secure quality jobs in regional areas. Despite the continuing pressures on the Industry the importance of local newspapers for INM is not diminished. CMNL is facing material financial challenges which INM can alleviate. 5. Along with the above, INM believes that the Proposed Transaction will not be contrary to the public interest in protecting plurality of media in the State for the following reasons, which are discussed in further detail in this document: No geographic overlap between INM and CMNL titles and the existence of competing newspapers in each area. Editorial independence of the editors of all regional titles affected will continue following the Proposed Transaction. CMNL’s readers will see no discernible difference in their newspaper. The Proposed Transaction will secure the future of CMNL’s newspapers. Frank Mulrennan, Chief Executive of CMNL, will join INM and continue to lead CMNL and its employees. 1 Determination of CCPC M16/044-INM/CMNL 10th November 2016, Paragraph 75 2 SECTION 1 – INTRODUCTION About CMNL 6. Celtic Media Group was formed in 2012 through a management buy-out, led by current Chief Executive Frank Mulrennan, from a receivership event involving the former Scottish investor owners and Lloyds Bank. In addition to securing many jobs, Celtic Media allocated 21% of the shares in the Company to its editors, sales managers and production managers. These staff members will therefore benefit from the proceeds of sale. 7. CMNL Limited, the publishing division of Celtic Media Group, employs approximately 99 people and publishes five paid-for and two free newspapers. Its paid-for titles comprise The Connaught Telegraph, Westmeath Independent, Westmeath Examiner, Meath Chronicle, and The Anglo Celt, and its free newspapers comprise Your Forum and Offaly Independent. These newspapers have c. 950 years of combined history and deep commitment to their communities. 8. In addition, CMNL offers pre-press services (outsourced graphic design, page layout and digital services) to independently-owned titles such as The Nenagh Guardian, The Tuam Herald, Cork Independent and Galway Independent, enabling these titles to operate efficiently and, more importantly, with certainty. About INM 9. Independent News & Media plc is a media company in Ireland and Northern Ireland. All of the Group’s operations are based on the island of Ireland and it provides direct employment to c. 600 people in the State, a further c. 215 in Northern Ireland and many more indirectly. 10. INM’s newspapers far predate the existence of INM itself with papers such as The Sligo Champion (founded 1836), The Kerryman (1904) all well-established papers. The Irish Independent has recorded Irish and international matters for the Irish people since 1905. Other papers in INM’s business are also household names, such as the Sunday Independent, The Herald, Sunday World, Wexford People and other regional titles. All of these titles have maintained their identity and continue to have a unique voice speaking to their readers from within INM. 11. INM’s current weekly regional newspapers are published in counties Louth, Wexford, Wicklow, Cork, Kerry, and Sligo. None of these catchment areas represent any overlap with any of the titles in the Proposed Transaction to acquire CMNL. This was recognised by the CCPC itself in its determination where it found that the Proposed Transaction “does not give rise to horizontal overlaps in different local/regional areas for the publication of local/regional newspapers based on readership” except for minor spill-over sales2. INM history 12. The company was formed as Independent Newspapers Limited in 1904 by William Martin Murphy, the publisher of the Irish Independent. The Irish Independent was the direct successor to the Daily Irish Independent, a newspaper that originated in the 1890’s. 13. In an early sign that consolidation has always been a factor in print publishing (and will be necessary to remain so), in 1924, the traditional nationalist newspaper, the Freeman’s Journal, merged with the Irish Independent, and until 1986 the paper's masthead contained the words "incorporating the Freeman's Journal". Over the following decades, the Company expanded into regional press acquiring the Drogheda Independent, the Wexford People series of titles, The Corkman, The Kerryman 2 Determination of CCPC M16/044-INM/CMNL 10th November 2016, Paragraph 42 3 and The Sligo Champion. All of these regional titles make a valuable contribution to the INM business and their inter-dependency with the national titles in sharing back-office services, network and printing plants allow them to plan for a longer future as printed newspaper and safeguard jobs. 14. In the late 2000’s INM’s publishing assets, along with the industry as a whole, suffered a material decline in revenue. In 2008, INM announced losses before tax of €161.4m. In early 2009, the Company failed to reach agreement with bondholders in relation to €200m bond which cast doubt on INM’s ability to continue as a going concern3. Following material support from shareholders, the Board, management and staff, the company underwent major and complex restructuring. Between 2009 and 2015 it was necessary for INM to dispose of multiple foreign holdings in markets such as Germany, UK, South Africa and Australia. All proceeds of these transactions were used to reduce and ultimately clear outstanding bank debt. 15. In the face of all these challenges, the quality of INM’s journalistic output has been recognised in the achievement of its editorial team in winning numerous awards. INM’s belief in Print & Publishing in Ireland 16. By 2015, INM’s financial position was such that the Company was in a position to evaluate acquisition opportunities. While INM has stated publicly its ambition to invest in and acquire digital assets, INM has also reiterated on numerous occasions its belief in the print and publishing industry in Ireland. 17. INM also believes that it has an obligation to the industry not just to direct investment abroad but to use its resources to sustain and improve the existing newspaper offer in the island of Ireland and the jobs that are necessary to create that. Proposed acquisition of CMNL 18. The Proposed Transaction with CMNL, currently under review by the BAI, demonstrates this belief in the Irish publishing industry in a tangible way. INM strongly believes that the Proposed Transaction involving CMNL is beneficial to regional papers in general and CMNL in particular. This acquisition will provide much needed financial support to CMNL, secure the future of CMNL’s seven titles (two of which are free titles) and the associated jobs and give these titles the opportunity to leverage INM’s resources, knowledge and scale to deliver a strong, more robust and more sustainable CMNL for the future. 19. INM is currently developing a solution for local and regional papers to also be able to reach readers through the digital channel and this will be available to CMNL newspapers making them more attractive to readers and securing their long-term future. SECTION 2 – CHALLENGES FACINGTHE IRISH NEWSPAPER INDUSTRY Declining circulation and revenue 20. The newspaper publishing industry in Ireland, both local and national, has faced and continues to be challenged by severe disruption. The factors causing this are: A move by the consumer from consuming content in newspapers to digital. Significantly lower yield from digital advertising than print advertising. 3 https://www.theguardian.com/media/2009/apr/30/independent-news-media-bondholders 4 A market where Irish publishers also face competition from foreign owned newspapers, often with lower cover prices. Severe impact from Ireland’s unprecedented economic crisis. Where large parts of the economy have started to recover, the upturn has not impacted into the newspaper industry. The industry is freshly hit by the UK’s Brexit vote with markedly worse performance in advertising revenues since June 2016 and an uncertain outlook to the future. 21.