Company says it has more than 2,000 e-paper subscribers

MANAGEMENT AT The Irish Times Ltd briefed staff yesterday on plans to reduce its cost base by €10 million over two years.

Managing director Liam Kavanagh and editor Kevin O’Sullivan told staff that changes to the way the newspaper operated were necessary to secure the company’s financial position in the context of a continued weak economic environment, and to facilitate greater integration between print and digital content to reflect the changes in the way people are consuming media.

The plans will involve a cut of €5 million in the newspaper’s cost base both this year and in 2012.

These reductions in costs are necessary to protect the company’s cash reserves of just over €11 million, Mr Kavanagh said.

The Irish Times Ltd made a pretax profit of €2.1 million in 2010, but this was due to a one-off pension credit, which was a non-cash item.

“It was very good to report a profit but the underlying concern is that cash reserves still fell by about €2 million,” he said.

“They will be down by another €3 million in 2011.”

Mr Kavanagh said The Irish Times Ltd was projected to record a loss both this year and in 2012. Advertising revenue is expected to decline by 7 per cent this year.

“Revenues are continuing to fall and this year we have had newsprint price increases,” he said.

“Costs have stabilised but that’s against a backdrop of falling revenues. So we now have to address the cost base again.”

He said the group’s cash reserves would be exhausted by the end of 2013 without action on costs.

The changes will involve a “two-pillar approach”. This will comprise the development of content relevant to the way that media is now being consumed and organisational change.

Mr Kavanagh said the intention was to “preserve and enhance the print product” while also “growing and developing online content”.

“We are trying to develop and grow our online audience in a way that is different to print but also complementary to print,” he said.

Mr Kavanagh said The Irish Timeshad about 2,000 daily subscribers to its e-paper, while 22,000 smartphone apps had been downloaded by mobile users.

Online revenues account for about 8 per cent of group turnover and the company is looking at other ways of monetising its digital content.

Mr Kavanagh said this was likely to involve a “micro payments-type model as opposed to a fully free service”.

This would be similar in type to the Financial Timesand the New York Times, he added.

As a first step, €5 million in cost cuts will be sought this year in consultation with staff and their trade unions.

About half of the cuts will come from payroll. The company’s management head count will be reduced by 10, yielding savings of around €1 million a year.

In addition, subediting functions across the paper are to be amalgamated, which the company expects will result in six voluntary redundancies.

A reorganisation is also proposed at its Citywest printing plant, which is expected to lead to six voluntary redundancies.

Savings of €2 million in non-payroll costs are also being targeted, along with a reduction in staff terms and conditions of about €400,000.

An additional €5 million will be sought next year. This will involve a thorough review of all processes within the production of the newspaper, its commercial activities and printing operation.

Mr Kavanagh said changes to work practices, rosters and shift patterns were likely to occur.

A new content management system will be installed over the next 18 months, which will help to facilitate closer integration between the company’s print and digital media platforms.

Mr Kavanagh said the company's other investments – which include ownership of Myhome.ie and Ireland.com, and stakes in Metro Herald, the Gloss magazine and Gazette Newspapers – are no longer a cash drain on the company.

“All of them are relatively stable and are not a drain on The Irish Times,” he said.

When asked how the group might look in five years’ time, Mr Kavanagh said: “We will still have a printed newspaper but it [sales] will be less than today, although I’m not sure what that number will be.”

The Irish Timeshad an average daily circulation of just under 101,000 in the first six months of this year.

"There will be a shift to a more balanced content offering from The Irish Times. We have to make sure that we are working on the best possible platforms and in the best possible way," he said.