Abstract
For more than a decade, the insistent complaint about the lack of media pluralism in Ireland has centred on one of the country's richest men, the billionaire entrepreneur Denis O'Brien. His many critics argued that his control of Ireland's largest newspaper publisher and, in addition, two of the leading national radio channels, gave him too dominant a presence.
Now, with the sale in April of Independent News & Media (INM) to a Belgian-Dutch company, Mediahuis, it is likely that the next concern will be about the disproportionate amount of foreign ownership because another of the major newspaper proprietors to have penetrated the Irish market is Rupert Murdoch's News UK. It means that The Irish Times, which also owns the Irish Examiner, is now the only home-grown publisher of nationally distributed daily titles.
However, such is the widespread sense of relief at O'Brien's departure from the scene that any worries about the implications of Ireland's best-selling newspapers having fallen into non-Irish hands have been muted. This is, after all, a country which has embraced the European project and enjoyed its benefits.
But Mediahuis has a lot of work to do if it is to transform the fortunes of the Irish Independent, Sunday Independent, the Herald and Sunday World, not to mention the ailing Belfast Telegraph and Sunday Life, plus a dozen regional weeklies. INM is in bad shape after 13 tumultuous years since O'Brien first started to spend lavishly to buy shares in the company, which had previously been run by another wealthy businessman, Sir Anthony O'Reilly.
Under pressure from O'Brien, O'Reilly retired as chief executive in 2009 to be replaced by his son Gavin, who, after an increasingly bitter boardroom battle, stepped aside in 2012, ending 39 years of his family's connection with the group. By that time, O'Brien had become its major shareholder and de facto controller.
His stewardship was controversial from the off. He had been found by a judicial tribunal to have made payments to an Irish government minister who, in 1995, had assisted him to win a mobile phone licence. O'Brien rejected the findings and was incensed at the critical media coverage he received, including that published by INM titles. In what was to become a habit, O'Brien called in his lawyers, and several of the dozens of legal cases he has launched are still working their way through the courts.
Journalists, both within INM and elsewhere in Ireland, were rightly suspicious of his motive for spending millions to acquire the largest stake, which enabled him to choose a chairman and pack the board with his acolytes. What was his motive? It didn't take long to find out. The then editor of the Sunday Independent, Anne Harris, revealed that she was ordered not to publish stories mentioning O'Brien without referring them to a senior executive. She later told how that executive deleted four key words about O'Brien from a leading article after she had sent it to press.
These, and other, questionable examples of editorial interference were followed in 2016 by dramas at managerial level. INM's chairman, Leslie Buckley, an O'Brien appointee, fell out with the chief executive, Robert Pitt, over the proposed acquisition by INM of a radio station, Newstalk, owned by one of O'Brien's companies, Communicorp. Pitt believed INM was prepared to pay over the odds, which would have resulted in a substantial profit for O'Brien.
It was the beginning of a saga which led to an intervention by Ireland's super regulator, the Office of the Director of Corporate Enforcement (OCDE), which was created to investigate breaches of company law. Its officials, blessed with wide-ranging powers, are knee-deep into an investigation, sanctioned by the Dublin high court, of an alleged data breach at INM. Expensive legal actions could well follow.
Observers believe that O'Brien's decision to sell off his shares, thereby endorsing the Mediahuis takeover, was partly, if not wholly, due to the OCDE's arrival in INM's offices. He certainly didn't do it to make a financial killing. It is estimated that, over the years, his involvement in INM cost him £425 million. Analysts agree that Mediahuis, which paid £123 million for INM, got it cheaply. One investor protested to the board: “You're giving the bloody company away.”
He was not placated by the response from INM's chairman, Murdoch MacLennan – the former Telegraph Media Group chief executive – who said it was the only bid on the table and represented “the best deal for shareholders”. MacLennan, who took up the poisoned chalice at INM in March 2018, was bowing to reality because O'Brien and his fellow shareholders were calling the tune. They wanted out and, in so doing, left in their wake a business worth about £55 million, a giant plunge from its market value of £2.55 billion in 2007.
Of course, the O'Brien factor is far from the only reason for INM's troubles. As with other newspaper publishers in Ireland and across the developed world, the digital revolution has devastated revenues. Print sales of the Independent titles halved between 2002 and 2018, while advertising income declined. Despite responding with a “digital first” strategy, it did not find a way of monetising its online audience, which was said by Michael Doorly, executive director at the time of the takeover, to make 13 million impressions a month.
But quantity may not represent quality. According to Anne Harris, the digital initiative was “profoundly flawed” because “INM opted for click-based journalism, thereby bringing it downmarket”. The proof will doubtless emerge, should Mediahuis, as widely expected, start charging for access to its websites. Experience with newspaper paywalls elsewhere suggests that only the affluent and the educated are prepared to pay for journalistic content. The website of the Irish Independent is also decidedly clunky.
In Ireland, The Irish Times has already made inroads by charging for some of its online content, gradually building subscribers. Did Mediahuis do its homework? According to its chairman, Thomas Leysen, it spent a year looking closely at INM's prospects. But, as any child knows, there is a difference between doing the homework and getting it right.
His company, publisher of Holland's largest-selling paper De Telegraaf and several titles in Belgium, including De Standaard, has improved their revenue take by erecting paywalls. But old media is not called old media without reason.
Aside from the growing success of The Irish Times's online offering, there are a couple of vibrant free-to-access news sites, such as thejournal.ie and Slugger O'Toole, which have loyal followings. Mediahuis will have its work cut out to rescue INM both from its internal strife and from its failure to create a sustainable digital future.