psmith, journalist

In times of crisis in business, you re-evaluate what you do and why.

The current debate over the Future of News, which mostly consists of learned sages berating encumbant media executives for not getting “it” and journalists moaning that there’s no “model” that will save their craft or monetise “the internet”.

This debate makes some pretty dangerous assumptions and it may be setting the benchmark of success in the wrong place. As with so much of UK life since the “big bang” deregulation of the City ushered in by Margaret Thatcher’s pro-enterprise Conservatives in the 1980s, profit and profit margins have come to dominate the media.

But what if the purpose of magazines, newspapers and online media was not to line the pockets of institutional shareholders, achive unrealistic margins or give satisfactory returns to private equity partners; what if the whole point was just to to survive?

I was impressed by the series of films last month by BBC Newsnight‘s Paul Mason on how the country is coping with economic recovery.

In his trip to Wales (no embedding, it seems) he speaks to a group of entrepreneurs who don’t particularly care about profit – as in, they see there’s more to life than the ruthless pursuit of large profit margins that are far beyond what their companies need to serve their operating costs and pay staff. “It’s the concept of ‘enough‘”, as one of them puts it.

Instead of looking for areas to expand into, these guys accept that a rival business is better placed to serve other market segments and will even help peers to thrive. There’s a real lesson there for media businesses looking to reinvent themselves in a post-print advertising economy.

Johnston Press once had near-40 percent profit margin after the turn of the century. But while JP’s share price rose to more than £5 (see chart below, via Google Finance), the party is over and in March 2009 the company devalued its newspapers by £511m. The result? JP staff are left with hundreds of cuts, newspaper closures, office closures, mergers and demoralisation. The picture is repeated again and again at every other regional group. Check out this sad tale from Northcliffe wage slaves.

So here’s the question: is this the picture that we’re trying to re-build? Or is the real business model the industry is seeking one that will not remunerate managing directors and shareholders, please City analysts and make a few white men rich but one that will support journalism, pay journalists and keep people informed and entertained? How much is enough?

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