Newsquest CEO: The choices are tough, but they’re helping make local journalism sustainable

Henry Faure-Walker

The chief executive of regional news publisher Newsquest has warned the next two to three years will continue to be bumpy for the local news industry — and insisted finding news ways to be efficient was essential for survival.

In a wide-ranging interview with the Media Masters podcast series, Henry Faure-Walker, who led Johnston Press’s digital operations before taking over the top post at Newsquest, also warned that digital platforms needed to play a much greater part in sustaining local news.

He said: “We have shareholders, but were focused on the bottom line not because we want to feed our shareholders but primarily because we’re trying to build a sustainable model for local journalism.

“I think we’ve come in for some criticism on how we’ve had to restructure the business, but we are building a sustainable journalism model.

“We’ve had to take some painful decisions about restructuring headcount. Otherwise you’d have to close 200 newspapers and we’d much rather be in a position whereby we can carry on having a sustainable portfolio of local newspapers that is fit for the future, that can carry on employing local journalists doing great local journalism.

“That’s much better than sticking our head in the sand pretending that the internet was never there and waiting for the fairy godmother to arrive that will never arrive.”

He added: “We know we’re going to have to work hard to control our own destiny and that’s why we focus on the bottom line and we focus on efficiency and we focus on efficiency, but not to feed our shareholders.

“We focus on efficiency to sustain the local journalism model and I think sometimes that’s misunderstood.”

The sad collapse of the Oldham Evening Chronicle last year was an indictor of why news publishers need to keep changing, Henry added.

He said: “A particular salient example was when unfortunately the Oldham Evening Chronicle, which employed 50 people on a daily newspaper in Oldham, went bust.

“I think that was a lesson for all of us that it is a tough business and in order to sustain the business you have to make some painful decisions.

“We want to get ahead of the curve make sure that we have a cost base that enables us to sustain our business through the next two to three years which will probably continue to be a bit bumpy, whilst we ramp up the digital business and thats why thats why efficiency is important to us.

“I do’nt want to speak ill of the great people at the Oldham Chronicle. I think its difficult if you don’t have the scale of Newsquest and obviously they didn’t have that, but they did have 50 staff in a small local paper in Oldham. I think by any account that is a lot of staff to have and you’re unlikely to be able to generate the revenues to be able to sustain those staff.

“So we would run a more efficient model. The advantage would be that we would be able to carry on publishing in Oldham.”

Henry said 30% of Newsquest’s advertising revenue now comes from digital, with digital marketing services — which enables sales teams to sell a complete digital commercial package, including search, social and websites to clients — an increasingly important part of their offering.

He also predicted 50% of advertising revenue would come from digital sources within the next two to three years.

But he warned that the current division of revenue between platforms such as Facebook, which keep most of the digital revenue, and the publishers, who get pennies despite funding the content, can’t continue.

He said: “Facebook is a very important driver of audience to us and all of our local news brands will have significant followings on Facebook. Some of our titles get 30-35 percent of their traffic from Facebook.

“But it is a poor environment for us in terms of monetising that and we only really get value when the user clicks out of Facebook and comes through to our site and then we can serve them advertising at high yields then.

“So there’s a problem and one of the broader issues that the news industry is concerned about is the unequal playing field that we have in terms of the financial reward that we get for the fact that much of our content fuels social media.

“There’s been some work done on this as a research study which is often referred to by the News Media Association that says that indicated that over 40 percent of engagements on Facebook in the UK were actually content provided by professional news publishers.

“So you have this unequal situation where Facebook is building its own audience its own engagement off the back of news journalism, in my case local news journalism, arguably free-riding the huge investment that we put into local journalism and we are getting pennies trickled down in return, whereas Facebook is obviously making huge huge sums out of it.

“I just don’t think it is sustainable.”

You can listen to the whole podcast here




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