Michael O’Leary avoids his Gerald Ratner moment of truth – for now

July 17, 2010

I picked up Thursday’s Guardian with mounting anticipation and turned to page 9, as instructed. There it was, half a page of sheer, undiluted schadenfreude!

A half-page ad in which Michael O’Leary is forced to apologise fulsomely for calling his EasyJet rival Sir Stelios Haji-Ioannu a liar in print. Appearing in the Telegraph, too. And all paid for by Ryanair.

That’s the sadness of the Ryanair brand. For all the gritty enterprise that has made it Europe’s first airline, we don’t very much like it, or its leader. In fact, we can’t wait for him, or it, to get their come-uppance.

Not that O’Leary will be losing much sleep over such sentiment (see my Horlicks post). If anyone thinks this is his Gerald Ratner moment, they are very much mistaken. O’Leary’s arrogance is not yet so overbearing that he has lost touch with his market. Granted that both he and Ratner have the same contempt for the people they have served. But the difference is that O’Leary’s judgement of human nature is much shrewder. Spookily, he seems to know us better than we know ourselves. Just how much more are we prepared to be abused at the check-in counter, treated like cattle as we board and sheep once aboard, before outraged human dignity finally overcomes our greed for lower prices? A lot more, I suggest; even after Ryanair introduces the single paying loo. Ryanair never forgets that, despite our better selves, we don’t really have a choice – and rubs our noses in it.

Still, we can have a few laughs along the way at the great brand’s expense, and this is definitely one of them. The knife between Stelios and O’Leary is an outstanding illustration of mutual corporate and personal loathing. Others examples include Sir Richard Branson and Willie Walsh; and Sir Martin Sorrell and Maurice Lévy. My favourite, however, (for which I am indebted to the BBC News website) is the case of the two Dassler brothers, one of whom (Adi) set up Adidas, and the other (Rudi), Puma. The hostility between the two of them was so visceral that for many years the Bavarian town of Herzogenaurach, where both had factories, was in a state of undeclared civil war.


iPad – the newspaper industry’s false messiah

May 26, 2010

Personally, I blame the iPad. Its imminent launch here seems to have stimulated a bout of weltschmerz among newspaper proprietors, who are now outdoing each other in the gloominess of their predictions about the end of the Gutenberg era (c1453-2015, RIP).

Latest to join the swelling chorus is Pearson, owner of the Financial Times. Pearson’s director of global content standards Madi Solomon has come up with the rather snappy phrase “the sunset of print”, which FT executives expect to happen in about 5 years’ time. If anything, the 5-year estimate is a tad on the optimistic side. It could have been sooner but the financial crisis, and people’s avid interest in it, has artificially prolonged the time horizon.

Rusbridger: Prophet of gloom

Put it this way, the FT won’t be investing in any more printing presses. And nor will the Guardian or Times Newspapers (as it is still quaintly called). Guardian editor Alan Rusbridger has long claimed he felt “in his bones” that new printing presses installed at the time of the Berliner relaunch (2005) would be the last. But he originally scoped in 20 more years of production. Now he reckons that was vastly optimistic. John Witherow, editor of The Sunday Times, also predicts that his presses, installed in 2008, will be the newspaper’s last. For a fuller litany of pessimism, consult this page in PaidContent.

I hesitate to voice dissent, particularly when the consensus is so eminent, but isn’t all this pessimism a little overdone? An old adage about “cart” and “horse” comes to mind. The cart I have in mind is the so-called electronic reader, of which Kindle, the Sony Reader and iPad are the most successful examples to date.

First though, let’s go back to a fundamental issue: why do people read newspapers, as opposed to glean their information from the internet? Granted age and social conditioning may have something to do with it. But is not also true that newspapers, and for that matter most magazines, are a more enjoyable, tactile medium? The internet is excellent for any kind of search-based activity, but it can scarcely be described as a “great read”. Ah, you say, but that’s where this new, reader-friendly technology provided by iPad and its like comes in. It will make electronic browsing fun – once little glitches like flicker, eye-strain and inadequate battery life have been ironed out (as they inevitably will be in a few years’ time). No one, it seems, is subscribing more enthusiastically to this techno-salvation than newspaper proprietors themselves. In it they discern a form of commercial lifeline – a means of making internet joyriders pay for the colossal, but legitimately-engendered, costs of newsgathering – via licensed apps. A means, in short, of ditching the enormous financial burden of print and building a new and more viable commercial model.

I’d like to believe them right, but can’t bring myself to do so. There have been many annunciations over the past few years of the Coming One – the technical application that will enable us to transfer our loyalties effortlessly from paper to the electronic screen. Of those so far, the iPad holds the most promise. But, though ingenious and popular, it is likely to prove a false messiah – so far as the newspaper industry is concerned. For a start, the revenue stream from licensed products cannot possibly compete with those extracted from traditional newspapers (especially after Apple has taken its 30% cut), even if we allow for a reduced industry overhead. More importantly, what is the iPad for? Newspaper proprietors may read into it a form of salvation, but that matters little if punters don’t see it the same way. And the early indications from America are that they don’t.

Put another way, reading a newspaper via iPad is near the bottom of their user priorities. Printers, don’t despair: the press will be stuck with chopped-down trees for a good few years yet. Certainly more than five.

POSTSCRIPT. Such has been the momentum of Apple, which has just overtaken Microsoft as the world’s biggest technology company by market capitalisation, and such the success of its latest ‘tablet’ product, the iPad, that some experts are now writing the obituary of Google.

One such is Richard Holway who, in a recent presentation, claimed that a combination of Apple-sponsored apps and Facebook will “block out” Google’s sponsored search model by allowing consumers to go directly to brands and media owners.

Not so fast, says one reader of the article in which this vaulting claim appears. Sam Rothstein points out that a) nearly every phone will soon be a type of smartphone – most probably powered by a Google product, Android; b) Apple’s domination of its latest niche, the tablet, will face a similar challenge. A number of netbooks/tablets running Android are launching imminently.


BSkyB loses pay TV battle but wins the war

March 31, 2010

So, BSkyB has lost the battle over what price it charges rivals Virgin Media, BT and Top Up TV to transmit Sky Sports, after the regulator Ofcom imposed a swingeing cut of nearly 24% on wholesale prices paid for Sky Sports 1 and 2.

You wouldn’t think so, though, to judge by BSkyB’s share price which, in early trading this morning, soared 3%. Now why would that be?

Most of the answer is succinctly supplied by Gavin Patterson, head of BT Retail – quoted in The Guardian:

“Ofcom should have gone much further than it did. They have dropped movie channels, which should have been included. They should have included all Sky Sports channels, not just two [and] the wholesale price for the two sports channels is higher than the regulator had previously suggested.” Deconstructed, from BSkyB’s point of view: ‘Phew! It could have been a lot worse.’

One other thing. Ofcom has given the go-ahead to BSkyB’s Picnic project, as a quid pro quo to accepting its wholesale prices ruling. Picnic, which stalled some time ago after running into trouble with the regulator, would enable BSkyB to replace its three Freeview free-to-air channels, Sky News, Sky3 and Sky Sports News, with a potentially lucrative pay TV proposition.

No wonder the City is chortling. BSkyB, however, seems less happy. It has immediately lodged an appeal against the Ofcom ruling. Which, given the lengthy legal prevarification involved, will make its rivals even more irate.

For more on the background to the pay TV dispute, look here.


McCall’s ambition takes flight

March 26, 2010

Commentary on Carolyn McCall’s decision to quit the top job at Guardian Media Group in favour of the top job at Easyjet has tended to focus on two astonishing observations. The first is that she is a woman; the second, that she doesn’t know anything about aviation. Both spot on, of course. But it’s the sly implication behind them that’s the real blinder. If she’s a woman, poor dear, she’ll be utterly outclassed in the macho world of boys toys. Whatever was she thinking of leaving the comfortable, cocooned world of GMG?

Maybe it’s just me, but I’ve never noticed Guy Zitter, Murdoch MacLennan or Les Hinton wearing a skirt. The management of newspaper publishing, in which McCall has spent most of her career, was until very recently a dauntingly masculine environment. The first to break the glass ceiling was Sly Bailey, when she took over at Trinity Mirror in 2003 – and she herself was a product of the more genteel, feminised world of magazines. Only now is change in the air, with Rebekah Brooks (formerly Wade) taking the helm at News International.

The credit for leading the way, however, should really go to Caroline Marland, once chief executive of Guardian Newspapers, and her young protegée McCall, who succeeded her in 2004. Like any disciple of talent, McCall has exceeded the achievement of her mentor – by being the first woman to head the organisation as a whole.

There’s a second, and somewhat overlooked, dimension to McCall scaling the heights of GMG. More important than being a woman, she’s an insider; whereas traditionally the job of group ceo has gone to a seasoned outsider, well versed in the ways of the City but coasting through the autumn of their career. The late Sir Bob Phillis springs to mind. For someone like McCall, in her forties and highly ambitious, this was never going to be her last job of consequence.

All the same, it was a formative experience that created a window onto the world of plcs. On the one hand, GMG is unique in being governed by a trust, whose primary purpose is not to appease shareholders but to guarantee the editorial independence of The Guardian and associated GMG newspapers. On the other, it shares exactly the same structural problem facing the rest of the print-based media, most of whom are public limited companies: how to survive the internet. It so happened that during McCall’s tenure, this crisis has come to a head, giving her the opportunity to shape the organisation for years to come.

She’s divested and she’s acquired; she has given whole-hearted commitment to an open online strategy – as opposed to the paywall route now being explored by Rupert Murdoch et al. With what results, we cannot yet be certain. The divestment of half the Auto Trader group to private equity company Apax looked a smart move; the subsequent decision to join Apax in carving up the Emap empire less so (if only because the world financial crisis intervened, making the acquisition look very over-priced). Probably, she should have closed the heavily loss-making Observer when she had the opportunity to do so – although the decision to make cuts elsewhere is entirely understandable within the context of the Trust. The success of the online strategy pioneered by McCall and Guardian editor Alan Rusbridger will be a matter of opinion for some time to come. The important point, though, is that the die has been cast.

But why, of all places, seek a new challenge in the world of aviation? In fact, the similarities between a newspaper publishing group and an airline are greater than they might seem at first sight. Both are high-fixed-cost businesses whose profitability is highly sensitive to the economic cycle. Both industries have been forced into great change in recent years, which has involved shedding costs and people. Both exist within a regulatory straitjacket that makes industry consolidation an unlikely solution to economic difficulty. Both, so far as leadership is concerned, have an entrepreneurial ‘seat of the pants’ feel to them.

I could go on…the point being that relevant, rather than previous, experience is the key requirement for the Easyjet job. Final proof being that McCall’s predecessor, Andrew Harrison, came not from the airline industry but from the RAC. He has gone on to Whitbread.

One other quality that might come in handy from McCall’s Guardian days is her skill as a boardroom tactician. The airline industry is not known for its diplomatic finesse – witness the clumsy confrontation at BA and the management style of Ryanair. But it will certainly be at a premium in the boardroom of Easyjet, where the airline’s founder and major shareholder, Sir Stelios Haji-Ioannou, has been in a smouldering feud with the management team over the airline’s strategy.

Good luck to her.


Save the planet – and get some Helen Mirren Xmas wrapping paper free

December 7, 2009

You’ve got to laugh. The Guardian, along with 55 other newspapers in 45 countries, took up most of its front page today with a ringing editorial, reminding politicians about to meet at our forthcoming climate summit of their sacred duty to the Planet. Here’s a sample:

“The politicians in Copenhagen have the power to shape history’s judgment on this generation: one that saw a challenge and rose to it, or one so stupid that we saw calamity coming but did nothing to avert it.”

This grandiloquent appeal was somewhat marred, however, by the only other thing to appear on the front page: a strapline slot above ‘Fourteen days to seal history’s judgment on this generation’ advertising free Guardian advertising wrapping paper designed by Helen Mirren.

Among the frivolous things we’ll need to jettison in our austere, post-throwaway society, Helen Mirren designer wrapping paper must rank near the top. If even the high-minded Guardian has managed to get its editorial tone and commercial priorities in a muddle, what hope is there for the politicians at Copenhagen?


Jenkins and Murdoch prepare for Dunkirk

August 14, 2009

Simon JenkinsI liked the piece by columnist Simon Jenkins, former editor of The Times, on the future of the newspaper industry. Jenkins has wide-ranging interests, but he’s particularly strong on newspapers. I remember being impressed by one of his earlier publications, Newspapers: The Power and the Money, when I started as a journalist.

Among the salient points in the column:

  • Rupert Murdoch’s determined initiative to stall internet joy-riders by erecting subscription barriers around all his newspaper and TV station online content will be as significant as his stand against the print unions at Wapping in 1985. And for the same reason. Murdoch is the only one who can provide the media industry leadership to carry the day. His rivals, out of fear of the consequences or loathing for Murdoch, will equivocate. But, as at Wapping, they will be quick enough to mimick his action once early signs of success become evident.
  • Paywalls are not a solution. They are a palliative which will slow the inevitable extinction of print. Newspapers, as we know them, are facing their “Dunkirk”; the best that can be hoped for is enough time to draw up the boats.
  • Newspapers must reinvent themselves as “affinity” clubs. Look how the seemingly moribund pop industry has cast off the shackles of the record industry and  transformed itself into a “mass movement for live audiences”.
  • Newspapers have great brands which can act as umbrellas for all sorts of other commercial activities of interest to their readers, such as courses, seminars, conferences, music events. News is a core, but by no means definitive, attribute of what these brands stand for. Once this truth has been thoroughly absorbed by media owners they will find it much easier to persuade like-minded people to pay for the privilege of joining a club.

The Battle of  France is over, but the Battle of Britain is about to begin, I seem to remember someone saying of Dunkirk.


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