Figures obtained from Companies House reveal that owners of Horticulture Week, Haymarket Publishing, posted a loss in 2009 of £8.09m (2008 £8.29m) as the recession and changes to the advertising market impacted on their business.
Turnover dropped 19.3% from £145m to £117m and employee headcount was reduced by 114 leading to an exceptional restructuring cost of £3.8m - the UK and US operations bore the biggest brunt of the losses.
These latest figures are a clear vindication that traditional print media was heading for trouble and I'm convinced that their is still more pain to come.
Just under a year ago, I asked if Haymarket Publishing was too big to fail? based on these latest set of figures and the potential still of a second more devastating wave to this recession - bear in mind that Hort Week's audience is made up mainly of commercial managers in the public sector who are yet to see the outcome of the local government spending review - and as traditional print advertising continues its transition to social media and interactive websites, the likelihood of continuing its severe losses are very real prospect.
Five years ago (maybe even less) it was inconceivable that Lehman Brothers could go bust: just look at Liverpool Football Club; on the brink of administration and Manchester United - hugely profitable but weighed down by so much debt that if the rest of football fails, Man Utd's valuation will evaporate overnight; but its debt won't.
In 2007, Haymarket Publishing made over £44m profit on a turnover of £147m, in 2008 a loss of over £8m on a turnover of £145m and in 2009, a turnover of £117m leads to yet another loss in excess of £8m - what for 2010?
Even though the Haymarket directors are saying they are cautiously confident that 2010 will see a change in fortunes, I wonder if a turnaround is within their powers? And, what if turnover decreased to £100m next year and yet more losses ensue; what then?
Every company needs critical mass to maintain its infrastructure and if that mass falls below a certain level then the whole business is weakened.
At the moment, Haymarket Publishing has used its property portfolio to secure its borrowings of £118m. Luckily for them, commercial property has not seen a significant decrease in valuations as a lack of supply kept priced up: but what if - and there's a real chance - of a commercial property crash?
As for the demise of print? Well, I think I've called it pretty well over the last four years or more but don't take my word for it that traditional printed media is finished. No, I'll leave the last word to one of my business heroes, Richard Branson.
And if anyone should know about how a disruptive business model can smash and existing model in a short space of time it is Branson. Remember, he built his first empire on traditional record sales and came close to disaster when cassette and CD changed the music business - and now, downloadable music, in digital format, has also wiped out those too.
In his latest blog - Don't be afraid to diversify - Branson says that despite being one to take a daily newspaper, 'the writing is on the wall for the print versions of newspapers'.
Would the last one out please turn off the printing press.
Recent Comments