The New European Bought By Consortium From Archant
A consortium including Mark Thompson and Lionel Barber has conducted a management buy-out of The New European, the make-shift weekly print title initially launched on a four-week run in 2016 to fight Brexit.
TNE was owned by Archant, the local publishing group based in Norwich.
Its chief content officer, former Daily Mirror executive Matt Kelly, led the fund-raising effort, and as of this morning has left Archant to become CEO and editor-in-chief of The New European.
The executive chairman will be Gavin O’Reilly, the Irish businessman who was former CEO of Independent News & Media, and whose father Tony was for many years proprietor of The Independent.
Archant was sold to a private equity group last August.
Kelly was the first editor of TNE, before moving up to be publisher. His backers include influential figures from the world of venture capital and technology: Robin Klein, a partner at Index Ventures and co-founder of The Accelerator Group; and Taavet Hinrikus, the Estonian founder of TransferWise, an international money transfer platform, who previously helped grow Skype.
O’Reilly and Kelly, who knew each other previously, first discussed the idea while drinking at Piers Morgan’s annual Christmas party at The Scarsdale Tavern, a pub in Kensington, west London, in 2019.
The involvement of Barber and Thompson is striking. For Barber, it is his first significant editorial intervention since resigning as editor of The Financial Times (he has started a podcast for LBC, too). He has been a vocal critic of Brexit.
For Thompson, the former BBC director general who is moving toward a portfolio career after a commercially successful reign as chief executive of The New York Times, it is the first well-publicised investment of his own money. Thompson made several million dollars from the sharp rise in the share price of The New York Times under his leadership.
The strong political stance of TNE makes this a noteworthy association. As the boss of the BBC, Thompson was required to abide by strict impartiality rules. The New York Times is a liberal title, though its news reporters are expected to be impartial too. When Kelly first approached him, Thompson was at his home in Maine, north of New York, where he had just finished digging his Subaru out of a snowdrift.
Other backers investing in a personal capacity are: Saul Klein (Local Globe), Barry Maloney (Balderton), Jeff Henry (ex-CEO of Archant who green-lit TNE), journalist Steve Anglesey, ex-McKinsey partner Cornelius Walter and entrepreneur Niels Kroninger.
Another backer, also investing in a personal capacity, is Ed Williams, the president and CEO of Edelman in Europe, the Middle East and Africa. Williams worked with Thompson at the BBC, and spent two hours walking round Kensington Gardens with Kelly discussing the proposal.
There are 14 investors in total, including Kelly and O’Reilly.
That is an impressive roster of investors. None of them will expect TNE to make them rich. This must be a passion project for them.
Nevertheless, at a time of structural decline in the print market, and Covid-19 leading to further falls in circulation and advertising, profit remains the only guarantee of true independence.
Can The New European be profitable? Yes – but not immediately. And not in a big way – that is, it won’t make several million each year – unless people pay for it online.
TNE currently more than washes its face, making £80,000 as a standalone business. But that is based on a shoestring editorial budget of £6,500 per issue, with some costs absorbed by Archant and only three members of staff, including editor Jasper Copping and digital editor Jono Read. That editorial budget will rise by 50 per cent immediately; and Archant will no longer foot the bill for overheads.
As with all print products, lockdown has caused a fall in circulation, but also created an opportunity to grow subscriptions. There are now more than 10,000 subscribers. With 7,000 sales at news-stand, that makes around 17,000 full price weekly sales.
The website gets more than a million page views a month, which is not big. TNE didn’t have a website until several months after it launched. The print title, which is £3, will remain core to its future.
There is an intriguing but embryonic plan to crowd-fund the publication later this year, by making a portion of the business available for ownership by members of the public.
The new owners project a loss in 2021, but a return to profit in 2022.
When launching a new media product, the key question is not whether there is a gap in the market, but whether there is a market in the gap. That is, what evidence do you have that revenues will come in?
Here, Kelly and his team will quickly discover the limits of the UK print market. A hardy perennial in British media – and one that explains the abject failure of the experiment in local TV news – is to look at what happens in America, and presume it can be replicated here, totally overlooking the fact that the US is a much, much bigger country. For curious historic reasons, the UK has a small but very crowded print market.
It follows that the key is to sell in bigger markets. The internet provides that – especially its English-speaking users in America. The remarkable growth in traffic and revenues at The Independent since it went digital only in March 2016 has come largely from America, a trick other publications such as Mail Online and The Economist have also pulled off. (Full disclosure: I was editor of The Independent until that transition.)
Thirty years ago, a liberal print publication might worry about whether titles with similar politics had sewn up the money of all those inclined to pay for such journalism. Today, there is a vast market online, and the evidence is growing that its consumers will pay for content if it’s good enough.
Powered by the web, and digital subscriptions in particular, Britain’s political magazine culture is in improving health. Titles like The New Statesman, London Review of Books, Times Literary Supplement, Prospect and 1843, a magazine from The Economist, have all grown their paying audience.
The sharpest growth, however, is from The Spectator. It has more sales than at any point since its launch in 1828. It will soon cross 100,000. New editions have been launched in both America and Australia. Such is its digital growth, that coming out of print distribution (which is very costly and, when done through retailers, reduces margins) may be an option for Andrew Neil, the chairman, to consider.
That said, coming out of print probably leads to a loss of influence, especially for a prestige product. There is a value in hard copies thudding on doormats, not least in Westminster; and the heart of many a writer skips a beat on seeing a byline in print.
The New European Bought By Consortium From Archant