Chapter One – From strength to vulnerability

Chapter 27 – The new order

While the way in which the changes were introduced at the Mercury were wide open to very deserved censure both from the reading and advertising public as well as from long-suffering staff, the plan devised under Chris Tippler’s guidance had many strong points.

Especially in the case of the Mercury, but also in the case of the Cape Times, if the plan was adhered to, it gave a new reason for existence just when it was becoming so difficult to be sure they had any commercial reason to survive.
Under the old Argus regime, growth opportunities for the Mercury were blocked to protect the Daily News from any serious competition, and the Mercury was destined to languish with overlapping target markets in an overtraded environment under these constraints, with an undeveloped circulation potential, and under a discriminatory accounting formula that ensured financial losses. It was the spurned adopted child of the Argus Company.
Its function seemed to be mainly to be to take up its share of the cost overheads so that the other newspapers could run at a profit, but only the Sunday Tribune out of all the newspapers in Natal Newspapers made a good profit, and the branch’s superior results within the whole company were really attributable to printing the Sunday Times and Ilanga on contract to other owners, and to commercial printing work arising as a spin-off from newspaper publishing.
O’Reilly’s Independent Newspapers tried to change this, but threw everything into a chaos of rapid change. When the papers emerged from this trauma, they were becoming more differentiated as products to span the South African newspaper market. Until the new pressure of political transformation became a new irresistible pressure, it gave the hope of an eventual better future.
As far as the Mercury was concerned, the Tippler plan gave a coherent role for the paper to play, and a benchmark financial structure to try to conform to, so that it could become a profit-centre in its own right.
I had championed the role of the newspaper as an upmarket instrument for opinion-formers and decision-makers from the day I came to the paper, but it was only after the Tippler plan had been unrolled that the Mercury was allowed within the company to occupy that territory without dispute.
When we had moved the Mercury’s psychographic “footprint” to where it needed to be to play that upmarket role, management had tried to force the Mercury away from it to protect the Daily News, but under Tippler’s plan, that was the Mercury’s rightful place in the market, and the Daily News had to change its market psychographic “footprint” to occupy a different sector of the market.
What was distressing in the whole upheaval was the extent to which regular readers of the papers in the stable were ignored, with the result that most of the newspapers in the stable suffered significant circulation losses which they have been unable to retrieve.
The introduction of Business Report was a major and positive advance on what had gone before. Though its introduction was accompanied by severe problems, it eventually realised what had been no more than distant dreams before –a decent news service for business in the Mercury. The business niche, long identified, had remained neglected under a lack of Natal advertising to support the necessary business pages, and consequentially, a lack of editorial space to project business news.
Now Business Report, although it experienced huge start-up problems and took time to attract advertisers on any scale, gave a national business service through four newspapers, and was able to use advertising garnered in Johannesburg, Pretoria and Cape Town as well as in Durban to support the pages. At first, advertising was not readily forthcoming, and there was a battle with Business Day for advertising, but the competition in the field of business news actually had the effect eventually of increasing the reading public’s interest in financial matters, to the benefit of both Business Day and Business Report. It took time to live through the difficult early days of this product, but the Mercury benefited appreciably from the introduction of Business Report.
This change of fortunes with the introduction of Business Report was due to two things – the change of ownership which brought the Tippler plan, and the arrival of technology that enabled a business section to be published nationally on a daily basis. Without these two developments, which happened virtually simultaneously, the Business Report rescue for the Mercury would not have been possible. Looking past the early problems, Business Report was undoubtedly a winning concept. It was just a pity it was executed without proper consideration for practicalities.
Mistakes were made as the changes were introduced, none more grievous than the catastrophic doubling of the cover price in four months, without concern for readers. The circulation loss was far greater than Tippler foresaw. A process of gradualism would have worked far better, but the climate in the company – as O’Reilly moved in to sweep clean – was not conducive to gradual change.
With the rapid rise in cover price, and the equally rapid plunge of circulation (more than a third in just over a year), with the staff cuts and technological changes that caused so much disruption, the Mercury still emerged better financially than it had been. Editorially, it had lost heavily. Not only had its staff been reduced by a third, but it had lost thousands of regular readers whom editorial staff members had worked hard over the years to serve.
Financially, the paper did not immediately rise out of the red, but it began to turn the corner – slowly at first, but with gathering speed as Business Report grew in its first year. At the time I retired from the paper early in 1996, we were reaching the break-even point, but still had some way to go to meet the Tippler profit targets. It had the chance to regain its respected status among readers, and it could also begin to hold its head up when company managers looked at the business side of the operation.
From management side, Tony Hiles’s view was that the Tippler plan “focused editors more on the view of the major shareholders and how they viewed the business, that they were there for making profits. The other thing it achieved was the holding of regular meetings, which actually strengthened the commercial/editorial co-operation.”
David Mead, former marketing manager, said: “The idea was always that the Mercury would be at the quality end of the stable of newspapers. It had to catch the thinking reader whereas the Daily News was a broad-based, almost downmarket paper. One could never convince Michael Green, as editor of the Daily News, or anyone else either, to recognise the position it was already in and to cater to that market. There was always the prevailing ambition to have the quality paper in terms of the readership profile of that newspaper.
“Featherstone wanted it, but he was never willing to bite the bullet, because of the aggravation that it would cause. He had a style of management which gave total autonomy within the restraints of working with other executives. They all had an opinion. But it did mean that nobody was able to do the things that Tony O’Reilly did, with people like Tippler. Featherstone started the process. The letter of contract for editors was changed.”
News editor Greg Dardagan said there had been great sadness in the staff when the Mercury merged with Argus, but they did feel there would be greater job security. “But it didn’t go like that. The Mercury still struggled. We had to cut staff and new goals were set. And the doubts and fears about the viability of the Mercury continue to this day. There haven’t been many occasions when the Mercury has run smoothly and everyone has been told: ‘You’re doing fine. You’re making a profit. Your circulation is up.’ For us, the future has always been one of doom. We’re always being told circulation is down, advertising is down, you’ve got to cut staff, you can’t replace. It has been a newspaper very much in crisis all the time. Ever since I joined, there have been very few periods where we could feel confident. We’ve longed for that. The staff here longs for surety that we are doing well, that we’re succeeding and that we’re profitable. But most of the time, we are anxious, worried, concerned. The rumours fly.
“But one thing the Mercury does have is good heart. We always surfaced again after bad times. Its people are genuinely interested in its welfare. Most of the people here want it to succeed. I don’t think you can necessarily say that about other newspapers or other businesses. Our strong point at the Mercury has been that, in times of crisis, after initially being morbid and depressed, people bounced back. That has been the strength of the Mercury and the quality of the core staff that have worked on the paper. There have been some bloody good journalists over the years. The core has been strong and there has been a lot of spirit.”
Ed Booth’s view was that O’Reilly gave some better direction to the Mercury after all the feelings of insecurity the staff had had. Booth said he personally had never had it in his mind to close the Mercury down. Benchmarking under O’Reilly had clarified the profit target goals for each division of the stable, and clarity had been brought to the different papers’ target markets. The different reader profiles had enabled the psychographic “footprints” to be pulled much further apart, which was advantageous for the Mercury.
Doug Band, chairman of Argus Newspapers up to the O’Reilly take-over, was cautious about the changes O’Reilly has made, saying: “If you write a book now, in some ways it is going to be premature in terms of being able to judge the outcome and result of the adoption of the O’Reilly philosophy.”