Paper's Demise Does Not Mean Fleet St Is Dead

The nation’s media correspondents are at one: The New Day was doomed to fail.

Launched on a limited budget and targeting an audience that had given up on newspapers, it was always asking too much of Allison Phillips, the editor, and her small but determined team – just 25 journalists - to create a sustainable product in a fiercely competitive market in which newspaper circulations have been falling for more than 15 years.

Criticism is being particularly targeted at Simon Fox, chief executive of Trinity Mirror (LSE: TNI.L - news) , the parent company of The New Day.

The numbers are not particularly pleasant reading for Trinity Mirror shareholders. During its nine weeks of existence, The New Day’s circulation has fallen from around 150,000 at the launch to around 30,000 now, way below the 200,000 that Trinity Mirror was targeting.

The paper’s advertising revenues, while not having been disclosed, are also likely to have been well short of expectations and not least because the rates that advertisers were being charged were predicated on the paper hitting that circulation target.

Yet Mr Fox has plenty of things in his defence. The idea underpinning The New Day was not a bad one: a recognition that, during the last two years, more than a million people had stopped buying a daily newspaper. If even one in five of them could be tempted back into buying a newspaper regularly, The New Day would have had a fighting chance.

Those now criticising Trinity Mirror for thinking that those people could be lured back into the buying habit are the kind of defeatists who probably never try anything new. Business people are often criticised for playing it safe rather than for giving new ideas a go. Mr Fox, a past master at prolonging the lives of businesses seen as in terminal decline such as Comet and HMV, at least deserves credit for daring to try something different.

Moreover, it looked as if Trinity Mirror had done its homework in terms of identifying its audience, as The New Day was targeted specifically at pushed-for-time young women – an audience that its market research had suggested was under-served by existing titles on the market.

The marketing strategy was also an interesting experiment, too, with the title having no digital edition but instead seeking to build an audience through social media and, in particular, Facebook (NasdaqGS: FB - news) . The lessons learned from this experiment will serve the company well as it seeks to protect revenues at its existing national and regional titles.

The other key point to bear in mind is that the stakes were relatively low for Trinity Mirror: one of the reasons that the title was able to be launched cheaply was because the company had spare capacity on its printing presses.

Its losses are said by insiders to have been running at an annualised rate of £1m and, even after accounting for launch costs and the cost of making the title’s staff redundant, the cost of this nine week experiment are unlikely to have reached that point.

It (Other OTC: ITGL - news) would be easy to assume from the demise of The New Day, along with the recent closure of The Independent and Independent on Sunday’s print editions, that the newspaper industry in this country is doomed.

But that is not the case. Titles like The Times and The Sunday Times are flourishing, having taken the decision in May 2010 to stop giving away their journalism and to charge readers for reading their online editions.

They have been rewarded with year-on-year growth – not bad for an industry said to be in terminal decline. Similarly, having also taken the decision to charge readers for its digital editions, the Financial Times is flourishing. Online now accounts for the overwhelming majority of its global sales now.

The Sun, which will next year celebrate 40 years as Britain’s best-selling daily newspaper, is still bought by more than two million people every day and delivers advertisers more than seven million pairs of eyes every day – an audience that even Coronation Street, ITV’s mighty old ratings battleship, cannot provide these days.

The Daily Mail is not far behind in circulation terms and has also built one of the English-speaking world’s most popular news websites.

The Telegraph titles, while suffering a long-term decline in circulation, are also still immensely profitable. And even The Guardian, despite haemorrhaging some £70m of cash during the last year, has also built a strong franchise with its digital editions – albeit one from which it has yet to achieve a sustainable profit.

So all is not lost for what remains the world’s most vibrant, competitive and, yes, greatest newspaper industry.

Meanwhile, for old Fleet Street hands, there is one more crumb of comfort from the demise of the New Day. "The New Day was created by marketing types," they will mutter knowingly into their beer or wine this evening. "Only we journalists are truly capable of understanding our readers and coming up with a product that they genuinely like and want to buy."

The New Day may have come and gone in a matter of weeks. But so have other titles, such as the ill-fated News (Other OTC: NWSAL - news) on Sunday, a left-wing tabloid backed by the unions that lasted for seven months in 1987 and the much-missed Sunday Business, which ran from 1998 to 2006. The ultimate closure of both titles was, in a way, testament to the strength of the existing titles on the market. And the latter, in particular, proved a launch-pad for many successful journalistic careers.

Fleet Street isn’t dead. Far from it.