A big company would not tolerate our modest return on capital, but it is enough to keep us going
- To make a local newspaper work you need to understand your market – a shrieking tabloid will not prosper in a gentrifying area
- You need to know where your advertising is coming from – a lot of public sector ads have migrated to the net
- You should keep your cost base low – not least by keeping the pay differential small
I hate being called ‘founding editor’ of the Camden New Journal. The paper was actually founded by a group of us. The staff of the then Camden Journal was in dispute with the paper’s owners from 1979 to 1981 over the closure of the paper. Part of the settlement of that dispute was the sale of the title to us for £1. Quite a lot of colleagues from the paper that closed volunteered to help us with the new paper after the closure.
Now we have a turnover of £2m a year and a staff of 30, despite the slump we are getting by.
The paper was launched in 1982. We did not go to the GLC for a grant initially – I expected the business to fail, and I did not want to waste public money. So we went to the bank and applied under the small business scheme for a £50,000 loan, guaranteed by the Government.
We were established with help from the Co-operative Development Agency. It created the touchstone of the CNJ. The paper’s core philosophy is a belief in the common ownership of land, commerce, and industry. That is still part of its constitution.
Lots of organisations go under the mantra ‘not for profit’, but there is no such thing as not for profit. You have to make a profit to survive.
What differentiates the CNJ and its sisters from the big groups is the level of profit. The big newspaper titles were making returns of upwards of 25% on capital. As profits have shrunk, they have done the inevitable, drastically cut costs. In the good years, the CNJ makes 10 – 13% return on capital. Now we make around 5%. We keep our costs low, and it helps, of course, that we don’t have a managing director earning £60 – £70,000.
Journalists tend to make a lot of mistakes when setting up a paper. There is no point in producing a tabloid for a gentrifying area. The Islington Gazette, had a circulation of 28,000 in 1982, and now has a circulation of 6–7000. It is a shrieking tabloid paper circulating in a gentrified area. We established a paper in Islington a couple of years ago and are now doing pretty well.
You also have to think about where your advertising is going to come from. Today, councils are putting public notice ads and job ads into the web, or in their own magazines. So we have lost the ‘sits vacs’ to the council. Even large companies are doing exactly the same. Traditionally, recruitment and public notice ads were charged at four or five times the price of display ads, so you can imagine what a difference this makes to revenue.
You should have an egalitarian pay structure. Our pay differential is not more than about two-and-a-half or three to one. It has been one of the factors in making the CNJ successful. It enhances the feeling in the office – we are all in the same boat. It also constrains the wage bill. The wage bill is important. Economists decree that wages should not exceed 20% of a company’s costs. We exceed that ratio, but that is because we are so small, and don’t benefit from economies of scale.
We made a lot of mistakes at the start. For example, we employed a national company to distribute the paper, but got rid of them after about 6 months. And we were soon in the red. We lost the initial £50,000 (which would be about £150,000 at today’s prices). Then had to seek a loan from the GLC for a further £100,000. But we were in the black by the mid-80s and repaid all our debts. We developed physical assets as an anchor for the company. We bought our premises and two other properties.
We also obeyed that golden law of capitalism – expand or die. So we opened up two other papers. Today, we are managing, but it is because we can survive on a small net profit. A big company would not tolerate our performance. They would close us down. My only concern is that the paper is not sold off to a private company. We have had overtures, but have never followed them up.
At the moment, we are trying to formulate a new form of ownership, because I can’t go on forever. We did consider the idea of adopting the model of the West Highland Free Press which is now employee-owned. We are also considering establishing some sort of charity to own the paper.
My sticking point, though, is that our commitment to public-ownership must be part of the paper’s constitution.
Eric Gordon is founder and managing editor of Camden New Journal, one of the first independent local London papers.