Mr. Robert Pitt:

I am joined by my colleague, Mr. Gerry Lennon, managing director for INM regionals.

I thank the joint committee for its invitation to INM to address it on the examination by the BAI of the proposed acquisition of Celtic Media Newspapers by INM. I will address the committee first on the reasons for the proposed acquisition by INM of Celtic Media Newspapers. Mr. Lennon will talk about the INM regional newspapers.

The agreement for the sale and purchase of the entire issued share capital of CMNL Limited by INM was executed on 2 September 2016. In line with media merger requirements, INM and CMNL jointly submitted a notification to the Competition and Consumer Protection Commission, CCPC, on 5 September 2016. On 10 November 2016 the CCPC determined that the transaction would not lead to a substantial lessening of competition in any market for goods or services in the State. INM believes the proposed transaction will not be contrary to the public interest in protecting plurality of media in the State.

INM is a media company operating in the Republic of Ireland and Northern Ireland. All of its operations are based on the island of Ireland and it provides direct employment for more than 800 people and many more indirectly. Its newspapers far predate its existence, with papers such as The Sligo Championwhich was founded in 1836 and The Kerrymanwhich was founded in 1904. Of its national titles,Irish Independent was first published in 1905. Other papers are also household names, including Sunday Independent, The Herald, Sunday World, Wexford People and other regional titles.

Towards the end of the last decade the industry as a whole suffered a material decline in revenue. In 2008 INM announced losses of €161.4 million. In early 2009 the company failed to reach agreement with bondholders on a figure of €200 million which cast doubt on its ability to continue as a going concern. Following material support from shareholders, the board, management and staff, the company underwent major restructuring. Since dealing with these legacy issues, INM's financial position has stabilised. It remains challenged, however, by the disruption it faces from the growth of digital in the industry. Nevertheless, investment from its own resources in creating a viable digital future for all of its titles has seen positive growth in this channel. The indigenous newspaper publishing industry, both local and national, has faced and continues to be challenged by severe disruption. As a result, it has seen a decline of 62% in print advertising revenues since 2007 and a decline of 39% in circulation volumes since the same year. Continuing programmes of redundancies across the industry, with the existence of several titles under threat, are also a fact of life in the industry.

The financial challenges which have impacted on the publishing industry have resulted in the closure of many regional and national titles. The pressures brought on by the recession led to the closure by Alpha Newspapers of three local newspaper titles in Ireland in 2010: Roscommon Champion, Longford News and Athlone Voice. At the time Deputy Denis Naughten, now Minister, was reported as saying, "The closure of the papers is devastating news for the 40 employees who will lose their jobs, but it is also a major blow for the area."

A cornerstone of democracy is an independent free press. To maintain independence, media enterprises must be financially sustainable and capable of survival. News organisations have faced increasing pressure to remain commercially viable. As a result, consolidation and collaboration have become commonplace in the global newspaper industry. In Ireland INM and The Irish Times, INM's primary competitor in the national market, have entered into agreements, whereby The Irish Timesprints certain INM titles and Newspread, our distribution business, distributes The Irish Times. Such collaboration has become essential to ensure publishers remain competitive.

INM expects collaboration to become more commonplace in the future. Consolidation has allowed publishers to use centralised back office functions and infrastructure to produce newspapers of high quality, despite falling revenues. Consolidation is the only real means to ensure the continuation of many titles, the protection of jobs and the survival of newspapers and this actually protects the diversity of views. The proposed acquisition will benefit CMNL by enabling access to the financial and operational resources of a larger parent company, without any impact on editorial independence.

By 2015 the financial position of INM was such that the company was in a position to evaluate acquisition opportunities. INM believes it has an obligation to its domestic market to use its resources to sustain and improve the existing newspaper offer on the island of Ireland and the jobs that are necessary to support that. The proposed transaction with Celtic Media Newspapers demonstrates this belief. The transaction is beneficial to regional papers in general and to Celtic Media in particular. It will provide much needed financial support and will secure the future of Celtic Media's seven titles as well as the associated jobs.