Independent Newspapers considers its options for ‘greenfield’ operation

INDEPENDENT Newspapers is examining the feasibility of setting up a greenfield printing operation and has looked at a number of potential sites in the Dublin area.

Setting up of dedicated state of the art printing operation is one of a number of options being considered to improve the group’s printing capabilities and the option is linked to Independent’s aim to become involved in the rescue of the troubled Irish Press group.

Independent is understood to be interested in printing the three Irish Press titles in any new printing plant.

Other options under consideration are understood to include contracting out all printing to a dedicated printing company and concentrating resources on publishing its titles, or setting up a printing operation with a partner. Independent group chairman Dr Tony O’Reilly is understood to believe that rationalisation of the Irish printing industry is overdue. The examination of printing arrangements is taking place against a background of high printing costs, the Independent’s need to modernise its own printing capacity and the precarious financial position of the Irish Press Group.

With the Irish Press Group desperately seeking new equity investment, industry sources suggest that the Independent is anxious to become involved in the rescue in order to ensure that British publishers, such as Rupert Murdoch’s News International or Mr David Montgomery’s Mirror group, do not gain entry into the Irish newspaper business.

Irish Press and Irish Independent are in direct competition on the daily, evening and Sunday titles. Independent is concerned about possible pressure on its market share if a UK publisher invests in, the Irish Press, revamps the group’s titles and cuts the cover costs to recover lost market share.

The colour pre-printing of the Irish Press publications is currently done by a subsidiary of the Jefferson Smurfit Group which has also expressed an interest in the full printing contract for the Irish Press titles.

While Independent’s main reason for setting up a new printing operation is to improve its own printing facilities and reduce costs, a new operation could generate income for the group if it took over the full printing contract for the three Irish Press titles.

While Independent’s main reason for setting up a new printing operation is to improve its own printing facilities and reduce costs, a new operation could generate income of the group if it took over the full printing contract for the three Irish Press titles.

Independent’s possible involvement in a consortium bid for Drogheda Webb Offset could be seen as a move to ensure the required printing facilities.

One of the elements in the rescue of the Irish Press rescue will be the reduction in the cost of printing the three titles, the Irish Press, the Evening Press and the Sunday Press. A Supreme Court decision next month upholding the High Court damages and compensation Pounds 8.75 million award to Irish Press would go a little way towards repairing the IP balance sheet.

Irish Press chief executive Mr Vincent Jennings has warned that Ingersoll, the former 50 per cent partner of Irish Press who was ordered to pay the damages and compensation, is unlikely to be able to pay the amount awarded.

But if the award is upheld, Irish Press could set off the Pounds 2.25 million cost of acquiring the 50 per cent stake in Irish Press which the High Court ordered Ingersoll to sell back to Irish Press, as well as a Pounds 4 million loan from Ingersoll to the company, against the damages and compensation award.

But the group will require significant new capital to boost liquidity, restructure its operation and revamp its titles.

With a direct equity investment by Independent in Irish Press likely be rejected by the Mergers and Monopolies commission, industry sources are speculating on a possible investment by an O Reilly family company or the involvement of an independent investor not already involved in the newspaper industry.

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