Tim Bowdler: Meet the real king of the regional press industry

Johnston Press has become a giant of the UK's local newspaper sector. And, as its chief executive, Tim Bowdler, tells Raymond Snoddy, the company is ready for the challenge of electronic media too

The most powerful figure in Britain's £3bn regional newspaper industry is neither the flaxen-haired Sly Bailey of Trinity Mirror nor the curly-topped ruler of the Harmsworth press dynasty, Viscount Rothermere, but an engineer with a track record in companies that make everything from ball bearings to milk floats.

Tim Bowdler runs the Edinburgh-based Johnston Press, which now owns 283 local and regional newspapers, more than any other company in the UK and Ireland, after an extraordinary succession of takeovers.

In this age of ever-increasing competition from the electronic media, Johnston, a company whose origins go back to a Falkirk printing business in 1767, still delivers hefty profit margins to its shareholders of about 35 per cent. Johnston's belief in the future of the local newspaper industry is unbounded and the company is always looking for new papers to buy "at the right price".

The possible downside for Johnston employees is that Bowdler combines a determination not to spend any more money than is strictly necessary with an unsentimental approach to business. Despite its size, Johnston Press has no office in London because it does not think the expense would be justified. And when the company makes an acquisition the takeover is so clinical that staff in the new unwanted head office can find themselves fired on day one of the new era.

Bowdler admits that when he was first contacted by headhunters inquiring about whether he would be interested in becoming chief executive of Johnston Press his answer was a firm "no". For a start, he comes from Wolverhampton and did not want to live in Scotland. Secondly, he knew nothing about newspapers. Bowdler even cancelled an initial meeting with the then chairman Freddy Johnston, now a non-executive director, before being persuaded to change his mind. "Freddy was looking for someone who knew nothing about newspapers and they couldn't find anyone else who knew less than me," he jokes.

When it floated on the stock market in 1988 the company was worth £22m - a value that had risen to £65m by the time Bowdler joined in 1994 as the first complete newspaper industry outsider to take charge of a significant publishing group.

As he joined, Johnston was already in talks to buy the Halifax Courier, its first daily, and more than a decade of acquisition was under way. Last year Johnston pulled off three newspaper deals in Northern Ireland and the Republic of Ireland in quick succession for a total of £313m. The deals included the News Letter in Belfast and a nail-biting £93.9m sealed bid auction for the Leinster Leader group in Ireland. Then the splurge culminated in Edinburgh just before Christmas with the £160m purchase of Scotsman Publications from the Barclay brothers.

"After the Scotsman deal we're second largest by a whisker ahead of both Newsquest and Northcliffe," says Bowdler, speaking in his venerable office in Johnston's headquarters in a distinguished Victorian house. Although Johnston owns the most titles, Trinity Mirror remains the largest regional group in the UK in terms of weekly circulation. But the trade magazine Press Gazette still ranks Bowdler as number one in its list of most influential industry figures.

Bowdler's pursuit of the Scotsman group began two years ago when he asked for a meeting with Aidan Barclay who runs the business interests of Sir David and Sir Frederick. The young Barclay insisted the business was not for sale. Then in October the phone rang. This time Aidan Barclay wanted a meeting and the reason was immediately clear to Bowdler: the Barclays were selling their Scottish titles and wanted to do so with the minimum of fuss and the leaks and counter-leaks of an auction. The deal was completed on 15 December just before Johnston directors started to arrive for their Christmas dinner at the Scotch Malt Whisky Society in Edinburgh.

"I think the watershed for [the Barclays] was their failure to acquire [Glasgow paper] The Herald. Sitting with The Scotsman as a solus title here in Scotland without anything else and without the prospect of growing that business made it quite difficult for them." The Barclays may also have wanted to reduce their exposure to newspapers following their £650m acquisition of the Telegraph Group.

The Johnston purchase, which took The Scotsman back into Scottish ownership for the first time in 60 years, was widely welcomed in Scotland. "I think there was a view that the new owners, Johnston Press, would be more sensitive and sympathetic to the needs of the community in which The Scotsman publishes," says Bowdler.

Johnston moved quickly to integrate The Scotsman with the rest of the group - as it always does - a process that usually means job losses. About 45 jobs went at The Scotsman and Scotland on Sunday, although Bowdler explains the aim is always to make the "back office" as efficient as possible. Editorial costs usually rise.

Johnston Press has also faced union allegations of low pay, an issue that boiled over into strikes at its South Yorkshire Newspapers division last month. Journalists say graduate trainees there start on as little as £12,508 and that the current minimum rate for qualified journalists of £16,855 is far below the UK average wage. Bowdler says Johnston pay deals are always ahead of inflation and that the company has no difficulty recruiting the staff it needs.

The family origins of the company are emphasised by the fact that Freddy's son Michael is now the managing director of Scotsman Publications after a career that has included both the BBC and working for Northcliffe. There is, Bowdler emphasises, no expectation, promise, or family pressure that son will follow father. But there is clearly a hope that one day, if competition rules allow, Johnston will take over The Herald, bringing together the east and the west coast of Scotland under common newspaper ownership for the first time.

It was when the Scotsman Publications deal was going through its final stages that Lord Rothermere decided, in what appeared to be a massive blow to confidence in the future of local papers, to put Northcliffe Newspapers, its regional division, on the market. There were no doubts or hesitation in the Johnston camp about the future of local newspapers, and the company quickly started preparing a bid for part of Northcliffe.

Bowdler was surprised that Lord Rothermere had decided to sell and surprised again when the DMGT chairman decided not to sell several months later when the hoped-for £1.5bn price was not forthcoming.

"The comfort I take is that it was clear it wasn't a sale at any price, that confidence [in local papers] wasn't so depressed that they just had to get out of the business," he says. "I believe they made the right decision - that while they see challenges they also clearly believe there is a future and one that is worth investing in and working at."

For the Johnston chief executive the absolute focus of the business remains where it has always been. It is a theme expressed in the title of a recently published history of the company, Life is Local.

"We think, as you look ahead, the local newspaper is going to be absolutely at the centre of the local community and is going to remain a vital part of the local media mix," he says. "That's not to say it will be the only channel. Of course it won't be."

Like most local publishers Johnston directors spend a lot of time worrying about the growing competitive threats to their businesses from the internet and interactive online advertising and plans by both the BBC and ITV to launch local television services via broadband. Bowdler is phlegmatic about the threats. "We have an awful lot of advantages and, provided we take it seriously and invest intelligently, we can continue to play a very strong, leading part in community publishing."

There is a degree of frustration about the polarised views in the City about a pure newspaper group like Johnston, which have hit the company's share price. Some see newspapers as a hopelessly mature business or even that the game is up entirely. Bowdler accepts that only time will persuade them otherwise. The current advertising difficulties are, he believes, cyclical. He warned the City on 21 June that there had been no discernible improvement in advertising revenue but blamed the state of the economy rather than competition from the internet.

"Other [analysts] accept the broad view we have, which is that we play a vital role in local markets. We have a tremendously strong position now and we have the ability in this changing world to adapt to continue to hold that position," he insists.

Johnston has taken a measured approach to the internet so far. The papers all have their websites. But, unlike both Trinity Mirror and DMGT, the Edinburgh company has not gone shopping for expensive internet companies. Most of its work has been done internally and critics would say the company has not gone much further than taking its content and publishing it online. Until now there has been little origination of online content.

But there are signs that Johnston is about to accelerate the pace of its digital developments. "We are putting an increasing amount of resources into digital activity. It's not a step-change so much as a progressive acceleration," says Bowdler.

More journalists with web experience are being hired for Johnston's digital centre in Peterborough, which develops websites for the entire group. In April a director of digital publishing was appointed for the first time with the aim of driving the group's digital publishing strategy. At the same time Johnston is creating in Preston what it calls its "newsroom of the future" working with the University of Central Lancashire where Johnston has sponsored a chair in digital journalism. "It's the test bed. It's where we are trying out different approaches and eventually roll them out to other centres."

The Preston newsdesk is deciding at the outset which media outlet will be used for a particular news item. "If it's a breaking story it will be straight on to the web and that breaking story will be treated somewhat differently in print. But the whole thing will be a joined-up process in terms of thinking how best to take each piece of news and present it to the community."

The result of the experimentation at Preston has been a decision to spend millions of pounds merging print and web operations in 70 digital news hubs across the country. For the first time, across the group journalists will file stories for the web ahead of the newspaper titles. In Preston there was no loss of circulation as a result of the increased emphasis on the web but users stayed online longer. It gives Bowdler renewed confidence in the future - that local papers can beat off the challenge of the web.

The rise of Johnston Press from a small Scottish local newspaper publisher in the working lifetime of Freddy Johnston has been remarkable. In the early days acquisitions sometimes meant Freddy attending the funerals of the owners of privately-owned newspapers, lending a sympathetic ear to the widow in case she might be in a mood to sell. By 1999 Bowdler and Freddy Johnston were conducting dawn raids on the shares of Portsmouth and Sunderland newspapers - before managing to complete a hostile takeover for about £250m.

Three years later the target was bigger, Regional Indep-endent Media, publishers of the Yorkshire Post, a deal that cost £560m. The Yorkshire takeover demonstrated the Johnston method. When the company moved in there was a 10-page spreadsheet setting out everything that had to be done and when. After the unneeded head office was closed, a 28-strong accounts section was replaced by just three extra staff at Johnston head office. "It's not really about cost savings. It's about a more efficient organisation which uses its scale intelligently," says Bowdler. Within 18 months RIM's profit margins had been lifted to the Johnston level despite a 6 per cent rise in editorial spending.

At every stage, Bowdler says, observers have wondered whether Johnston has gone too far this time. "When we bought Halifax we were just weekly publishers and people were sucking their teeth and saying, 'Daily newspapers, can you cope?'" Then Yorkshire was seen as too big a challenge. It was a morning, a regional and a paper with international news. "Not a bit of it. Leeds has become the hub of what we do in Yorkshire."

What if the Mirror or any national newspaper group became available as a result of the current review of the group being undertaken by Sly Bailey? "They would not be of any interest to Johnston Press. Categorically not," says Bowdler.

He believes the competitive pressures in the national and regional press are very different and that the synergies of running the two together are not very great. Of course, if Trinity Mirror ever decided to put its regional titles on the market you can be sure that Bowdler would be at the head of the queue.