How Jim ‘mad’ Mullen’s digital gamble left dozens of newspapers staring into abyss

If Jim Mullen, the chief executive of publisher Reach, was hoping to mollify his workforce at a company-wide meeting earlier this month, his efforts proved futile.

“He answered a few questions and was generally condescending as f*** throughout,” says one infuriated journalist. “[He had a] grin all the way through and nothing was actually addressed.”

The comments highlight the growing fury among staff at the owner of the Mirror and Express newspapers after Mullen announced 450 job cuts earlier this month, taking the total number of roles reduced this year to almost 800. 

The NUJ and BAJ unions have both expressed no confidence in Mullen’s leadership, raising the prospect of strikes. For workers, the cuts are the latest example of mismanagement by the chief executive, raising serious questions about whether his ruthless methods will pay off.

“The worry is has the music stopped,” says Alex DeGroote, a media analyst and former Reach adviser. “Are we at the tipping point?”

When Mullen joined Reach from betting chain Ladbrokes Coral in 2019, he joined a business desperately pursuing growth.

A string of acquisitions under predecessor Simon Fox transformed Reach into the UK’s largest commercial news organisation, home to the Star and Express tabloids and local titles including the Manchester Evening News and Liverpool Echo.

However, the benefits of expansion have long since subsided and for Mullen, the brutal cost-cutting is required to put the company on a sustainable financial footing.

The chief executive, dubbed “mad Mullen” by Private Eye, has also come under fire for his eye-watering pay packets after taking home more than £4m in 2021. 

He will this year forgo a bonus and an increase to his £500,000 salary, but the pay levels have still left staff incandescent as hundreds of employees are laid off just before Christmas.

Mr Mullen has said the cuts, alongside the closure of its offices in Bristol and Newcastle and more than a dozen online publications, will reduce operating costs by between 5pc and 6pc. 

But underpinning Reach’s troubles is a faltering transition to the digital era.

Unable to convert its mass-market audience into subscribers, the company has been forced to rely on digital advertising revenues. Now, a wider downturn in the ad market, compounded by Reach’s overreliance on social media to feed its content to readers, has left this strategy exposed.

In a further blow, Reach’s need to sweep up as many advertising pennies as possible has left its website flooded with irritating ads that risk putting off readers.

The crisis is beginning to show in Reach’s top line. The company posted a 14pc drop in its digital advertising revenues in the third quarter, while page views fell by more than a fifth in the first nine months of the year, primarily due to changes in Facebook’s algorithm.

As one former executive puts it: “Obviously, they became too dependent on the scale that came through social media channels and that scale fell away.”

DeGroote goes further, branding Reach’s digital performance “shocking”. He adds: “Digital has gone into reverse in quite an epic style. For a media business to be declining at that rate is not very good.”

In an attempt to halt this decline, Mullen has focused on registrations, meaning the publisher can gather more data on its users for use in targeted advertising and e-commerce.

Other strategic shifts include expanding the Mirror and Express titles in the US and hiring social media influencers.

But the latter move has sparked particular ire among journalists at a time of crippling redundancies. Insiders are also sceptical about how effectively this strategy is being deployed.

“They talk about wanting to integrate content creators, but have no clue why those creators gained a following in the first place or how to utilise them in a way to build successful projects,” says one employee.

“Everything is cut down or changed within months of it starting, so to blame influencers here is misdirected. The lack of vision comes from above, and responsibility lies at their feet.”

What’s more, the desire to pursue audiences on TikTok only seems to echo past mistakes of relying on social media to find readers.

Conversely, the bright spot in Reach’s business is print, which accounted for more than three-quarters of revenue in the first half of the year as increases in cover prices offset a decline in circulation.

“There’s a lot more pricing power in newspapers than some people believe, so that gives them some sort of defence,” says a leading Reach investor. “If you hadn’t got that then I think you’d just abandon ship.”

Yet Reach cannot pin its future on the declining print industry. 

Moreover, the company is facing significant pressures on its balance sheet from its pensions deficit and losses related to phone hacking claims, which have totalled £65m over the last six years.

So with margins under pressure, Reach may be forced to cut its dividend – a move DeGroote warns could have catastrophic effects on its share price, which has already slumped to less than a fifth of its peak in 2021.

Jonathan Barrett, an analyst at Panmure Gordon, is sanguine about Reach’s prospects, arguing that efficiency will improve and ad revenues will bounce back. “They’ve got the audience, they just need to make sure they monetise it,” he says.

Yet others are more sceptical about the outlook. Mullen could look to sell off some titles, but the recent merging of operations means it could be hard to disentangle the group, while the cuts risk further harming output and devaluing the news brands.

Ultimately, many observers feel there is no choice but to sit back and hope that Reach can weather the storm. But as Mullen tries to balance the demands of shareholders with those of a workforce in near-open mutiny, he is unlikely to get an easy ride.

“When you look at it, it’s like trying to cut the Gordian knot when all you’ve got is a blunt pair of scissors,” says the shareholder. “There’s no easy fix.”