Profile: Susan Panuccio, FD of News International

How about helping to shift your business to a totally new revenue model, aid
in restructuring the organsiation, all the while handling the biggest newspaper
brands in the world. Oh, and do it all in five years and look after your young
family…having arrived in 2002 from Melbourne.

News International FD Susan Panuccio has taken these tasks head on. She
manages the finances for brands such as The Times, The Sunday
Times, The Sun and News of the World.

The London Paper has joined the ever-growing free daily newspaper
handout published in the early afternoon for commuters to read on their way home
on the tube.

The titles are far reaching with readership figures showing they reach 34.6
million people everyday, which is 71% of all UK adults.

More than 50% of their revenue is driven by circulation.

But it has not all been plain sailing for Panuccio, who took on the role in
one of the most difficult economic times to hit the UK.

News International is part of News Corporation and its results are
consolidated with those of the whole group. The parent company recently
announced a loss of $3.4bn (£2.1bn).

The Downturn

The UK company is known to have a turnover of over £1bn but has been hit,
like all publishers, by the advertising downturn. Operating income at the UK
newspaper business was down 18% in the last quarter due to lower advertising
revenues but also due to higher marketing and production costs. The publisher
makes more than 50% of its revenues from circulation, however, so cover price
increases go some way to offset a reduction in advertising revenues. Turnover is
said to be only marginally down year-on-year.

But one thing you learn quickly from the 37-year-old with a young family is
that she likes a challenge.

Panuccio is not shy about getting her hands dirty either. Despite only being
in the job since June 2008, after starting with News International back in 2002,
she has orchestrated two restructures – having arrived just before the economic
meltdown. She has also risen above those who she used to report to – overcoming
the psychological barriers associated with ‘the whispers in the corridor’.

‘My current peers were previously my bosses, so that was hard initially.
Everyone could see how difficult it was but you work through those issues,’ she
said.

‘It has definitely been hard work in the past 12 months, there is no doubt
about it, but the most important aspect has to be to first establish the right
team,’ Panuccio says.

With more than 140 staff and five key reports to analyse on a weekly basis,
Panuccio’s desire to surround herself with people she could trust and feel
comfortable with is easy to understand.

‘The biggest challenge in the past year or so, when advertising revenues
started falling from the newspapers, was to conduct an efficiency and
effectiveness review across the whole group and we have employed the Boston
Consulting Group to work with us through that process,’ she says.

‘Before the economic recession hit we were gearing up for a new way of
working. We set up full colour presses that are now fully functional. But there
is no doubt the recession hit us hard, like all other newspaper groups,
especially in advertising.

‘But James (Murdoch) is very passionate about the newspapers and is a strong
believer that we have quality products.

‘What the recession has forced us to do is look at new business models and
see if we can put them in place.’

Making online pay

One of the business models that News International, and most other publishers
around the world are considering, is how to get consumers to pay for content
online.

Newspaper publishers have created a rod for their own back by initially
giving away free content and, although there have been some success with the
Wall Street Journal charging for content, this is more the exception than the
rule.

‘I think in the future you will see business modelling regarding charging
fees for online content linked to a subscription,’ Panuccio continues. ‘We need
to tailor information to the consumer.

‘The Wall Street Journal is both successful and profitable, while The
Economist is also to a lesser degree, when it comes to paying for online
content.

‘It is a big challenge for us and to also increase our subscription base for
tabloids. It is doable but it will be hard work.’

The day-to-day

Like all top finance professionals in big companies, Panuccio’s team uses the
‘colour book’ scenario for accounting reports. At News International it is blue.
She insists

on weekly reporting from her subordinates and a full profit and loss report
every week, with an even more detailed financial review every month.

‘I just focus on the UK publications and we require a lot of detail. I need
to make sure I am on top of everything.’

But being a financial chief is not just about looking at the numbers. You
also have the difficulties of managing staff. For Panuccio, that doesn’t just
mean people in her own domain, but dealing with editors who are under enormous
pressure on a daily basis and bristle at the prospect of their editorial budget
or staff numbers being cut.

‘Of course there are personality clashes but that is to be expected in a busy
editorial room,’ she says. ‘The key is good stakeholder management and to have
open dialogue wherever possible.

‘I am a very pragmatic person and very direct. I like to stick to the facts
because they are there in black and white and you can’t argue with that.

‘One of the great things about News International is that people are very
passionate about their newspapers and their work. Often, after I have had a
meeting with a senior editorial person, I get told later that I have delivered
bad news in such a nice way that after I have left the room they feel as though
I have stolen something from them.’

But a thief she is not. Panuccio has a difficult job to do and is extremely
effective in her work. One of the key management changes News International has
instigated is to involve editorial people on the executive management team. You
may think “why weren’t they there in the first place?” but breaking down the
great divide between those running a business and those making it happen on a
daily basis is the hardest to achieve.

‘James Murdoch was very keen on getting the senior editorial staff involved
in more key management decisions. There is no doubt it has improved transparency
and allowed for better understanding of decisions.

‘The hardest part has always been getting everyone to agree on big decisions.
You have a myriad of personalities in the room so it is not easy. The reality of
the situation is that the newspaper model is changing. A lot of classified
advertising is migrating online away from traditional newspapers, especially in
the area of employment and real estate.

‘Back in 2000, The Sunday Times recruitment section was 60 pages. It has been
as low as eight pages this year. On the other hand The Sun has had its biggest
year ever in advertising, so there have been conflicting signs.

‘Classified advertising, however, won’t come back. We will never get back to
the good old days of 2,000. Newspapers can still have very profitable
circulation revenue, which is now higher than advertising revenue in some
cases.’

For Panuccio, the challenge will only get harder in the future, not easier,
as more and more people go online and also self-publish. But you get the
impression that will only make her more determined to succeed.

WAPPING WOES

News Corp’s net loss has come in at $3.4bn (£2.1bn), compared to a $5.4bn
profit for 2007/08. The UK

suffered a drop in profits despite reduced depreciation expense on printing
presses decommissioned in

2008 because 14% lower advertising revenues ­ and higher marketing and
productions costs ­ had a net negative effect.

Chairman and CEO Rupert Murdoch was unequivocal on the issues faced by the
global business.

‘The past year has been the most difficult in recent history, and our 2009
financial performance clearly reflects the weak economic environment that we
confronted throughout the year.

‘We streamlined all our businesses and continue to do so, at the same time
adjusting to the revolutionary changes taking place throughout the media
industry.’

Newspaper and information services contributed revenues of $96m for Q4 ending
30 June 2009 ­ a decrease of $167m on the previous year. Revenues for the whole
year were down to $466m, a $320m decrease.