This blog was posted at www.businesszone.co.uk by Giles Simon and I have reposted here for members interested in employee ownership.
It’s well known that local newspapers are in crisis. Advertising revenue is down for many in the industry, we’re seeing big changes and vibrant discussions across the newspaper industry about alternative business models. Journalists and employees of a local paper in Scotland – the West Highland Free Press – think they’ve hit on to a viable option. Whether it will work across the industry is a different question, but this option looks set to work for them.
The paper was founded by five friends in 1972 as a weekly newspaper. But as they began to pursue new interests they felt the time had come to sell their shares in the newspaper. Rather than selling the business on the open market, they approached the employees of West Highland Free Press to see whether they would be interested in buying the shares.
Ten employees now own and run the business, and the creation of an employee benefits trust will hold the shares for the employees and ensure that the paper continues to run at the heart of the community.
One of the biggest challenges facing innovative business models like this is securing finance, so when the traditional bank route closed, the Baxi Partnership, which controls a £20 million fund specifically for facilitating employee buyouts, was able to bring together a funding package that allowed 10 employees to purchase the title from the paper’s five founders.
Baxi also worked with other specialists, including Co-operative Development Scotland, which works to increase the number of employee-owned and co-operative businesses in Scotland, and Co-operative and Community Finance, which has been providing loan finance to co-operative enterprises since the 1970s.
Employee ownership is no panacea for a failing business or industry – they have to compete and make a profit like all businesses. So why do the employees at West Highland think that employee ownership can work for them?
Paul Wood, Managing Director there, explains:
“Despite what is happening in the wider industry we are optimistic about the future. The Free Press has always been a breeding ground for talent and employee ownership will not only help us retain that talent but make even better use of it.
“Our readership is loyal and discerning and we think we can build on this base and further develop the business through the greater participation that employees will have in the way the business is run. Through our staff we are already identifying opportunities for developing content, utilising new-media and developing a news agency side to the business.”
This has always been one of the strengths of employee ownership – employees that are motivated, care about the business, put effort in and go the extra mile to ensure that the business continues to grow.
As Ian Taylor of Co-operative and Community Finance puts it, “West Highlands Free Press is a fine example to show how employee buyouts can increase the motivation and job satisfaction of staff. For this company, employee-ownership was the only business model which would enable the paper to continue running at the centre of its community and ensure all members of staff job security.”
Sarah Deas, Chief Executive of Co-operative Development Scotland (CDS), agrees: "Research shows that employee-owned businesses [like John Lewis Partnership, Eaga or Loch Fyne Oysters] are more productive and sustainable, so there is enormous potential for this type of ownership model to contribute to the development of Scotland's economy.”
Employee ownership might not be the answer for every local paper. But as West Highland Free Press have realised, if there’s a market then an employee buyout can create more motivated and committed employees who actively help grow and develop the business.