Sly 'sexes up' old news and draws a Blank at Trinity Mirror

Front-page news it was not. Six months in the waiting, the announcement - after several leaks and much speculation - of Sly Bailey's shake-up of stalled newspaper group Trinity Mirror was a modest affair. Piers Morgan, the Daily Mirror's outspoken editor, kept his job and the national titles (which include the Sunday Mirror, The People and the Daily Record) will not be sold. There will be job losses - but 550 is less than many had feared - and there will also be asset sales, but of the Irish titles. The plan is to cut costs, "stabilise and revitalise", and then set about achieving growth.

Simple really. So why didn't anyone think of it before? Well someone did - Ms Bailey's predecessor as chief executive. It was Philip Graf who introduced the "From Biggest to Best" shake-up and Ms Bailey's take, one industry insider counters, is simply "a more glamorous and sexed-up version". Mr Graf is now derided as someone who let the group falter.

It is clear what is wrong at Trinity Mirror. The country's largest newspaper group has a strong stable of regional titles, but most agree that the national titles have been left to drift since Trinity and Mirror Group joined forces in 1999.

Ms Bailey concedes she was "disappointed" by what she found when she joined from magazine giant IPC - namely, a merger in which everyone had lost interest. "After a year or so, progress ceased to be made and many of the potential benefits of the merger were locked up in boxes marked 'next year', 'too difficult', 'not invented here' and 'thanks but no thanks"." She adds that the brands also suffered from a lack of "direction and control" from the centre.

All of which must make uncomfortable reading for long-standing chairman Sir Victor Blank. He denies the board let the company drift, saying that, to the contrary, they acted to improve conditions by appointing Ms Bailey. That was six months ago, however, and as Ms Bailey herself points out, the rot set in long before. Sir Victor refuses to be drawn. "The board did its job," he insists.

The group is aiming to cut costs of £25m by 2005, on top of the £42m of savings already announced. As well as the job cuts, finance, human resources and IT will be centralised. Ms Bailey is also not afraid to shut down titles:the group is closing M, the Daily Mirror's costly Saturday supplement. Arrangements with suppliers could also come under scrutiny.

The other big tranche of the overhaul is the sale of the Irish titles. This could be construed as a bizarre decision as they are profitable; Trinity Mirror has a foot in each camp in the sectarian Northern Irish market through the Catholic Derry Journal and Protestant The News Letter.

Most analysts, however, agree with Ms Bailey's assertion that the titles are on the periphery of the portfolio. The £40m to £50m likely to be raised - Trinity Mirror has already had a number of approaches despite hoisting the "for sale" sign only a few days ago - is also likely to help.

So with the nationals safe, for the time being at least - Ms Bailey is careful not to rule anything out - the job now is to reverse what has been a terrible period for the flagship Daily Mirror. Mr Morgan, who initiated the disastrous cover price war with The Sun and misjudged how readers would react to the paper's stance on the Gulf war, retains the editor's role. This is despite his recently introduced "serious journalism" being replaced by what Ms Bailey calls a move towards "seriously good popular journalism". She says the original decision wasn't wrong but "relentless", allowing, in her words, no space for Beckham alongside Baghdad. She admits the paper has lost its way in understanding its readers and has launched a series of focus groups to find out where it went wrong and where it can improve. The idea is to differentiate itself as a must-buy product, so allowing it to compete harder with The Sun.

That, though, is a rather simplistic way to look at it because, while The Sun is its traditional rival, the left-wing tabloid must now take on the mighty Daily Mail and revitalised Daily Express as well. The battle for market share has got tougher, and although Ms Bailey insists circulation close to the two million mark is credible, advertisers, given such an array of choice, might beg to differ. Tim McCloskey, managing partner of media buying firm OMD, says: "The Mirror still has a lot of people that we want to reach, but we are not prepared to pay."

The City and the board are behind Ms Bailey, though, with many believing she is the right person to turn round Trinity Mirror. Her background in the cut-throat world of woman's weeklies stands her in good stead, and it is universally agreed that she is going about reform in the right way by tackling costs and addressing the product itself. Get that sorted out, and circulation and advertising yield should, in theory, improve.

Yet this is a market, even leaving aside the recent advertising downturn, that many feel is in terminal decline. People simply don't read newspapers as much as they used to. Ms Bailey concedes that one of the toughest tasks is attracting younger readers, and she has to do that in a market where one competitor has expanded to three.

Most of all, however, she has on her hands a company that has been left to drift arguably not just since the merger but for much longer, maybe even going back to the days of Robert Maxwell. As one analyst sums it up: "It's been under-funded for years and more recently has been poorly managed as well."