Previous Section Home Page

Column 434

look in the mirror, we will discover that we have one for ourselves. One often finds more naked flesh in The Guardian than in The Sun .

The change in the nature of the newspaper market applies just as much to the discrimination of readers in all part of our community. As the hon. Member for Cannock and Burntwood has said, the interesting question relates to The Times . Why are we ignoring our normal monopoly and fair trading conventions, if not our rules, when a newspaper deliberately doubles its loss on a sustained basis ? We are talking not about a one-off price reduction, but about a sustained campaign to reduce the price of the newspaper.

It is not for me to argue for Mr. Black, Hollinger Incorporated or the Telegraph Group, although I have friends who work for it. It is not for me to argue whether Mr. Black, or his directors, were wrong to get involved in the price war. It may have been wrong for the Telegraph Group to cut its price, but I do not want to second-guess it. A price war requires two to tango.

As a result of that price war, the number of broadsheet newspapers will fall significantly, and rather faster than the normal process of movement in the newspaper market. We are used to seeing people create newspapers in this country. My namesake, but no relation as far as I know, because I suspect that he was born without parents and died without children, Horatio Bottomley, showed how it was possible to build up newspapers, in part by pandering to people's prejudice and by being a great advertiser.

We have seen the creation of great newspaper families, in part by them backing good editors and by conducting vigorous, but often unsuccessful, campaigns. I cannot think of a single campaign run by the Beaverbrook papers Press between the wars that was successful, although I have not subjected them to detailed analysis. People quite enjoy campaigning, even it is not a success.

We have seen newspapers increase their circulation to 5 million copies, and then decline. That is part of the normal cycle, and it is certainly not for the House to argue that we should have a set number of broadsheet newspapers--so-called serious, quality newspapers. In this country, we have the distinction of a greater diversity of newspapers and easier access to creating a newspaper than elsewhere. It is interesting to note that France has one Sunday newspaper, of no great account. We now have good weekend newspapers on Saturday and Sunday--in part due to the innovations of The Independent --which offer fine, detailed coverage.

The current problems have arisen because we have been setting the wrong rules for the media, and not applying the rules we have. I have already referred to the Sunday Times takeover, which was a open breach of the law. In the past five years, we have set laws about cross-media ownership, but we have focused on the wrong target. Technology has overtaken us, plus some people's clever wriggling around the regulations.

We said that major newspapers could not become satellite broadcasters. Maxwell BSB did not work, but Murdoch Sky did work. We now recognise that there will be no shortage of capacity in satellite broadcasting--once more Astra satellites are operational, as many channels as possible will offer the service. I suggest that we should accept what the major media groups, including Pearson, Associated Newspapers and Guardian Media, have said. They believe that we should drop the bar on those groups

Column 435

having more than a 20 per cent. stake in terrestrial broadcasting. It may be too late for some but it may open up the market in a better way.

We should try to treat newspapers as though they are ordinary industries, as far as possible. The same approach goes for rules that apply to journalists and for the ownership of newspapers. That would suggest that the Office of Fair Trading and the Monopolies and Mergers Commission should be asked to examine newspapers. I think that they should recommend that any group or individual should be required to divest if it or he has a national newspaper circulation that is 20 per cent. of the market or more, unless there is only one title. If the group or individual has one title that has 35 or 38 per cent. of the market, that is fine.

We know, of course, that newspapers can cross subsidise on a loss-making basis, which is what The Times is doing. I suggest that it has increased its losses by 50 per cent., if not 100 per cent. Unless it can show that at that level of pricing it can, with a reasonable time scale, start making a profit because of extra advertising revenue or extra sales, it should be required to stop the loss-making subsidy or face a mandatory divestment order. That would wake people up to some extent. At the same time, it would be reasonable and fair.

Why did that approach not apply to the Observer ? The answer is that, in terms of the market, it did not matter. We should be able to say what does matter in the market. We should have some discretion. If someone said of the magazine market, in which I think there are 5, 000 titles, "Why is Naim Attallah able to subsidise The Oldie for as long as he chooses ?"--I am sorry that he is choosing not to do it for longer, because I think it is a good magazine, or at least the writing is good--the answer is that it does not matter all that much. If someone says, "What about the Literary Review and its subsidy ?"--£25 comes to me every other month if Auberon Waugh accepts one of my articles--the answer again is that that does not matter too much to competitors.It does not threaten The Times Literary Supplement and the book review pages in serious newspapers.

There is a scale within which some things obviously matter while others do not. We can argue about where between those two points we should start paying attention. I would argue that the issue of The Times is way beyond any margin of debate.

Mr. Robin Cook (Livingston) : I would not dissent from any of the points that the hon. Gentleman has made, but I caution him on where he is taking the argument. I think that he will agree that, if we take as an example that delightful magazine, The Oldie , running at a loss, the test of whether it is guilty of predatory competitive behaviour is not that it is running at a loss but whether there is predatory pricing that is designed to force other magazines out of the market. None of the publications to which the hon. Gentleman has referred could possibly be accused of predatory pricing, albeit they were or are running at a loss.

Mr. Bottomley : Maybe so. I can only offer my thoughts, which may be inadequate because this is the second time today that I have bothered the House with a few reflections.

Column 436

I think that we are in basic agreement. Some things matter, some things matter more and some things matter a great deal. I have a friendly disrespect for the press. I am happy to condemn it. I think that it should face the same controls as we do as Back-Bench Members in Parliament, where there are few rules that really restrict us. It boils down to what people think we can get away with or what they are willing to tolerate from us. Those are the considerations that matter most. As I said during the debate on referring issues to the Committee of Privileges, we should set standards for ourselves. At the same time, the press should set standards for itself. Our standards should be the higher. That would seem to be reasonable. It is more elegant if the press criticises politicians rather than politicians criticising the press. In this instance, we are not criticising it. Instead, we are considering the business side of newspapers, and that matters more.

Mr. Dalyell : The hon. Gentleman is making a thoughtful speech. On the business side, can The Times , at a price of 20p, be seriously expected to make money without at first killing off at least one other broadsheet newspaper ? If the answer to that question is no, is the Murdoch policy of The Times at 20p not a clear example of predatory pricing, which makes the hon. Gentleman's worries all too real ?

Mr. Bottomley : The hon. Gentleman may be right. That is a matter now for the OFT. I agree that it does not have to spend so very long looking into the matter, at least on a preliminary basis. There is a time constraint, because of the market conditions.

If News International, the publishers of The Times , can show that, even if other newspapers came out of the market, it has the prospect of making money at 20p--it does not have to guarantee it--I would not want to stand in the way of such a large donation to readers. Clearly, it is good that people can buy a newspaper at a lower price. At times, newspapers have acted like a cartel in pushing prices up. We are now getting at them for cut-throat competition. Life is like the tide--a sort of sine curve. At the moment, we are concerned about cut-throat competition.

The Independent started to lose its way before price cutting began. To depersonalise the matter, its proprietors made a mistake in saying that they wanted to knock out The Sunday Correspondent, and their greatest mistake was to launch The Independent on Sunday . They came into the market before securing their base, and they have been unable to keep both going effectively. I reserve my comments on one or two of the editorial judgments until after the editorship has changed.

Not surprisingly, the slide in The Daily Telegraph 's circulation began before predatory pricing started. The Evening Standard has also seen a reduction in its circulation. If I were discussing the matter outside the House, I would say that, if both The Daily Telegraph and the Evening Standard spend their time attacking my wife, they cannot expect their sales to stay up, because she is one of the more popular people around. If they tell people that she is unpopular, they will lose interest.

A new newspaper will be launched the next parliamentary day--today, in normal terms. People will stand at 40 spots around London and give away 100,000 copies of the newspaper. Presumably it will begin as a

Column 437

loss-making newspaper, but it will not keep going for long at a loss because there is no big pot of gold to keep it going. It must become a commercial success.

What the House is saying to the Office of Fair Trading, the Monopolies and Mergers Commission and the proprietors of News International is that we are not interested in their driving other newspapers out of business and then putting up their price, having driven part of the competition out of the market. They must demonstrate that they will keep the price low, whatever happens in the competitive marketplace.

If they then say that it is a challenging business and ask why we are so jealous about them making money out of Sky after it nearly went bust, we must answer that that is the past. We are concerned about the future, and what provides the best opportunities in the medium term for media consumers. We are on the side of the readership and, in the context of television and radio, those who watch and listen.

If News International is interested in my views on this matter, it should start to pay more attention to the price at which it makes its encryption service available to satellite television. That, too, will be a matter of interest.

Where, for some reason, there is an effective monopoly, it will require people taking a legislative interest which, in time, will become stronger and more effective than some of the other controls that we thought we had brought in--not against News International but to create a media system that allows competition, entry, adventure and entrepreneurs but avoids unfair competition.

There is not much more for me to say, except that the best thing is for News International to say at what price The Times could be sold profitably. If it then says that The Times is not a commercial proposition, it should try to find a solution for it that does not require sustained, unfair price competition for its competitors. In the next five or 10 years, some newspapers will go out of business. A battle is going on between Today and the Daily Mirror , and I do not know who will win. It does not matter to me whether both survive, but I doubt whether both will.

I do not wish to pick on a particular Sunday newspaper, but if I were talking to a friend in a pub, I would say that I am not sure that we gain a great deal from the Sunday People . It does not add much that does not already exist in the Sunday Mirror and the News of the World --or perhaps vice versa.

In the daily market, I am not sure what the long-term place of the Daily Star is. However, if we looked 20 years or more into the past--I forget the precise timing--we would remember that The Sun would probably have gone out of business if Rupert Murdoch had not come along and turned it into a successful newspaper with his editors. The saving of newspapers can therefore be as important as their destruction.

We should have a reasonably fair playing field. The only level playing field that I ever encountered was in a water polo swimming pool, which is rather easier as it has less unlevel ground than most. If we speak clearly about what we think the principles should be, we can let the outcome be uncertain. One pays for it, but one avoids the unfairness that was wisely mentioned by the hon. Member for Cannock and Burntwood.

Column 438

12.19 am

Mr. Denis MacShane (Rotherham) : I want to make a short contribution on the impact of the price war on the regional press. I have to tell the hon. Member for Eltham (Mr. Bottomley), who gave a most interesting discourse, that The Sunday People is widely read in Rotherham.

When I was a boy at school, there seemed to be many more newspapers than there are now. When any newspaper drops out of existence, for whatever reason, I think that democracy is diminished. The loss of former Ministers or their replacement today is a headline ; the loss of a newspaper is extremely bad news. I agree with Benjamin Franklin, who said :

"If I had to choose between a government without newspapers or newspapers without government I would have no hesitation in opting for the latter."

We have had price wars, or circulation wars, before in this country-- notably in the 1930s, when giant circulation wars were conducted by giving away encyclopaedias, not by cutting prices. It would be a nice treat today if The Times were competing by offering "Encyclopaedia Britannica" instead of chopping its price by more than 50 per cent.

Although I want to enter some words of reservation about The Times , I think that, in the past year or so, its coverage has improved immensely. Its features are strong. Its sense of news--I speak as a former president of the National Union of Journalists--is extremely positive and interesting. Today it led on Mr. Santer's repudiation of the Prime Minister's views on Europe--a tough, no-nonsense news story, which I think other newspapers should be running with. Perhaps, instead of conducting the price war, it could have stuck to its new, rather more virile, news feature and comments service, and handled the other competition on fair terms.

I am very worried about the fact that The Independent is under threat. The Independent has been a positive contribution to the British press and, were it to go out of existence, it would emphasise once more the fact that we are living in a country in which, in recent years, we know the price of everything and the value of nothing. I hold The Independent in high esteem. It is a paper of great value, which has contributed much to debate in our society. It is not for the House--not for politicians or Ministers--to say which paper lives and which dies, but, inasmuch as we have regulation of anything, we are entitled to hold a view about pricing that will place that newspaper under severe threat.

In addition, the pricing war that is now under way places the existence of some of our regional papers under potential pressure, according to research that I have undertaken with the regional press. Statistics from the Audit Bureau of Circulation are not yet available for the first half of this year, during which The Times and The Daily Telegraph jumped over the precipice on the price front, but the signs are that sales are down, and that advertising is under threat. The fact that newspapers such as the Yorkshire Post in my part of the country and the Northern Echo continue to maintain a strong existence should be important to Parliament.

We live in a centralised society. We live in the only country in Europe--I speak now about what is read in England although it also affects Scotland, Wales and Ireland--where the press is entirely focused in one city. The French press is more regional. I think that the strength of the German economy and German society is that there

Column 439

is no one city that, as it were, controls the free flow of information in the way that London does in the United Kingdom.

Mr. Dalyell : Does my hon. Friend recognise that, if there were any serious threat to either the Glasgow Herald or The Scotsman , many Scots would think that the quality of life in Scotland was thereby diminished ? It is a serious matter, as my hon. Friend says, not only for the regional press, but for the Scottish press--certainly in relation to advertising. When the threat last arose and Roy Thomson faced problems, he was made to choose. His editor, Alistair Dunnett, said that at that time the score was laid firmly on the line that it was one or the other, and people could not use television to harm competitors.

Mr. MacShane : My mother, who lives in Glasgow, and many of my aunts worry each morning about which paper they will buy, the Glasgow Herald or The Scotsman --both are distinguished in their own way, and both contribute much to the different climate of political culture and debate in Scotland. Were those papers to be faced with any serious challenge to their existence by a pricing war determined in London but okayed in the United States, that would be a serious threat to democratic debate in our country.

In recent years, there has been an increasing tendency for households to buy only one newspaper. The hon. Member for Eltham mentioned the changing pattern of newspaper purchase and reading habits. Recently, when I have found myself jingling the coins in my pocket on a railway station, I have opted for The Times simply because it is half the price of my favourite reads, the Financial Times and The Guardian . As a materialist, I have to count my pennies.

A variety of press is expressed through our healthy and positive regional daily papers. I am referring not to the free advertising sheets, but those papers which employ a substantial number of journalists. The Western Morning News has 63 reporters covering its region, compared with The Times and The Daily Telegraph , which have none covering that region. Those regional daily papers make a great contribution to our regional culture.

I hope that the Government are prepared to accept such concerns and to support the reference to the Office of Fair Trading and the Monopolies and Mergers Commission if it is relevant. I also hope that the Government are prepared to join in the cross-party desire to discover what measures can be taken. The moment one regulates, introduces laws or sets up a commission that can determine pricing or advertising, one interferes in the pure logic of the market. Most people in this country want a free, varied, pluralistic and decentralised press.

I fully support the speech of my hon. Friend the Member for Cannock and Burntwood (Dr. Wright), and I am delighted to see hon. Friends present who, like me, are concerned about the plurality of the press in this country. The House will have to return to this subject. 12.28 am

Mr. Chris Mullin (Sunderland, South) : I congratulate my hon. Friend the Member for Cannock and Burntwood (Dr. Wright) on an excellent speech and on his good fortune in winning this debate.

Column 440

The price war is a symptom of a much larger problem. Gradually and remorselessly, control of most of what we see and read is slipping into the hands of a handful of ruthless megalomaniacs. As other hon. Members have said, it is perhaps the most serious threat to democracy in this country.

Mr. Murdoch is only the most obvious of the megalomaniacs with a grasp on our national newspaper and television industries. He owns five national newspapers and 50 per cent. of BSkyB. He appears to enjoy special arrangements that apply only to him. I understand that a regulation is enforced against all other ITV companies stating that at least 50 per cent. --or perhaps 60 per cent.--of what they broadcast must be produced domestically. That does not apply to satellite television, with the result that Mr. Murdoch is able to buy off-the-peg junk television from Australia and America. He is gradually dragging down standards in ITV, which has to move down market to compete with him. He is also able to accumulate the sort of profits that have allowed him to engage in the present ruthless price-cutting war.

The Murdoch press has polluted our culture during the past 20 years. The effect of Mr. Murdoch has not been just on those newspapers that he happens to own ; it has been on competitors who have felt obliged to go down market to compete with him. Nowhere has the effect of The Sun been greater than on the quality of the Daily Mirror , which has deteriorated badly in recent years. Now there is the spectacle of ITV going down market to compete with BSkyB. Gradually, documentaries such as "First Tuesday" and "This Week" have disappeared. "World in Action" is under pressure to move to a slot at 11 o'clock at night, when it will have an audience of 2 million instead of 8 million. Murdoch's effect on ITV will be similar to his effect on the Daily Mirror . Everyone will go down market to compete.

Of course, it is not only Murdoch who is involved. During the past two years there has been the rise, for example, of Mr. Michael Green of Carlton Television. He now owns a great swathe of ITV and he was donating money to the Conservative party even as he bid for the franchise. He also controls 36 per cent. of Independent Television News and 36 per cent. of Independent Radio News by virtue of the fact that he controls two of the major ITV companies.

Mr. Gerry Robinson, who came from the catering division of Granada Television, now has a similar hold on two other commercial television companies and a large stake in the ownership of ITN. I believe that that is already being reflected in ITN, which increasingly consists of one anchor man talking to another anchor man, usually about a mile from ITN headquarters. There is pressure, too, to move "News at Ten" out of the way to make room for junk television--to 6.30 pm or 11.30 pm when the audiences will be similarly diminished.

All that is having an effect on our national culture. It is not a left or right-wing bias that worries me ; it is trivialisation. It is becoming increasingly hard for the average citizen to discover from the daily newspapers or the television that he or she is likely to be watching what is going on in the world. Already one sees the catastrophe in Rwanda having difficulty in outbidding Prince Charles or whatever the story of the night happens to be on ITV news. That is a large problem. It will become increasingly difficult to have a diverse political culture if we do not have a diverse source of news and information.

Column 441

There are some obvious solutions. The most obvious is a little bit of liberal anti-monopoly legislation--a thought that I am sure will appeal to easily the majority of British citizens. It would not cost any Government any money, and would require only a little bit of political will. The proposition that there should be only one daily and one Sunday newspaper per proprietor would not prove politically controversial. It would make a big difference to the diversity of newspaper ownership in Britain.

If we wanted to go a step further we could lay down one or two rules about the kind of proprietors or corporations that would be entitled to bid for the assets that come on the market. We could go down the American road--I do not necessarily argue that we should--and say that only corporations owned by British citizens or at least EC citizens could compete. Mr. Murdoch has already changed his nationality once from Australian to American in order to come within the American regulations. It is a stunt that I do not think that he would find it easy to pull twice.

There is great pressure to reduce the limits on cross-media ownership. They should be maintained. The regulations about the percentage of domestic production that already apply to independent television should be extended to Sky television. The fact that they have not been is an anomaly which I assume is a pay-off to Mr. Murdoch for his support over the years for the ruling party. It is an anomaly that cannot be justified and should be removed.

The hon. Member for Eltham (Mr. Bottomley) said that something must be done about Murdoch's monopoly of the encryption system. Unless something is done about it, he will maintain his grip on satellite television and there will be no question of competition there. Something must be done to deprive him of that monopoly.

With regard to independent television, the Broadcasting Act 1990, as everyone knows

Madam Deputy Speaker (Dame Janet Fookes) : Order. I am sorry to interrupt the hon. Gentleman. Obviously, on occasions such as this, the subject matter is fairly broad, but I remind the hon. Gentleman that the subject is newspaper prices.

Mr. Mullin : One of the questions that we must ask ourselves is from where Mr. Murdoch has obtained the enormous amount of loot that enables him to cut the price of his newspapers and to sustain losses of the sort that he is sustaining. The answer is that it comes from other parts of his empire, one of which is satellite television. That is why television is relevant. I am also describing the overall effect that the price war has on our political culture, of which television is an aspect. Mr. Murdoch has other television assets as well. He is also getting his hands on a slice of our publishing industry.

I shall not dwell on it, Madam Deputy Speaker, but I return for a moment to where I was. Before the Broadcasting Act 1990, ITV was not broke and did not need fixing. I fail to see why the drift towards a monopoly that is beginning to occur there should be allowed to continue. In fact, it should be reversed.

We should not be afraid of regulation. Of course the state must be careful how it regulates the media. The only excuse is that one is regulating in the name of greater diversity, plurality and a greater flow of argument and information than already exists. Regulation has worked extremely well in the BBC over the years. It is one reason why the corporation remains the envy of the world and

Column 442

why even the Government decided the other day to keep the BBC more or less as it is. We should not be afraid to create by way of regulation a newspaper industry that is as free and high quality as the BBC is in broadcasting.

12.40 am

Mr. Robin Cook (Livingston) : I congratulate my hon. Friend the Member for Cannock and Burntwood (Dr. Wright) on securing this Adjournment debate on an important issue, which has attracted thoughtful and knowledgeable speeches from hon. Members representing both major parties. Perhaps it is a pity that no representative of any minority part is present to participate in a debate on an issue that affects the health of our democracy. Nothing comes nearer to touching that than the variety of our newspapers and the diversity of views that they contain. The newspaper industry has played an important part in our debates and it is right that, before the House rises for a prolonged period, we should have found time to debate a development that is likely to precipitate a crisis for a number of newspapers.

I have twice written to the Director General of Fair Trading about the price cuts at The Times . Price cutting and competition at an unrealistically low price is becoming a feature of the Murdoch press generally. Leaving aside the references to The Sun already made tonight, there is the interesting example of Today launching a Scottish edition at 10p. There is no way that one could justify such a price in calculating the commercial cost of producing that newspaper and the profit one could hope to make. That pricing is clearly a decision to obtain a market share by undercutting, at a loss, existing newspapers in that market.

Last September, I wrote to the Director General of Fair Trading drawing his attention to the reduction in the price of The Times to 30p. I will quote part of Sir Bryan Carsberg's reply, in declining to undertake an inquiry. I apologise to the House for wearying it with a quotation at this time, but it is a short one. He said :

"At times there is a fine line between aggressive price competition and predatory pricing. I am satisfied on the basis of information available"

last September

"that the reduction in the cover price of The Times reflects a calculated commercial decision by News International."

If there was only

"a fine line between aggressive price competition and predatory pricing"

last September, when The Times reduced its price to 30p, the subsequent reduction in the past month to 20p marches right across that fine line.

As the Minister is aware, I wrote again to Sir Bryan, suggesting that there is an even more compelling case for an inquiry into whether The Times is guilty of predatory pricing. Sir Bryan has agreed to an informal inquiry, to establish whether there are grounds for a formal reference. I argue that there is an overwhelming case for such a formal reference. It is hard in logic to avoid the conclusion that there is a case for a formal inquiry.

The grounds for an inquiry into predatory pricing were set out by the Director General of Fair Trading last year following his report on Thamesway. In that report, Sir Bryan set out three tests by which he would assess whether a company was guilty of predatory pricing. The first test was whether the new price was bound to incur losses for the company that had set it. I have to say that it is beyond contention that the reduction in the price of The Times to 20p will incur losses. It is not, as Sir Bryan expressed it last

Column 443

September, a "calculated commercial decision". There is plainly no commercial justification for a reduction in price to 20p. It is clearly a decision driven by only one consideration--to undercut the rest of the market at a loss and thereby behave in a predatory fashion.

Before The Times had its first price cut, it was selling at 45p. All the figures are highly confidential, and therefore it is possible, as some of my hon. Friends have done, to produce different figures, but they all point broadly to the same conclusion. We understand that, at that stage, the margin on every copy of The Times was 30p. That is the amount left over after meeting the direct printing and distribution costs.

If that is the case and 45p produced a 35p margin, when one reduces the price to 20p, one is left with a margin of only 5p, because the printing and distribution costs have remained constant throughout that process. Those figures might be out by a penny or two here or there. It may indeed be 2 p, as one of my hon. Friends suggested. It might be only 3p, as I have seen suggested by one of the rivals to The Times . But even a margin of 5p comes nowhere near meeting the publishing costs involved in running the journalist enterprise with its overheads, not to mention its indirect advertising costs. It is probable that The Times is now running at an annual loss in excess of between £20 million and £25 million a year. In other words, the decision to reduce its price to 20p was taken in the full knowledge that it would incur substantial and continuing losses, which have no prospect of being turned around by any increase in sales, because the margin on the increased copies sold comes nowhere near making a contribution to the overheads. In short, the losses are possible only because The Times is part of an immense empire and is now being cross- subsidised by the profits of other parts of that empire.

The problem is that, if The Times behaves in that way, it is setting a price that cannot be matched by independent newspapers, such as The Independent or The Guardian , which do not belong to large conglomerates and cannot hope to obtain large, continuing subsidies to cope with the losses that they would incur were they to try to compete with The Times at its present price. I believe that it is incontestable that the first test has been met and that the price reduction is increasing the losses for a paper that was already making a loss before the cut.

The second test was whether predatory pricing was a feasible business strategy in the particular market--in this case the newspaper market. I say with some regret that I fear that it is only too likely to be so. Indeed, the hon. Member for Eltham (Mr. Bottomley) made the perfectly reasonable point that Rupert Murdoch's conduct is rational market behaviour whether or not we like it. The objective of predatory pricing is to put out of business rivals in the market. That objective could be achieved.

Indeed, there is already evidence that predatory pricing is working towards that objective. Sales of The Independent are now down by 20 per cent. on a year ago, and that loss occurred even before the latest cut in the price of The Times . Since that cut to 20p, the major regional and the Scottish and Welsh newspapers have between them lost some 30,000 daily sales.

I echo the point made by my hon. Friend the Member for Rotherham (Mr. MacShane). We in Britain already have a

Column 444

much more centralised and homogenised national newspaper industry than any other country in Europe : all the others have much more diverse, regionally based media industries. We already have dominant national newspapers that produce broadly similar editions, from Kent to Caithness. If we were to lose our existing regional press and the Scottish and Welsh newspapers, we would lose one of the last remaining elements of pluralism in our printed media.

The Scotsman , The Glasgow Herald and--this is a studiously politically neutral observation--even The Birmingham Post are part of the richness of their local politics ; they contribute to regional political life, and therefore to the pluralism and diversity of British political life. All those newspapers have made losses since the introduction of price cuts by The Times . The problem is that, even if only a relatively modest number of readers desert them--attracted by the new price of The Times --that minority will destablise their finances for all their readers. A 25 per cent. loss of readers might be sufficient to put one or more papers out of business : that would mean the loss of the paper to the 75 per cent. of readers who wanted to continue to read them.

Sir Bryan's third test in regard to predatory pricing related to the intentions of the alleged predator. In this case, the predator's intentions are only too clear. As one of my hon. Friends pointed out--I think that it was my hon. Friend the Member for Linlithgow (Mr. Dalyell)--Rupert Murdoch is on record as saying that he expects only the Daily Mail , The Sun and The Times to be in existence at the turn of the century. I fear that that was not simply a neutral, passive observation ; I suspect that it is part of a strategy, and that Mr. Murdoch intends to play an active part in achieving the position to which he referred.

Paradoxically, a newspaper proprietor who insists that his editors preach competition is currently practising unfair competition. A proprietor who, through his newspapers, preaches the supreme virtue and value of consumer choice is now acting in a way that is calculated to restrict consumer choice in the newspaper industry. That brings me to the wider points beyond the narrow issue of whether predatory pricing now takes place in the printed media. They were mentioned by my hon. Friend the Member for Sunderland, South (Mr. Mullin), who said earlier this evening that he might not speak in the debate ; I am very grateful to him for changing his mind, and making some interesting observations based on long study and a deep knowledge of the issue.

Even before the recent cut in the price of the Murdoch papers, Rupert Murdoch controlled newspapers representing one third of both the daily and Sunday circulations in Britain. He also has the controlling interest in the sole satellite service, which is increasingly penetrating our television viewing figures. In terms of markets generally, the threshold that conventionally triggers an inquiry into whether a monopoly is being established is 25 per cent. Rupert Murdoch is already well over that threshold in terms of the printed media industry, and may soon achieve it in terms of an aggregate of the printed media circulation and television viewing figures.

This, however, is not just any market ; the media constitute a particularly sensitive market. A free and open society requires free and open media which permit the expression of a diversity of opinion.

That brings me to another problem that acts as a backdrop to this exchange. I mentioned earlier that there are two requirements from our media if we are to have a

Column 445

healthy democracy. First, we should have a variety of newspapers and, secondly, those papers should contain a diversity of views. There is no diversity of editorial view in the Murdoch press. It is the same standard line--right-wing and Conservative in political views, intolerant and judgmental in social views--and it is united in a third factor which is a wild enthusiasm for Sky Television. That enthusiasm for Sky is so common and so deeply ingrained in the Murdoch newspapers that the day after he relaunched Sky Television last year produced 12 sq ft in the Murdoch press reporting the relaunch, with no fewer than five separate articles in The Times . I suspect that not all that was entirely the result of the free play of editorial judgment as to the news value of the event.

The question we have to ask is whether we want the market share of that single news corporation to get bigger. That is what is happening. I said earlier that, before the price cuts began, the Murdoch newspapers had one third of the circulation of the dailies and the Sundays. I have to report to the House that, as near as one can identify the figures, before the last cut to 20p in the price of The Times , that figure had increased to 36 per cent.

It is likely, given the momentum of the latest price cuts, that we shall shortly see the circulation of the Murdoch press rise from a third of total circulation to something approaching two fifths. Do we want that expansion and, in particular, do we want that expansion at the expense of other newspapers folding ? My answer is an unequivocal no. That answer is also informed by a broad view of the need for a diverse media and of the importance of a diverse media for a healthy democracy.

It is not necessary for the Minister to embrace my prejudice for pluralism within the media as an important ingredient in our democracy. He could agree with my conclusion on the much narrower premise about what is important for fair competition. The Minister has a robust view of the importance of fair competition. He has founded an entire ideological career on the principle that fair competition gives the optimum results in terms of economic performance and consumer choice.

Very well : at this hour of the night, for the purpose of the debate, I shall accept the premise from which the Minister sets out. If that is the basis on which he has founded his ideology, he must be troubled by the behaviour of Rupert Murdoch, particularly in relation to the pricing of The Times , because that is unfair competition and predatory pricing, which is intended to distort the market and to force out of business other newspapers that are seeking to provide a price that genuinely reflects the cost of producing a newspaper. If the Minister and his colleagues fail to respond to the challenge for free and fair competition, they will be making a mockery of their own free market ideology.

12.57 am

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : It is customary on these occasions for the Minister to begin by saying that he is glad to be here to have this opportunity to answer the debate. On today of all days I say that with special feeling.

I listened with interest to the speeches by hon. Members on both sides of the House, even that of the hon. Member for Cannock and Burntwood (Dr. Wright), who singled me out to chide me for displaying a lack of attention to what

Column 446

he was saying. I have to admit--he knows this from sitting for many months on the Committee considering the Deregulation and Contracting Out Bill--that on occasions when he was speaking my attention did wander.

Fortunately, his speech wandered rather more, so it was possible for me to cut in at a later stage and still pick up the same point. I do not think that I missed anything of importance in what he said. I discovered that, like Wagner's operas, his speeches had sublime moments but somewhat turbid half-hours. Nevertheless, hon. Members of both parties have made important points on what I fully accept is a matter of some importance and general interest.

To begin, it is worth pointing out that Britain has a strong national press. We have 21 national newspapers, including dailies and Sundays and, as the hon. Member for Livingston (Mr. Cook) said, we also have a strong regional press. We therefore have a very lively printed medium. There is, of course, intense competition for sales and advertising revenue.

A feature of recent years has been the increase not only in competition but in diversity. I am a great believer in diversity--I wish that there were more newspapers that were kind to the Government, but I suppose that is rather too much to hope for. In the second half of the 1980s, national newspaper publishers improved their profit and loss accounts through two windfalls.

The first was the end of overmanning, which was associated with the move from Fleet street. Regrettably, I did not notice too much support for that move on the Opposition Benches. I think that that move was one of the major reasons that a newspaper such as The Independent was able to get going in the first place. The end of restrictive practices and the application of new technology meant that the cost of newspaper production was dramatically reduced. I welcome that, because it helps to promote diversity.

The second windfall was the emergence of colour in newspaper advertising. The hon. Member for Livingston neglected to mention the importance of advertising revenue to newspapers as a factor that will have to be taken into account in any attempt to analyse the motives of those who recently indulged in price cutting and the extent to which they seek to make up through advertising revenue the losses made on cover sales. I shall come to that issue a little later.

Mr. Dalyell : I do not doubt for a moment that the Minister's belief in diversity is absolutely sincere, because it fits in with in his other beliefs, but can The Times at 20p seriously be expected to make money without first killing at least one broadsheet and thereby reducing diversity ? If the answer is no, is not the Murdoch policy of selling The Times at 20p a clear case of predatory pricing, which reduces diversity ? If that is the case, and if the Minister wants diversity, why does he allow Murdoch to adopt that policy ?

Next Section

  Home Page