Crisis in the Scottish Press Industry - Scottish Affairs Committee Contents

Memorandum from the Scotland Office

  1.  The Scotland Office is pleased to have the opportunity to comment on the Scottish Affairs Committee inquiry into the crisis in the Scottish press industry.

BACKGROUND ON SCOTTISH PRESS INDUSTRY

  2.  The Scotland Office is aware that the Committee has heard witnesses and will be gathering further evidence on such matters as:

— The historic role of the Scottish press in covering regional, Scottish, UK and international news from the distinctive perspectives of the four major Scottish cities and their environs.

— The rise in competition from the London press with special Scottish editions.

— The decline in sales of Scottish newspapers at a greater rate than that experienced by the Scottish editions of the London press.

— The rise in competition from digital media and the corresponding falls in newspaper advertising revenues.

— The impact of technology in changing production methods and traditional roles within newspapers.

— The concerns about the viability of both the major national papers and some strictly local titles and about reductions in jobs within the industry.

  3.  The table at Annex A shows the trends in circulation for the national press from June 2005—March 2009.

UK GOVERNMENT POSITION

  4.  The Government's position is informed by several principles:

— A free and viable press is essential to enable the people of the UK to participate in all levels of government. This requires a plurality of ownership.

— The Government should not seek to intervene in the management of individual newspapers.

— The Government should not seek to intervene in the commercial management of individual businesses.

  5.  The Government's regulation of business does however impact on the newspaper industry in various ways, particularly in the regulation of monopolies and mergers, including the ownership of media, and of intellectual property.

Regulation of monopolies and mergers

  6.  The UK's digital economy accounts for around 8% of GDP and has been one of the fastest growing successes of the past decade. More importantly, the digital economy underpins our whole economy and builds our national competitiveness. Over the last 10 years the UK has been consistently closing its historic productivity gap with the other leading European economies, based largely on our take-up and adoption of digital technology.

  7.  The Digital Britain Report assesses the UK's readiness to exploit the dramatic shift to digital technology as the basis of huge parts of our economy and private lives and one part of this is how the news media are meeting the challenge.

  8.  It is important for the UK that we enjoy content over digital networks that relates to our culture and experiences as a society and informs us as citizens in a democracy. Our track record in creativity and technical innovation in existing media provides an excellent base, but this needs to be married to development of business models that enable content creators to flourish on new platforms. The market will always provide some of this content, but we need to decide what else we require, and make policy decisions to achieve that.

  9.  Action 14 of the Interim Digital Britain Report invited the Office of Fair Trading (OFT) Ofcom and other interested parties to "to undertake an exploratory review across the local and regional media sector" to inform whether change to the merger regime is desirable or necessary. The OFT is close to completing its review and is due to issue a headline report by the middle of May and Ofcom will be consulting later in the year.

  10.  The Communications Act 2003 requires Ofcom to review the media ownership rules at least every three years and to make recommendations if in Ofcom's view changes to the rules are needed. The rules are designed to strike a balance between ensuring a degree of plurality on the one hand and providing freedom to companies to expand, innovate and invest on the other. Ofcom is expected to submit its review of the current ownership rules, alongside any recommendations for change, to the Secretary of State for Culture, Media and Sport later this year.

  11.  The government recognises the important role the media plays in society and believes it is essential to have a balance of views expressed in the media. To date plurality of voice in media has been secured through statutory rules which seek to ensure that the most influential media in any community are not controlled by too few people or express too narrow a range of views and interests. These include cross-media ownership rules which prohibit the ownership of newspapers, radio stations and or a Channel 3 licence in a single market. There are also statutory obligations that provide for impartiality and accuracy in broadcasting. Changes of ownership involving newspaper enterprises are also subject to the same competition based regulation as mergers in other sectors—to prevent unacceptable levels of concentration in markets. These regulatory arrangements provide an appropriate means of controlling media ownership.

INTELLECTUAL PROPERTY

  12.  The Newspaper Society and the Society of Newspaper Editors argue that some internet providers are undermining the economic position of newspapers and infringing copyright by taking news gathered by the newspaper industry, and republishing it on the web. The operation is financed by advertising revenue which the internet providers receive.

  13.  Copyright law is determined by a combination of UK laws, EU Directives and international treaties. Copyright is primarily a civil law matter and it is mainly for rights holders to sue if they feel their rights have been infringed. The UK Intellectual Property Office (IPO) is responsible for the UK's copyright framework, but it does not function as a regulator.

  14.  The Government is encouraging the newspaper industry and internet providers to collaborate in the investigation and implementation of initiatives such as Automated Content Access Protocol. Automated Content Access Protocol marks webpages to identify the intellectual property owner.

PROPOSED SOLUTIONS

  15.  A number of solutions have been advanced by different voices in the newspaper industry, including:

— direct grants and subsidies to newspapers;

— free newspapers for all schoolchildren;

— imposing a duty on local authorities to advertise in the local press; and

— top-slicing the BBC licence fee to support local papers.

  16.  There is however no unanimity of views and some within the industry have argued that some of these solutions would threaten the independence of the press.

  17.  Government policy on these proposals will be informed by the OFT review, Ofcom's Media Ownership Rules Review and the report by the UK-wide Power of Information Task Force, published on 2 March 2009 at http://poit.cabinetoffice.gov.uk/poit/, which contributes to thinking about the way that most people regularly use the internet.

MEDIA SUMMIT

  18.  To further inform the direction of travel, the Government held a local media summit, hosted by Culture Secretary Andy Burnham on 28 April, in which key figures from across the media industry came together to discuss the challenges facing local newspapers. The event looked at various ways to support local news providers and is part of the ongoing programme of work looking at the future of media as part of the Digital Britain project. Speakers at the event included Stephen Carter, Minister for Communications, Broadcasting and Technology, Ed Richards, Chief Executive of Ofcom, and Alan Rusbridger, editor of The Guardian. They discussed issues around new models of ownership and collaborative ways of working particularly around training, along with ways for the industry to modernise and become part of the digital age. The discussion at the summit will feed into the Digital Britain report to be published by the Government later in the summer.

CONCLUSIONS

  19.  The Government awaits the conclusions of the Scottish Affairs Committee's important inquiry with great interest.

Annex A

SCOTTISH NATIONAL PRESS CIRCULATION TRENDS, JUNE 2005 TO MARCH 2009

	Jun 05-Nov 05	Nov 05-Apr 06	Apr 06-Sep 06	Sep 06-Feb 07	Feb 07-Jul 07	Jul 07-Dec 07	Dec 07-May 08	May 08-Oct 08	Oct 08-Mar 09
Daily Express	83,098	84,069	82,286	79,913	78,272	81,693	76,675	74,183	72,744
Daily Mail	127,567	126,916	124,807	124,993	126,807	128,288	125,802	121,506	117,766
Daily Mirror	47,986	44,321	40,516	37,099	34,947	34,471	32,766	31,267	28,896
Daily Mirror & Daily Record	466,783	461,517	437,142	424,138	407,835	402,813	398,392	382,031	362,601
Daily Record	418,797	417,196	396,626	387,039	372,888	368,342	365,626	350,764	333,705
Daily Star	92,921	91,594	88,439	90,744	93,927	92,848	86,911	85,159	85,058
Daily Star Sunday	30,584	29,753	30,499	32,526	30,851	35,452	29,299	30,070	28,241
Daily Telegraph	24,676	23,484	24,323	23,464	24,912	24,670	23,594	24,422	23,035
Financial Times	6,007	5,825	5,459	5,775	5,695	5,562	5,206	5,099	5,223
Guardian	15,865	16,385	16,158	15,830	15,760	16,359	16,204	16,109	16,030
Herald (Scotland)	75,672	75,061	71,376	70,778	69,562	67,614	66,313	63,097	60,642
Independent	12,407	12,363	11,467	10,835	9,950	9,437	9,735	9,385	8,756
Independent On Sunday	10,543	11,749	10,139	9,420	9,556	8,481	9,495	8,672	7,895
Mail On Sunday	122,298	125,519	123,388	120,491	115,841	117,531	113,577	109,669	105,568
News Of The World	325,824	318,886	306,616	308,241	294,916	295,222	289,950	278,151	270,084
Observer	20,498	22,437	22,600	21,837	21,804	22,553	22,500	22,611	22,122
People	31,436	29,516	28,400	26,122	24,336	23,256	21,081	19,736	18,450
Racing Post	3,987	4,015	4,085	3,765	3,869	3,735	3,813	3,634	3,498
Scotland on Sunday	77,681	74,894	69,251	69,142	66,977	65,223	64,939	62,639	59,466
Scotsman	65,710	63,380	60,045	57,658	55,556	53,812	52,053	50,073	48,270
Sun	355,040	366,822	399,423	418,003	403,113	402,823	400,071	379,781	369,032
Sunday Express	56,006	56,258	52,444	53,298	49,632	46,714	43,509	42,226	42,006
Sunday Herald	57,842	60,170	54,205	55,286	53,554	50,644	48,419	44,869	42,464
Sunday Mail	504,324	500,366	483,548	478,914	465,223	463,910	452,728	432,691	415,866
Sunday Mirror	39,066	37,377	34,455	32,055	32,249	32,125	29,777	28,102	25,634
Sunday Post	n/a	n/a	n/a	291,628	281,806	275,548	272,850	260,478	252,540
Sunday Sport	14,435	12,738	10,657	9,735	9,055	8,513	7,981	7,623	n/a
Sunday Telegraph	22,376	22,182	21,668	21,180	22,207	21,994	20,770	20,831	20,111
Sunday Times	78,746	77,209	74,866	74,304	69,157	68,937	67,281	68,385	70,590
May 2009

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Prepared 13 July 2009