Crisis in the Scottish Press Industry - Scottish Affairs Committee Contents

Memorandum from Mr Tim Blott, Mr Mark Hollinshead, Mr Michael Johnston, Mr John McLellan and Mr Jim Raeburn

  We write to express firstly our appreciation of the opportunity the Committee gave us on 6 May to discuss the increasingly difficult trading conditions confronting the daily and weekly newspaper industry in Scotland.

  Our concern is about the whole future of our industry but it is also based on a fundamental belief, which we are sure the Committee will share, that a strong, sustainable local press providing depth of coverage of the UK and Scottish Parliaments and local politics is in the best interests of democracy in a devolved Scotland. We should add that our member companies employ an estimated 6,000 people in Scotland.

  We will briefly reiterate the tremendous pressures under which newspapers are currently operating. These are:

    — Long term decline in sales of printed newspapers.

    — Economic downturn severely affecting advertising revenues.

    — Migration of classified advertising to the internet.

    — Changes in communications technology with instant news available from online publications, video, mobile telephony, podcasts etc.

  We are in unprecedented economic times with our industry suffering from a cyclical downturn as well as major structural change. The impact of this combination has resulted in sharply deteriorating revenues necessitating action to reduce costs including, regrettably, the loss of jobs.

  In order to address these challenges, our respective members have invested substantial resources in their digital publishing operations which are now firmly established as an integral part of the publishing mix. While this investment is yielding significant growth, digital revenues generally are still at the stage where they represent a relatively small proportion of total income.

  The industry's problems are, as we explained, being exacerbated by the loss of local authority recruitment advertising to the CoSLA electronic portal and the prospective loss of public notices going online.

  According to a Scottish Government analysis of advertising expenditure by the Scottish public sector in 2005-06 over £37 million was estimated to have been spent on recruitment advertising, £13.5 million (37%) of which was by local government.

  We consider it essential that there should be an independent evaluation of the cost effectiveness of CoSLA's electronic portal. You will understand our strongly held belief that our daily and weekly newspapers and their online services have long been an essential meeting place for people seeking new employment. It is our view that any financial savings claimed by CoSLA need careful scrutiny against the value of securing the best people through the services of the newspaper publishing industry.

  We are also deeply concerned about the proposed removal of the obligation on local authorities and others to place public notices in regional and local newspapers. We consider that there would be a serious risk of such action leading to more secretive, less open government and to many grass roots issues being decided without consultation and debate.

  We highlighted how broadband take-up in parts of Scotland is quite low eg 32% of households in Glasgow according to Ofcom's Nations and Regions survey in 2008, and compares extremely poorly against the household penetration of newspapers. We do not understand how the Scottish Government could contemplate disenfranchising large numbers of the public by relying on less effective information channels.

  The Scottish Government analysis referred to above also showed that over £10 million was spent on public notices, 57% of which was by local government. The industry's greatest fear, which we believe to be well founded, is that the Scottish Government is planning to persuade the whole of the Scottish public sector to move its recruitment advertising and public notices to electronic portals, involving an estimated combined loss of £47 million at 2005-06 prices. It is wholly incompatible with the Scottish Government's stated desire for a strong, sustainable Scottish press to think that up to £47 million of revenues can be withdrawn without severe consequences for its whole future. It contrasts with the position of the UK Government with the Culture, Media and Sport Secretary, Andy Burnham, indicating that he is minded to instruct local authorities that, in the interests of local democracy, they should not be competing with local newspapers and should be supporting them with advertising and other means.

  More generally, we are concerned about local authorities and other public sector bodies using their privileged position of public funding to provide services fully met by daily and local newspapers operating in a commercial environment to generate revenues based on audience reach. They can have a profoundly negative effect on the financial viability of our newspapers and their related websites.

  We readily acknowledge the pressures on the Scottish Government to reduce public spending but our belief is that the most effective use of any advertisement spend is with our newspapers.

  We would also welcome the support of the Scottish Affairs Committee in the current OFT review of regional and local media. We are asking that rules on newspaper and cross media ownership and competition be amended to take account of the realities of the Scottish media landscape and to allow flexibility in meeting the exceptional circumstance in which the industry finds itself.

  The Committee's recognition of the scale of the problems facing the newspaper industry and its support on the above matters would be greatly appreciated.

Tim Blott

Managing Director

Herald and Times Group

Mark Hollinshead

Managing Director

Scottish Daily Record & Sunday Mail Ltd

Michael Johnston

Divisional Managing Director

Johnston Press Scotland and President, Scottish Newspaper Publishing Association

John McLellan

Editor-in-Chief for The Scotsman Publications Ltd, Editor of The Scotsman

Jim Raeburn


Scottish Daily Newspaper Society

May 2009

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