Memorandum from Mr Tim Blott, Mr Mark
Hollinshead, Mr Michael Johnston, Mr John McLellan and Mr Jim
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
Economic downturn severely affecting
Migration of classified advertising to
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
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
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.
Herald and Times Group
Scottish Daily Record & Sunday Mail Ltd
Divisional Managing Director
Johnston Press Scotland and President, Scottish Newspaper
Editor-in-Chief for The Scotsman Publications Ltd,
Editor of The Scotsman
Scottish Daily Newspaper Society