Examination of Witnesses (Question Numbers
7 JULY 2009
Chairman: Good morning. Welcome to this
second session of the Committee's inquiry into the future for
local and regional media, and we are focusing again on the print
media this morning, although the Press Association of course does
extend beyond the print media. Can I welcome as our first group
of witnesses Tony Watson, the Managing Director of the Press Association,
Jonathan Grun, the Editor, and John Angeli, the Head of Content.
Q70 Adam Price: Good morning.
Many of the witnesses to this inquiry have painted a fairly depressing
picture of the future for local and regional newspapers. Claire
Enders in particular, you may have seen, predicted that up to
half of the approximately 1,300 local and regional newspapers
would close within the next five years. What is your assessment
of the prospects for the sector?
Mr Watson: I do not think there
is any doubt at all that the regional press is probably facing
the greatest challenge in its history. Whether those predictions
come true or not, I do not think anybody can reliably say at this
stage. They are caught in the classic perfect storm. They are
facing structural pressures which began to assert themselves on
the sector some time before the beginning of the recession, and
that is notably the migration of classified revenue to the Internet.
The regional press has traditionally relied very heavily for a
large income stream on the major pillars of classified: recruitment,
motors and property. So that process has been going on in the
lead-up to the recession and I think it is fair to say that the
effects of those changes are likely to be permanent. What nobody
really knows at this stage is to what extent the cyclical downturn
is responsible for the reduction in advertising revenues that
we have seen over the last 18 months or so, and I think what is
clear is that when the newspapers do emerge from recession they
will be smaller businesses and they will be businesses that operate
to much smaller margins than has hitherto been the case.
Q71 Adam Price: You mentioned the
perfect storm, which many people have referred to. We do not know
to what extent the problems are cyclical in relation to the recession
or whether they are more structural. Could I probe you a little
bit further on that? What is your hunch? There are some straws
in the wind which point in different directions, just in the last
week Trinity Mirror closing nine titles in the Midlands, and yet
UBS saying that actually it thought maybe revenue will bounce
back in the sector and, indeed, there is one report predicting
that next year advertising revenue in regional titles will rise.
Mr Watson: If I understand it
correctly, UBS's advice was that Trinity and others might see
anything up to 100% of revenues coming back that were affected
by the downturn. The question is to what extent the revenue losses
have arisen as a result of structural changes, ie that revenue
is never going to come back. Bear in mind the year-on-year comparisons
are being made at a much lower base than they were before these
businesses went into the recession. There is no doubt about it,
titles will continue to close, particularly titles that are second
or third within their local markets. I think the free newspapers
are particularly vulnerable because they do not have the benefit
of cover price revenue as part of their revenue mix. There will
definitely be a slimming down of the sector. What I think is open
to question at the moment is how far that is going to go. There
is no doubt that the movement of revenue online, particularly
classified revenue, is here to stay and that has put tremendous
pressure on the business model of these publishers.
Q72 Alan Keen: Nick Davies, in our
recent inquiry, which we have not even released a report on yet,
was pretty critical of the standards. He said that standards had
not only reduced but he particularly complained about "churnalism".
I know you rely a great deal on local journalists, do you not,
for stuff coming through to you which you then put out yourselves,
or am I wrong?
Mr Watson: Yes, I think there
are all sorts of sources for news and one of the most important
functions of regional journalism is that it sits at the bottom
of that news pyramid, and whether it is the broadcasters, agencies
or national newspapers, there is no substitute for having people
on the ground who understand their localities and the issues that
resonate with those audiences. It is quite common practice for
stories to be picked up that are run in local newspapers that
then have to be checked and developed and brought on to wider
Q73 Alan Keen: How is that system
developing then? We have just been talking about the critical
state of the newspaper industry because of loss of revenue. Is
that system changing now? How do you see that developing? Does
it need more formal links than there are at the moment? For instance,
we have seen the BBC, instead of having a lot of journalists covering
the same story, now for all their news programmes tend to put
it through one source. What are the developments like in the print
Mr Watson: I do not sense that
there has been any great change in the way that informal systems
operate. What is clearly the case is that in certain areas the
reduction in the number of journalists that are out there gathering
is bound to have an impact on the number of stories a newspaper
can cover. It is clearly something we may wish to discuss, but
the coverage of public institutions, for example, in certain areas
has diminished over time and that certainly has an impact on democratic
engagement and holding public institutions to account.
Q74 Alan Keen: Do you think that
the pressure on local newspapers has meant that the standard has
reduced? Has the standard reduced greatly, as Nick Davies said?
He was pretty critical of the press at all levels.
Mr Watson: We would seek to disagree
with a lot of what Nick Davies said in his book, and I do not
accept that the quality of regional newspapers, in terms of the
quality of the material that they produce, has suffered. There
may be an issue around volume; clearly, editions have been lost,
paginations are tighter than they were, so there is almost certainly
an argument for saying that in some areas the breadth of coverage
may not be what it was, but in terms of what is published I do
not detect any reduction in quality at all. In fact, as an agency,
in addition to training our own staff, we do recruit within the
regional press and there are some exceptional journalists working
in the regional press. You just need to look at some of the stories
and the campaigns and the investigations that are run. You see
them every year at the Regional British Press Awards: fantastic
endeavour, great attention to detail, taking on local issues.
I do not see any evidence that that has collapsed but clearly,
if the trends continue as they are at the moment, there has to
be a question mark over whether the resources that are at the
disposal of publishers will be adequate to discharge that function
in the way that they have in the past.
Q75 Alan Keen: Some people say that
desperation because of falling revenues, critical analysis, has
brought about a difference in the type of local journalism. Have
you noticed that?
Mr Watson: Jonathan, I do not
know if you want to perhaps talk this because you deal with this
on a day-to-day basis more than I would.
Mr Grun: Yes. The actual subjects
that regional newspapers report on have probably changed, evolved,
in line with what they think their customers will be looking for.
Just to reiterate what Tony said, I think the actual quality of
regional journalism is as high now as it has ever been. Regional
journalists are probably better qualified and better trained,
probably harder working, than they have ever been and can be proud
of the products that they produce. I was one of the judges at
the Regional Press Awards this year and it was a very pleasurable
experience to read the quality of the entries and also to see
how regional newspapers were adapting so that some of the entries
were not just in print; they were in multimedia format as well.
I was very encouraged by what I saw, so I would not agree with
some of the criticisms that have been levelled against the absolute
quality of the regional media.
Q76 Alan Keen: I am reluctant to
raise a personal issue but I experienced a local journalist using
photographs taken over the back fence which showed the back of
my house. He said it was dilapidated. He lied about the local
council threatening to take possession of the house and use it
for social housing, which led to squatters moving in, and they
are still in there now. Clearly, quite a lot of lies were told.
I do not know whether you have seen that story. How would you
verify whether that was true or not?
Mr Grun: If we wanted to follow
that story up, we would attempt to contact you, attempt to contact
the authorities and attempt to establish what the facts were.
Even with regard to the newspaper that would have originally published
that story, you would still have the means of redress yourself
because there are strict rules regarding things like long lens
photography and accuracy. You have a means of recourse, if you
want to take it.
Q77 Alan Keen: Finally, can you say
how do you think the industry should address the problems? What
reorganisation needs to take place? We do not want to see all
the press shutting down so there is nothing left. What is the
next step in the reorganisation in order for local papers to survive?
Mr Watson: I think a lot of the
groups now are in the process of trying to migrate their newspaper
brands online. They are now moving into areas like video. Obviously,
there is the opportunity for them if this becomes policy to take
part in the independently funded news consortia that have been
talked about. There is no doubt that the future is uncertain and,
at a time when large sums of money are being talked about to preserve
30 minutes of regional news on Channel 3, there is an argument
to say if that is the priority that we attach to public service
broadcasting, what about public service reporting? Is there not
a case to recognise the role that local newspapers play in the
life of their communities in holding public institutions to account
for that contestable fund to extend to newspapers? The industry
has always set its face against direct public funding, for all
sorts of reasonable reasons, but I think things are getting so
difficult in parts of the regional press now that there is a serious
danger that courts and councils and other public bodies will not
be covered to the extent that you would wish to be the case in
a functioning democracy. I think for the policymakers and the
regulators this is an issue to consider very carefully.
Q78 Chairman: You were ahead of many
others in seeing the direction of the development of your industry
and in providing multimedia content, and you have now established
the digital pool. Can you tell us how that is going and what take-up
you have had for that content, both from the traditional newspapers
and also from the new online providers?
Mr Angeli: Yes, just going back,
we started video gathering as an agency round about five years
ago. I would not describe it as a broadcast model. Many of our
journalists now are covering events both in text and video. We
provide that video content to a number of national newspapers
in packaged form, and also we are beginning to make available
raw video content to our regional clients. The setting up of the
digital pool was really to ensure that where there were events
of national and local interest, particularly local news providers
were getting some of the access to that content. In the past the
broadcast pool has operated around the Prime Minister's monthly
briefings, political party events, Buckingham Palace and so on,
and some of the stories that are emerging from those events will
be of core interest to local news providers. For example, at investitures
at the Palace, whilst there are many people picking up honours
that will be of interest to national news audiences, there are
often local figures who will be recognised, and we have traditionally
provided both the words and the photos for those events but increasingly
there was an appetite for video coverage. So we entered into discussions
with Number 10 and with the political parties and with Buckingham
Palace and with various departments to ensure that there was a
video presence for online clients, which we dubbed the digital
pool, and now we are regularly working alongside the broadcast
pool, providing that video content to clients on, I guess, a cost
basis that is more in line with next-generation provision. So
we do not particularly have trucks, engineers or producers at
these events, and we make that available on the PA video wire
and for the most part our access to those events is fine. We are
coming up against occasional difficulties in terms of access for
national and regional clients of ours, but we are working on that.
Q79 Chairman: Why could they not
have access to the broadcast pool?
Mr Angeli: The conversations that
we have had with BBC, Sky and ITN are around those core news events
where only one camera is allowed in. Because we and many of our
clients are not part of the broadcast pool, therefore there is
not access to that content.
Q80 Chairman: Is that not old thinking
that there is broadcast journalism and non-broadcast? The two
are coming together. Surely there should now be one camera supplying
content to anybody who wants it.
Mr Angeli: Yes.
Mr Watson: Yes, we would not argue
Mr Angeli: I think it is an issue
of convergence. In the same way the broadcasters now develop text-based
services online, regional and national newspapers develop multimedia
content online as well, and, as a consequence of convergence,
some of the demarcation of who gets to do what really needs some
Mr Watson: To be frank, we are,
and from a very friendly perspective, in dispute with the broadcasters
on this issue. Single camera assignments where we are offering
to make our camera available will always tend to go to the broadcast
pool and all we are saying is if you are permitted to move that
material to your own online operations, in BBC, Sky, and ITN,
and, in the case of ITN, sell that on, that footage ought to be
made available to us or to whoever else wants to do the digital
pool to pass on to their online audience. We are talking sometimes
about assignments of real national importance. One recently was
the filming around the advice to manage the spread of swine flu.
To our mind, the access holder would have a reasonable expectation
that that information was going to get out to as wide an audience
as possible. It is a public health emergency. We were not allowed
access to that material so, therefore, huge swathes of audience,
users, on newspaper websites and digital portals were not able
to see that information. There are many other examples.
Q81 Chairman: So it was not just
that you were not given access; you were not able to obtain it
from the people who were given access?
Mr Watson: No. That would be shared
amongst the members of the broadcast pool, the three broadcasters,
and they will use it on their own online properties but we were
not allowed access to that to pass on to our customers. We would
pass that on to both customers and non-customers on the basis
of public service.
Q82 Chairman: So the case would be
that newspapers, online providers who were trying to develop an
online offeringare denied material which is made available
to traditional broadcasters, which is clearly of a public service
Mr Watson: Precisely.
Mr Angeli: In describing it as
a broadcast pool, the content makes its way onto the online properties
of the broadcasters themselves, means that in a local area a story
which has been filmed under the auspices of the broadcast pool
may appear on a local BBCwell, it is probably going to
be the BBC local website but not available to the local newspaper
website in the same patch.
Q83 Ms Anderson: Could we just turn
to the Ofcom proposal for independently financed news consortia,
and I think you will know in the Digital Britain report there
was a proposal that there should be three pilots. Do you think
this is the answer to the continued delivery of regional news,
and how do you think it will work out?
Mr Watson: I do not think it is
the complete answer. The exact shape of the news consortia is
yet to be determined and I think the discussions and consultations
between DCMS and Ofcom around the criteria for pilots will begin
to frame what that might look like. I think what is positive is
that it gives an opportunity for the first time for a wider range
of media players to contribute content around regional news. I
think one of the opportunities that ought to fall out of that
is that it should not simply be a replica for regional news programming
as we know it now because I think there is an acceptance that
as a model that has failed to deliver to audiences. One of the
things that we would hope to see in the awarding of those bids
is some commitment to a more granular approach, at least a sub-regional
service, so that the stories that are being covered there resonate
more closely to those audiences. If you look at the size of some
of the regions now that form the current ITV regions, there is
no geographic compatibility in the stories from one end of a region
to another, which mean absolutely nothing to the people receiving
the news. Clearly, one of the challenges for news consortia is
to deal with that but I do think that, of the options that were
open to Ofcom, this has the best chance of safeguarding plurality
of provision within the regions. I think the other point to make
is that there has to be an expectation that the technology platform
that operates within a consortium has to be a lower cost option
than the legacy broadcast provision that we have seen in the past.
Finally, the replacement of the 30 minutes of programming on Channel
3 should be seen as just one step on a roadmap which leads to
more on-demand, more multi-platform provision for that content.
It is not the destination. As Stephen Carter acknowledged, that
linear output would decline in its importance over time, but that
is the issue that the policymakers have to deal with right now
with ITV in effect being given the green light to walk away from
those licences by 2013.
Q84 Ms Anderson: Would PA want to
Mr Watson: We certainly see ourselves
as a player in that proposition from the point of view of a content
provider because one of the things that we have done over the
last four years is invest heavily in our video gathering capability.
I think we are well placed to help the newspapers to play a meaningful
part in that proposition. Because we have the technical links
into all of the newsrooms, so there will be an issue about moving
video around, I think we can help, working alongside the BBC,
to set industry standards around format and metadata. I think
there is a training aspect to this as well for us and other training
providers. There is no doubt that whilst the regional press have
got on to the first rung of the ladder, if you like, in terms
of video gathering, there is a quality threshold to be met if
you are gathering video for output on a broadcast medium but it
is not the leap that some people in broadcasting will have you
Q85 Ms Anderson: So you think your
video wire service will be quite important?
Mr Watson: Absolutely, yes. We
are covering anything up to 30 stories a day around the UK, and
that will grow over the next couple of years. We think that we
can provide a bedrock of pooled material that would then allow
other players to focus on the distinctive material which is really
at the heart of plurality.
Q86 Ms Anderson: How do you think
the cost of these consortia would compare with the cost of delivering
regional news at the moment? You have mentioned the demand for
more local and sub-regional news, would that not be more expensive?
Mr Watson: Yes, it would, and
not least there would be transmission costs involved there but
what you would hope to do is to make up that gap, if you like,
by reducing the cost of the technology platform that you are operating
so that, for instance, you are gathering and moving video on a
file-based technology platform rather than predominantly satellite.
There is really no reason to do that now. Satellite trucks, engineers,
heavyweight cameras, all of that, whilst there will be a place
for that, it should not be the dominant technology platform going
forward. That is where I think you will begin to depress, quite
rightly, those costs.
Q87 Ms Anderson: You mentioned earlier
that traditionally the industry has set its face against public
funding but it may be that in the light of current circumstances
that is changing. If there were to be public funding provided
for the regional press, do you think that would have a chilling
effect in any way? Do you think it would affect the way they reported
Mr Watson: I do not think so.
I think it would have to be done centrally and you would probably
have to find some indirect mechanism. Setting the criteria would
be very challenging. Whatever the views of the BBC are, I do not
think anybody would argue, because it is in effect centrally funded,
that affects its ability to discharge its functions in terms of
impartial journalism, and I do not think it would in the case
of the newspapers.
Q88 Ms Anderson: Finally, can I just
ask you one question about the pilots? The proposal in Digital
Britain is that there should be one in Scotland, one in Wales
and one in an English region. It was suggested to us last week
when we visited Yorkshire that maybe it would be more sensible
to have the whole of England as a pilot. Would you agree with
Mr Watson: I think it would be
more challenging. You would probably find ITN would agree with
the whole of England as a pilot. I think it is such a big undertaking
and, of course, the way in which Ofcom are envisaging, subject
to consultation, this is actually happening is that the contestability
around the pilot would actually happen before the pilots were
awarded and that, assuming the quality thresholds were met, at
the end of that pilot process they would run into live transmission,
so they would simply take over that service. To do that on a national
basis I think would be pretty challenging. I think you would want
to try to do that in a manageable area, to be able to do a little
bit of experimentation, and I think to do that in a contained
area, it need not necessarily be one English region but that is
what Ofcom and the Department for Culture, Media and Sport (DCMS)
Q89 Ms Anderson: Do you have an opinion
about which region that should be?
Mr Watson: I think any region
would have its merits, but I think what you have in the North
West, for example, you have a city TV channel there that you can
build out from. That would be my main reason for favouring the
North West, plus of course it is a very good news area.
Ms Anderson: Thank you very much.
Chairman: That was the right answer for
Ms Anderson: And Nigel.
Q90 Mr Evans: It is the right answer
for me too. The BBC had 400 people at Glastonbury, hundreds over
at Beijing for the Olympics, loads at Obama's inauguration, and
I suspect there is not a BBC journalist left in this country now;
they will all be covering Jacko's memorial today in Los Angeles.
Do you not think the BBC's advantage is so huge that it is crippling
the commercial organisations?
Mr Watson: I do not think it is
for us to pronounce on the way in which the BBC deploys its journalists.
I can only talk about the potential impact in relation to us at
the Press Association. I would frame these comments in terms of
being a critical friend, if you like. I think what we have found
is that, having promised partnerships for the last couple of years,
the BBC now seems to be stirred into action. We are finding offers
of free video to our customers who we have been trying to build
an investment around for a commercial solution, and that is potentially
very damaging to us. We feel there is a chance that the market
will be distorted as a result of that. It puts the BBC in the
position of effectively operating like an agency and I do not
think that is what its purpose is. I do not think the way in which
they are making that material available answers the issue of plurality,
and there are all sorts of issues around the content itself. It
is geo-blocked, it has to be BBC branded, you cannot monetise
around it, and it will have been on bbc.co.uk first. The BBC is
a very important customer to us. We have a very good relationship
with the Corporation. In this respect, we feel very strongly that
the way in which they are conducting their business in this particular
area is not helpful.
Q91 Mr Evans: Have you made representations
to the Trust about this?
Mr Watson: We have made representations
to both the BBC management and the Trust, and that conversation
is ongoing, shall we say.
Q92 Mr Evans: You would prefer that
the BBC outsourced some of their own newsgathering to commercial
Mr Watson: It is nothing new for
the BBC to do this. It does it in terms of its foreign coverage
in video already. It does it in text and photos in relation to
online and broadcast. What agencies typically do are those heavy
lifting jobs, which are not about distinctive content, but you
need it in your programming, and so we would say, rather than
have three crews watching some individual coming in and out of
a building, why not outsource that and point your resources at
what makes your output distinctive. That is a well trodden path,
the agency model. The BBC makes a lot of its commitment, quite
rightly, to outsourcing to independent producers in non-news.
We would not ever go as far as saying that they should pursue
quotas but there does seem to be something in the DNA of the BBC
that says, "We cannot possibly allow anybody else to do this."
This principle was, in effect, conceded under the Memorandum of
Understanding between the ITV and BBC when they were talking about
sharing facilities up to and including content. That said to us
well, if you have conceded the principle that it does not matter
which one of you covers a certain type of diary or non-exclusive
assignment, what is the difference between actually outsourcing
that to an agency? The regions of the BBC do commission us on
an ad hoc basis to cover certain jobs, what we have yet
to establish is a principle that we have established here a video
agency for the UK for the benefit of not only online but for broadcasters
as well to help them reduce the cost of doing those diary, non-exclusive
jobs, to allow them then to work at what is really at the heart
of plurality: distinctive journalism.
Q93 Mr Evans: But then you get the
idea that because they have got access to so much of the licence
fee money they are able to throw lots of money at things. Online
is a perfect example. Online BBC news, I suspect, is one of the
best in the world and that is because they can just throw a disproportionate
amount of money at it which then thwarts other commercial news
organisations from being able to offer anything like what they
Mr Watson: It is certainly true
that BBC news online is the only, by some considerable distance,
online property in the UK that gets into the top ten sites, and
there is no question that the ubiquity of BBC news online makes
life difficult for us when we roll into a customer selling news
services for their online properties because often the answer
is "Well, we will do a little bit of news but we are not
going to do it in any depth because everybody goes to the BBC
anyway." There is no question that that is an issue for us.
Q94 Mr Evans: The answer to that
is what the Government is now doing, which is top-slicing the
Mr Watson: That is one solution.
We believe it is an innovative solution. We believe that it is
a reasonable suggestion and worthy of detailed consultation.
Q95 Chairman: Can I come back to
the concept that you have suggested, and that is public service
reporting. Can you say what you see as public service reporting
and how you think in the future you can assist to ensure that
it continues if it is under threat, as it seems to be now?
Mr Watson: I would class public
service reporting as the coverage of those public institutions
that have power and influence over people's lives, and the coverage
of those activities is essential to the functioning of a healthy
democracy. We would say on the courts that there is a very important
principle of justice being seen to be done and yet there are courts
up and down the land, as we know, where reporters are not covering
those proceedings, and it raises the principle of people being
sent to prison without anybody being there to record that fact.
I think also local authorities, although there is a suggestion
that local authorities in some cases have not helped themselves
in terms of opening up their proceedings, and then there is the
plethora of other bodies, health trusts, police authorities, et
cetera. That is broadly how I would define that activity and there
is no question that because of the pressure on resource that is
going to itself come under pressure. I think what we would say
is that the contestable fund offers a unique opportunity here.
There is a paragraph within the DCMS consultation document which
speaks about are there other public purposes that would be an
appropriate use of those funds over and above the independently
funded news consortia? We would say very definitely that it is
worth further examination of whether there could be some mechanism
of recognising that very important rolejust as important
as public service broadcastingthat the newspapers perform.
We would not seek to be prescriptive about how that might work.
What we are trying to suggest is that there is a principle here
that needs to be recognised, there needs to be some equivalence
here if we are potentially talking about spending up to £100
million of public money to support, in the first instance, linear
TV output for regional television news. There is a question mark
here as to whether newspapers are equally deserving of some recognition
in that regard. The picture is very patchy here and it is quite
anecdotal. There are many places, and MPs will see this themselves
in their own constituencies, where coverage is patchier than it
used to be. I think we need more information around this. We have
conducted our own snapshot research. I would not suggest it is
statistically robust but it certainly does back up the notion
that this coverage has diminished. We are proposing, alongside
this, to launch a pilot project which is aimed at trying to really
get to grips with whether there is content out there around public
institutions that is not finding its way into the media at the
moment as a result of the pressure on resources, and the only
way to do that is to stick a bunch of reporters into an area for
a defined period and point them at those institutions and just
see what comes out and see what take-up there might be from the
regional news media. Helpfully, Trinity Mirror, one of the largest
publishers, has agreed to join us in this project and will make
their papers in the defined area available to take part in this.
They are very happy for the local authorities and other public
bodies to be involved in this so that we get a much better handle
on the extent of this problem and then a discussion about what
might be meaningful solutions. We would hope ideally to launch
that in the autumn. At the moment we are seeking a source of independent
Q96 Chairman: So you are going to
deploy PA journalists in a particular locality to report on the
kinds of institutions that you described and then that content
is made available to anybody?
Mr Watson: Yes. That would have
to be the basis on which you would do that. I think for regional
newspapers, they would have to have confidence in their ability
to package that content more quickly and in a more interesting
way than other media players. That would have to be part of the
ground rules there.
Q97 Chairman: Is it made available
Mr Watson: Yes. We are talking
about a pilot here at the moment.
Q98 Chairman: I understand that,
although essentially it is different because in a sense that is
what you do anyway but at the moment newspapers pay for it.
Mr Watson: Yes.
Q99 Chairman: Whereas this, you are
going to go and do it.
Mr Watson: Yes. We would not typically
cover public institutions at that level of localness. That is
their role. Crown Courts and High Courts and so on, yes, that
is our role. Just on a point of information, we would not deploy
or redeploy our PA journalists into that project, we would actually
go out and recruit those specifically for that project.
Q100 Chairman: Where do you see the
money to support this coming from?
Mr Watson: We have a couple of
conversations going on at the moment. I would hesitate to mention
them because I do not want to seem to put them under pressure
and jeopardise the opportunity.
Q101 Chairman: But it will not be
Mr Watson: No.
Q102 Chairman: The people who get
this information do not have to contribute to the cost of it?
Mr Watson: No, and I think there
is something to be said for it to be independently funded. It
makes it a lot easier to say that this information is more widely
available. Were there to be a public funding solution ultimately
around this, I think there would have to be some acceptance on
the part of the industry that you make that information widely
Q103 Philip Davies: Can you just
touch on the impact that local authority publications and publications
by people like police authorities and things like that are having
on the local newspaper industry.
Mr Watson: Yes, I think they are
having a considerable effect. We picked up a document from the
Local Government Association recently which said that something
like 94% of all authorities had some form of publication, whether
it be a magazine or a newspaper (66% publish a magazine and 28%
publish a newspaper). I think that local authorities have a perfect
right and, indeed, an obligation to talk to their council tax
payers, but I think there is a world of difference between that
and seeking to set yourself up as a bona fide newspaper
competing with the local titles. I think where it is particularly
damaging to local press is where these publications are chasing
advertising, chasing the same advertising as local press, particularly
at a time when they are in such distressed circumstances. So I
think the decision to ask the Audit Commission to look at this
is right and proper.
Q104 Philip Davies: Of course, it
is not just the competing advertising. Lots of people do consider
these things to be just propaganda anyway. It is not just the
competing advertising but it is actually the advertising of local
authority jobs and things, which has always traditionally been
a big revenue stream for local papers.
Mr Watson: Indeed.
Q105 Philip Davies: Some people have
expressed a concern that, because many local papers have become
so dependent on local authority advertising for things like jobs,
it means that the local paper becomes less critical of the local
authority in case that advertising revenue disappears. Do you
think there is any truth in that?
Mr Watson: That is a danger the
papers have had to live with throughout their history, and it
is not just related to local authorities. It is not unusual for
a powerful local motor dealer to threaten to pull their advertising
because the paper has written something that it takes exception
to. When I worked in newspapers, the advertising departments would
often be in total exasperation to see an article that they knew
nothing aboutand it speaks volumes about the separation
of advertising and editorial in local newspapersappear
on page 1 and they would take the call from the local advertiser
saying, "Well, I am going to pull." In my experience,
newspapers have been very strong at resisting this because where
do you stop with that? If you have an issue around credibility
in terms of council-run newspapers, if all you have to do is to
threaten to pull your advertising to in effect emasculate a local
newspaper, then you are not going to have a lot of credibility
within the marketplace. So in my experience, if it is a serious
newspaper, it will tend to tough those things out. Obviously,
what is a lot more difficult these days is that there is much
more competition and advertisers have much more choice as to where
to place their business.
Q106 Philip Davies: Are you in favour
of the relaxation of the newspaper merger and cross-ownership
Mr Watson: We would support that.
I think for a long time those rules, in the way in which local
markets are defined, have been too narrow and it has not taken
into account the fact, for example, that online news aggregators
operate across geographical boundaries. I think a review was long
overdue and I think that the market guidance given in the Digital
Britain report and the role specified for Ofcom on behalf of the
OFT to conduct local media assessments when merger and acquisitions
are discussed is to be welcomed. I do not think it is a panacea
for the regional media's difficulties but I think what it will
do is give them scale and synergy to allow them to make the investments
that they need to do to re-skill and to develop their properties
on other platforms.
Q107 Philip Davies: Finally, can
I just ask you what the impact of the problems that the local
newspaper industry has been having is on the Press Association.
Has it been negative, in the sense that local papers can now no
longer afford to put things in the paper that you provide that
they once did, or has it been beneficial because whereas once
upon a time local papers would employ their own people to do things,
now they cannot afford to and so pool the costs and employ somebody
from the Press Association? Has this been positive or negative?
Mr Watson: Absolutely. That is
a very good question. The answer is both actually. There has been
a trend towards outsourcing certain types of activity. We would
supply more on the data manipulation side, so you are talking
about TV listings, sports data, race cards, that kind of thing,
which if you invest in database technology and you have the economies
of scale that we have within our production operation, we can
do it more cheaply than the publisher, but we will never replicate
the ability of local newspapers to cover their own patch. They
have more people on the ground, even in these distressed times,
than we would ever have, and that is not our game. To answer the
other part of your question, yes, we have also been a victim of
this process as well. There is no question that our revenues from
traditional media within the regions have declined as a result
of the pressures that they felt themselves.
Q108 Mr Sanders: I wanted to ask
that question the other way round. To what extent do you rely
on the local press and local journalists for your source material?
Mr Grun: I think, along with any
other national news organisation, we would happily acknowledge
that the regional media are incredibly important. They are the
solid foundation for the whole of what you could describe as the
news pyramid in this country. Many of the stories that you read
in the national media or indeed see on the Press Association wire
started, originated, in a local newspaper and were then picked
up or followed up by national news organisations.
Q109 Mr Sanders: It is a symbiotic
relationship, is it not, between yourselves and regional and local
papers, and therefore you suffer if there is a closure of titles
or there are fewer people beavering away, finding stories at a
Mr Watson: Yes, I think the whole
media ecology would suffer. If you talk to anybody that has worked
in local broadcasting, they will tell you that one of the first
things they would do when they were planning their programme output
for the following day is to get the local newspaper, because there
are all sorts of leads there for them to develop into their own
video schedule, so the local and regional press is a massive resource
for the rest of regional broadcast media and for national media,
and there is an army of local agency journalistsless than
there used to bethat spend all of their time combing the
local newspapers for stories that they can develop and sell on
to national newspapers.
Q110 Mr Sanders: Do you foresee a
future, if there are fewer local newspapers, of people starting
to trawl blogs and the Internet for stories?
Mr Watson: Some of that is happening
already. The big question isand it was raised by John Meehan
in this Committee's public meeting in York last weekthat
somebody has to initiate, source, this material somewhere, otherwise
all you are dealing with is comment and opinion, valid though
that is. For an informed society, you need well-sourced, accurate,
quality information. I do not think blogs or social media are
ever going to be a replacement for that. They are part of a bigger
conversation because people want to participate as well as being
lectured to these days, and that is quite proper.
Chairman: Thank you.