Future for local and regional media - Culture, Media and Sport Committee Contents

Examination of Witnesses (Question Numbers 70-110)


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 audiences.

  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 industry?

  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 with that.

  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 clarifying.

  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 offering—are denied material which is made available to traditional broadcasters, which is clearly of a public service nature.

  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 BBC—well, 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 be involved?

  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 believe.

  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 news?

  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 that?

  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) have determined.

  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 Janet.

  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 organisations?

  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 do.

  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 licence fee.

  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 role—just as important as public service broadcasting—that 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 funding.

  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 free?

  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 the industry?

  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 available.

  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 about—and it speaks volumes about the separation of advertising and editorial in local newspapers—appear 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 issues?

  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 local level?

  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 journalists—less than there used to be—that 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 is—and it was raised by John Meehan in this Committee's public meeting in York last week—that 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.

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