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

Examination of Witnesses (Question Numbers 120-139)


7 JULY 2009

  Q120  Mr Evans: What would you do about that? Is the BBC the number one bogeyman for you?

  Mr Newell: There are a number of bogeymen. Ed is better at bogeymen than I am but, yes, the BBC is a big, big, powerful beast in the sense that its total licence fee income is greater than the whole revenue of the regional press put together and we in that sense are a fragmented industry trying to compete against a national institution.

  Mr Curran: My career spans about 40 years and, in Northern Ireland, the BBC of course has been particularly strong as it is in Britain. I do regard it very much, with the benefit of hindsight and going forward, as being the bogeyman. I think that if you were to look at the history of regional newspapers over the last 30 or 40 years, the decline in circulation of big regional newspapers, big city regional newspapers, I think you can actually set the decline against the development of regional radio and television, not just the BBC but principally the BBC. I see the BBC—and I have seen it all the way through my career, even though I have appeared on it—as being a competitor and not being complementary. Many people within the BBC seem to think that they are complementary to us. I do not see any evidence of that. I have seen many occasions for example when newspapers have produced exclusives where no credit has been given to them where information that is in newspapers has been pinched. Going forward from radio and television, we now have the biggest challenge of all which is the Internet. In the 1990s when the BBC began for example to develop its Internet sites for the first time they went round the principal regional newspapers in Northern Ireland and pinched some of the best journalists at higher salaries, put them into an Internet department and attracted them in that way. I think that is grossly unfair as it never was a level playing field. We for example run one of Ireland's biggest Internet sites. I think that at one time the Irish Times in Dublin and the Belfast Telegraph would have been the biggest Internet sites and still are large. We have huge hits per week and unique users. There is no way that we can compete against the largesse of the BBC. I may say that the same thing applies to its regional journalism as distinct from national journalism. I would suggest that for example, in a region like Northern Ireland, the BBC employs more journalists and has more resources than all of the three daily regional newspapers put together in Belfast and probably a good number of the weekly papers added on as well, and I think that is something that is almost impossible to compete against.

  Q121  Mr Evans: So, over the years, the BBC has had its hand on your neck and it has slowly been closing its grip.

  Mr Curran: Yes. The final tourniquet, if I may use the phrase, is really the Internet in the sense that we are all struggling to find some means of monetising the Internet and, even if we all collectively got together tomorrow morning, Rupert Murdoch, Associated Newspapers, Independent News and Media, and said, "We are all going to charge for the Internet", we would be undermined by the BBC.

  Q122  Mr Evans: We know the problem, what is the solution?

  Mr Curran: My personal view is that I think the BBC needs to be restricted in the way it expands, particularly in the regions. All of us have a huge appreciation for the BBC nationally, for its international service and its national service throughout our lives—the model "nation shall speak peace unto nation", all of that and everything. However, since the 1960s, I think that its expansion in the regions has been detrimental to the overall regional media and is inevitably leading to journalists and newspapers being diminished, either journalists losing their jobs or newspapers closing eventually.

  Q123  Alan Keen: I can go back even longer as a consumer of news. I used to work for Middlesbrough Football Club; I used to be in London every Saturday; I remember watching one club before we played the following week or two weeks later. Much of my excitement in football was driving out on the Great West Road and watching the Evening News and the Evening Standard vehicles trying to get newspapers to the local users and people would be standing outside waiting to look at the football results and the league tables. That was really exciting. Nowadays it is absolutely nothing compared with what it used to be. It is a change in technology; it is nothing to do with the BBC being better funded. Why would anybody stand outside a newsagent shop on a Saturday evening to get the football results and league table results when you can get on your iPhone or whatever and get the up-to-date league tables and results with the advance of technology? I have to say that I have sat on this Committee since 1997 and we have had people from the private sector in broadcasting and print saying, "It is terrible; the BBC shouldn't be allowed to do the Internet; they shouldn't put it on the website; they shouldn't be allowed to do this; they are stopping our competition". If people had their way, we would not be able to get this wonderful service from the BBC. It is nothing to do with BBC funding. Be honest. Argue with me if you want to.

  Mr Curran: I would suggest that if in fact what was happening in the media industry with what is a pseudo-nationalised industry, namely the BBC, was reflected in any other sector of our society, there would probably be a hue and cry. In reality, we know for example at the moment how important private industry is and if any other area of it, we had a taxpayer-funded organisation that was basically going to a point where it was actually damaging the future of that private industry, I think there would be questions raised all over the place.

  Q124  Alan Keen: It is the technology that has changed. Print media has to come to an end. I also go back a long time and I have photos of me with my mother and father walking down the prom at Scarborough with newspapers sticking out of our pockets. I used to go and buy a newspaper every two hours to get the Yorkshire cricket scores. It is the technology that has changed. My local newspapers—and they are both known nationally—do not even produce an ongoing website. They are only just beginning to produce an ongoing website day by day. If they had their choice, they would still be just producing a newspaper once a week. It is the technology. You are going to have to go over to electronic and you might as well say that the print media is going to finish altogether and I will be sad because I have lived my whole life loving local papers.

  Mr Newell: I do not think we take that degree of pessimism really. We think that the future is a combination of print products and website products. The problem about the BBC is that the BBC crowds out our ability to make our website offering financially successful. Our website service is there and it is changing fast. There are now 1,200 websites run by regional and local newspapers of varying degrees of expertise, but the degree of expertise is increasing. Some of the issues that you discussed earlier this morning with the Press Association will actually hopefully accelerate that and the pilots that were referred to in terms of Digital Britain and all the rest of it will help the journey, but there are things on the journey that make things difficult. The BBC is one of those things. It may be interesting to hear from Geraldine whose Kent Messenger Group is a company that actually concentrates on Kent, in a way that does cover not only newspapers but other media.

  Ms Allinson: We are a company that has newspapers, radio stations and websites primarily but we do have mobile magazines and things like that, but we do concentrate on Kent. We are passionate about Kent and that is the area we concentrate on. We have been going through change really for the last 10 years when we decided that the future was not going to be just print media and that is why we invested heavily in radio and online. We have been doing video news on our website now for three years. When we started doing it, it was laughable because we only had still pictures and a person would be doing the presentation and we would pan in and pan out of still pictures. We have come on leaps and bounds since then. We have moving footage. All our journalists are being trained in broadcast journalism and video, likewise the commercial departments. We have partnered with Kent University on a new journalism course they are doing which is going to produce journalists who have a degree across all types of media and we offer work placements with them for all students. So, we are really trying to approach this; we believe the future is multimedia. When it comes to the BBC, we do have a big competitor. They do have a Kent BBC news website which mirrors their radio station. We compete with them in radio obviously; we have commercial radio; they have the BBC Kent radio. The interesting thing for me is that they approach the country, I believe, as if it were the same across the country. I believe that we do need to have very good journalism at a local level and, if there is market failure, I completely understand why we may expect the BBC to go in there and actually provide that service. It would make perfect sense to me for the country to be able to have access wherever people are to a very good local journalism service. When you ask the BBC about that, they are only interested in producing the same thing across the whole of the nation and I find that quite interesting.

  Q125  Alan Keen: If I lived in Kent, I would rather go to you than to the BBC. Is Kent Messenger Group still family run?

  Ms Allinson: Yes, it is.

  Q126  Alan Keen: There must be still a lot of pride in it.

  Ms Allinson: Huge.

  Q127  Alan Keen: With the national groups of newspapers, there cannot be the same pride as there is around a family-run business. Can you contrast the Kent Messenger with the newspapers owned by a national who are really, apart from a few owners, interested in money?

  Ms Allinson: It is a really difficult thing to quantify. My shareholders nearly all live in Kent and they absolutely are committed to the company and what it is able to do and the activities that the company have. I think you find that in the national companies like Northcliffe—and I worked in Northcliffe—there is also local pride with all the people who work in those titles. I do not think that there is any difference with regard to the people who work in those titles and actually what they are delivering to the local communities. I do not think that that is different. Maybe with the commitment from the shareholders when it comes to the returns they expect from their investment, that is different and maybe the big groups are driven differently to my company with regard to that. We have always thought that 10% profit to turnover would sustain our independence but clearly, when we face situations like we are facing now, if I am making a smaller profit when we go into a decline like we have, I have bigger problems to get back to profitability, which is what I have now.

  Q128  Janet Anderson: May I touch on something which I think is a very important part of this discussion and that is the protection of creative intellectual property rights because essentially the BBC have this huge public subsidy, they lift a lot of your creative content and use it to cross-advertise their different services and pay absolutely nothing for it. You talked earlier about there not being a model that is useable for monetising your online services, so what is the answer to this because it seems almost insufferable because, if you try and monetise and the BBC continues to provide everything for nothing because they have this huge public subsidy, what is the solution?

  Mr Pelosi: I think `twas ever thus. Our local journalists obviously have access and do gather a lot of content and a lot of unique content which is published daily. I did not know that in Northern Ireland the BBC had more journalists than the local press. If you take all of the areas that we cover, we will have far more journalists in our communities than the BBC has, but they can buy a copy of our newspaper and they can then rework the news content or just republish the news content online and it is the same with local radio. Local radio employs very few journalistic resources. Again, they will get their news from local newspapers. That is not to say that they do not get scoops as well, of course they will get the odd scoop, but, if we are talking 312 publishing days a year Monday to Saturday 52 weeks a year, then the vast bulk of local news is originated by the local press. What can you do about it? I fear we are where we are. I do not have the solution. Just as someone was asking what is the solution to monetising these websites, I do not think anybody has the solution at this stage, not just in the UK but in the USA. With all the reading I do, it is very difficult to see how we are going to resolve this.

  Q129  Janet Anderson: But it is true to say that this huge public subsidy that the BBC has puts you in a very unfair disadvantage, is it not?

  Mr Pelosi: Absolutely.

  Q130  Janet Anderson: So, when the BBC claim that they have to pay large salaries to people in order to compete, that is just not true at all.

  Mr Pelosi: They certainly have to pay the salaries et cetera, et cetera, but of course they do not have to generate any revenues so as to pay for these services. They are publicly funded.

  Mr Newell: I think that one of the things that concerns us about the BBC—and we must not just talk about the BBC, I know—is that, in all their public comments, they talk the language of partnership and yet the discussions that they have had with the regional and local newspaper industry have been fairly superficial and do not start off with the premise we think they should. For a partnership to work, discussions should start off from the premise of the BBC acknowledging how reliant they are on regional and local newspapers as the premier news-gathering resource in the country. I think that there has been too much in the language talked by the BBC, that the BBC have content to offer us whereas actually de facto we have the content that the BBC use on a daily basis.

  Q131  Mr Sanders: May I say that there is a lot of BBC bashing here. The reality is that the BBC has always been there. Is not the new threat now the new kid on the block, something like Google, that takes your content, puts it on the web and gets lots and lots of people looking at it?

  Mr Newell: I think that some of the issues that we have raised vis-a"-vis the BBC could apply in the same way to Google and of course I think where government can help is to ensure that there is a firm copyright regime that allows a content owner to control the destiny of their content and—

  Q132  Mr Sanders: How can the government do that in a global environment?

  Mr Newell: ... to ensure in addition to that, an ability for the content owners to have dialogue with Google. Ed earlier on referred to the interesting prospect of all the national newspaper owners and regional newspaper owners getting in a room together to decide how they should handle the BBC. You could also say getting into a room together to try to handle Google. The basic issue is that competition law does not allow that to happen at the moment and there is a fundamental imbalance, I think, that exists between a large, in the case of the BBC, public corporation that is a unitary body and, in the case of Google, a world-wide enormous company. To do business with those institutions on your own, whether you are a Group or an independent, whether you are Northcliffe or Kent Messenger, is extremely difficult. To be able to do it by way of co-operation and collaboration, existing competition law makes that hard. I think that one of the disappointments we would have with the Digital Britain report is that although on the whole it identifies the right issues or a lot of the right issues, albeit it is pretty light on Google, it does not with any degree of urgency suggest what the solutions will be. Although the OFT review and the possibility of Ofcom being involved will be helpful, I do not think that the Report really addresses the fundamental issue that it is very hard for newspaper companies, regardless of their size, to discuss with one another rationalisation, whether it is a sharing of resources in some areas and the swapping of titles in some areas. The geography of individual newspaper groups in this country is a geography of history. It is not a rational geography in terms of regional areas. Kent Messenger is very unusual in that Kent is Kent. Northcliffe titles are grouped around different areas within the country. The competition regime, if it is to change quickly, should allow those discussions to take place and also allow the industry to act as one when it comes to having strategies towards Google or the BBC.

  Q133  Chairman: May I pursue this because Google is clearly the bogeyman in the room, but there seems to be a certain amount of confusion in your industry about what you are complaining about. Is it a question in fact that Google is taking content? So it is an intellectual property question in that essentially Google is stealing your content and putting it up for nothing and therefore diverting eyes from your sites? Or is it that actually Google is taking advertising revenue? We know that the majority of advertising online is spent on search and by far the biggest provider of that is Google and that therefore advertising is not being put onto your sites, instead it is being taken over by Google?

  Mr Newell: I think you are right in characterising the position as one at the moment that individual companies have different views on and different arrangements with Google, but I think that what would unite the industry is the importance of a strong copyright regime and the need in practice using technology to make certain that individual companies are in control of their content so that, if they do not want Google to actually take their content, there are conventions and means to prevent that happening.

  Q134  Chairman: Surely you have to have Google otherwise most people are not going to find your site. People are not necessarily going to go directly to the Kent Messenger Group site or the Northcliffe site, they are going to Google, and actually Google is driving people to your sites.

  Mr Newell: And, within that, the way in which advertising revenue relates to that is extremely important. I think the more general point that I am making is that we need a strong copyright regime that works in practice and we need to find a way, which I do not think the industry has yet found, partly for the reasons I indicated because of competition law, so that there can be more generic discussion with Google about some of these issues.

  Q135  Chairman: When you say stronger intellectual property law, you are not suggesting that Google should not be able to carry the first sentence of an article because that actually is to your benefit and not to your detriment.

  Mr Newell: I think that it should be within the sovereignty of individual companies to decide whether they want Google to be a vehicle that they use or not.

  Q136  Chairman: I think the evidence we received last week was that however much people did not necessarily like Google, they accepted that they had to have Google if they were going to get people to their websites.

  Mr Newell: I think that would be the view of the majority of companies, but I think that they are in that position because of the sheer power of Google.

  Q137  Chairman: Google has been immensely successful and dominates search but there is not very much that you can do about that. The advertising issue is one perhaps where there is an imbalance and that may well be a competition issue.

  Mr Pelosi: There is no doubt that we need Google and the way in which we compile pages online are such that they are search engine friendly so that when people are searching for, say, "cricket scores in Cheltenham", then they will go to our site first. Yes, we do need Google, but Google has this aggregation service which of course means that traffic eyeballs can stay on Google and scan the news without coming to individual sites. Again, I suppose that we are where we are now because how can you get a snapshot of news other than through an aggregator but it is through an aggregator that we are denied traffic because traffic will go to Google first to look at Google News and then, as a result of an aggregator having that traffic, then they have the primary opportunity to monetise the eyeballs. Again, I think that we are in a very difficult situation and it is rather difficult to see how we are going to find a solution to this. We need Google for the search. As a result, we can have Google News, which is an aggregated content, and, as a result, they are going to get a lot of the eyeballs.

  Q138  Chairman: But you can always offer more than Google can in terms of depth of coverage and quality.

  Mr Pelosi: Yes, absolutely, and obviously we do. When somebody clicks onto that story, they click through to our website but it is whether they stay on that website or click back so that they can go on to the next story.

  Q139  Chairman: I am left with the impression that you see Google as being a serious threat in terms of taking eyeballs and indeed revenue, but it is not immediately obvious what we can do about it. Is that fair?

  Mr Pelosi: Certainly I feel that it is not obvious what we can do about it. We can stop Google taking our content—I think you can just block their robots—but, if we do that, then we do not have access to the Google search engine when someone keys in "cricket in Cheltenham" because we want them to come to our sites.

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