2 Regional and local newspapers|
12. Regional and local newspapers perform an important
role in the UK. They provide more coverage of local news, local
events and local people than any other medium. The vast majority
of local newspapers are politically independent, something which
is partly driven by financial common sense since alienating large
sections of a local community could be commercially unwise. However,
this independence and objectivity is one of the most significant
features of the local press, as local newspapers are the primary
source of reporting of local politics and public bodies facilitating
independent scrutiny and accountability.
13. In July 2009 we held an open public meeting in
York as part of this inquiry. It was the first time we had held
such an informal meeting with the public, and we would like to
thank the over 100 people who attended and shared their views
with us. We heard first-hand the importance to them of regional
media, and one of the overriding themes of the meeting was the
opinion that local newspapers, in hardcopy, were still relevant
14. Local newspapers, and more specifically the journalists
who work on them, also underpin the national news industry forming
the bottom layer of what has been described as the 'news pyramid'
as John Fry , Chief Executive of Johnston Press, explained to
There is a bit of a news pyramid really, where
locally we create the bottom layer of that pyramid. We have 11,000
journalists around the country and they create huge numbers of
local stories. People further up the pyramid then take some of
them and develop them. At BBC News what they do every day is they
come into work. They buy the local newspaper. They look on our
websites and they select from that. "There are 50 stories
there. Let's take these three." They will develop those three
stories during the day and that is what you will get on your evening
news. If you do not have our journalists doing those 50 stories
at the bottom, the whole pyramid does not work anymore.
15. In addition, many journalists working on national
newspapers and television broadcasters started their professional
careers on local newspapers. This further demonstrates the importance
of the role performed by local newspapers as a source of entry
and training in the profession of journalism.
The state of the local newspaper
16. As of January 2009, there were approximately
1,300 local and regional newspaper titles in the UK, published
by 87 publishers.
Most of these local and regional newspapers (70%), up until recently,
were published by the five largest local newspaper groups: Guardian
Media Group (GMG), Trinity Mirror, Johnston Press, Newsquest Media
(a subsidiary of US media company Gannett & Co.) and Northcliffe
Media (a division of Daily Mail and General Trust). In February
2010, Trinity Mirror bought out GMG's regional operations which
included 32 newspapers.
17. We heard from representatives of these local
and regional newspaper groups throughout the course of our inquiry,
as well as from the Newspaper Society, which represents the publishers
behind virtually all of the 1,300 titles. We also heard evidence
from Enders Analysis, a UK media consultancy, and the Press Association
which describes itself as the "national news agency of the
18. The evidence we heard from these publishers
and representatives of the local newspapers in the UK painted
a bleak picture of the industry. Claire Enders, Chief Executive
of Enders Analysis, said that she expected up to half of the 1,300
titles to close within five years.
The recorded profits of GMG Regional Media fell by 85% in the
last financial year (2008-09), while Trinity Mirror closed 27
newspapers in 2008 and another eight in 2009 (out of 150 local
titles). In March
2009, Johnston Press reported a loss of £429.3 million, compared
to a profit of £124.7 million in the previous year,
although Johnston Press' interim report at the end of August 2009
did report a stabilising in advertising revenues in the middle
of 2009. The National
Union of Journalists (NUJ) has documented the closure of 60 local
newspapers and more than 1,500 job losses in local newspapers
from May 2008 to May 2009,
and the Newspaper Society told us that the "industry currently
faces an unprecedented combination of economic and structural
Structural changes and declining
19. Ofcom has acknowledged that the local media sector
is "facing significant economic pressure"
though it does not accept that that this necessarily means the
fundamental model of local newspapers is broken, as the factors
affecting the industry could be cyclical.
Ofcom states that recent newspaper closures need to be seen in
the context of a significant expansion in the 1980s of the number
of newspaper titles published, many of which were free weekly
papers who took advantage of a boom in advertising revenues at
that time, and that there is "no evidence of large scale
closures among [local] dailies or paid weeklies".
20. This is at odds with the views of Enders Analysis
and the local newspaper groups who argued that not only had the
current economic recession resulted in a contraction of advertising
revenues and purchasing power from consumers but that this coincided
with an ongoing structural change in the correlation between advertising
spend and Gross Domestic Product (GDP). Traditionally, advertising
has increased in line with GDP.
However, as explained by Claire Enders, since 2001 advertising
spend has been growing at a slower rate and diverging from GDP.
21. As well as the economic downturn and wider trends
in advertising revenues, local media groups argue that other,
recent, structural changes have contributed to the challenging
environment that local newspapers find themselves in. The changing
way in which people search for jobs, property, cars and other
products has undoubtedly resulted in advertisers prioritising
the internet as a host for their campaigns. Government recruitment
advertising has increasingly migrated away from local newspapers,
as Claire Enders told us:
The main issue is with recruitment advertising
and property advertising, but particularly recruitment advertising.
The Government started to withdraw recruitment advertising from
the local press in 2004 and that has been absolutely the most
22. The Scottish Daily Newspaper Society agreed:
The industry's problems in Scotland are exacerbated
by the loss of local authority recruitment advertising to an electronic
portal operated by the Convention of Scottish Local Authorities
(CoSLA). Based on analysis of advertising expenditure by the Scottish
public sector relating to 2005-06 the loss of local government
recruitment advertising will cost the newspaper industry £13.5
23. Online advertising revenues in the UK increased
from £0.2 billion to £2.8 billion from 2002 to 2008
compared with a drop from £2.8 billion to £2 billion
for local and regional newspapers.
Trinity Mirror described the situation from its perspective:
] advertisers have been shifting ever-increasing
proportions of advertising budgets online to match these changing
consumption habits. [
] total regional newspaper advertising
fell by -15% in 2008 and has been forecast to fall by -28% in
2009, reflecting the sharp decline in classified categories we
and our competitors have been experiencing over the last year.
This compares to just -1% decline in regional newspaper advertising
revenues in 2007.
24. John Fry, Chief Executive of Johnston Press,
told us of the decline in advertising revenues for his businesses:
Advertising has dropped 40% in the last two years
] that is over 80% of our revenue that has dropped by over
40%. You can work out the numbers. It is around a third of our
revenue that has disappeared. To really understand the business,
you have to understand what is cyclical and what is structural
change. The structural change really got going for us with the
adoption of broadband in 2003. What we found is that we were losing
about 4% of our advertising each year due to structural change.
25. There are mixed views in the local media industry
about whether classified advertising in local newspapers will
recover. Carolyn McCall, Chief Executive of Guardian Media Group,
told us she was not optimistic:
I do not believe the prospects for recovery particularly
in classified advertising are strong. I think the structural change
means that many people are now testing online media and using
it quite effectively. I know that from one of our businesses in
our portfolio which is Auto Trader. I do not expect to
see a great deal of those three big markets [property, recruitment
and cars] and they were the bedrock of a lot of regional newspapers.
26. However, John Fry expressed the hope that although
irreversible structural changes had impacted on classified advertising
most of the decline in advertising revenues was cyclical and therefore
Cumulatively by last year we reckon that we lost
about 18% of our advertising due to structural change. Then we
hit massive economic problems so the 40% drop that we have seen
in the last couple of years I believe is more cyclical than structural.
That implies therefore that there will be a bounce in advertising
when the economy recovers. There will of course be further structural
change. We reckon we will lose around a quarter in total of our
advertising versus where we would have been. From here onwards,
we are likely to bottom out this year and, as the economy recovers
whenever that may be, we will see a recovery in our advertising.
27. In a report produced by Johnston Press at the
end of August 2009, John Fry did voice some cautious optimism
about recovery and said "the timing of the economic upturn
remains uncertain but advertising revenues are demonstrating greater
stability and we expect the cyclical improvement when it comes
to more than compensate any ongoing structural change."
28. Tony Watson, Managing Director of the Press Association,
also described the cyclical effect of the economic downturn on
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.
29. Claire Enders told us that although economic
forecasting could never be infallible, any further reductions
of income of 20-30% (as was recorded in 2008) would jeopardise
the survival of many local newspapers.
30. As well as a shift towards the internet by consumers
there has been a shift in consumer behaviour, shaped by changing
retail structures, that has contributed to the deterioration in
local newspaper sales. Supermarkets take much of the distribution
of local newspapers, and supermarkets are often located out-of-town
or a car journey away for many people, which has an impact on
the access to local newspapers for potential readers. Trinity
Mirror told us:
As more and more of the national retail spend
is attracted to the large supermarkets, consumer buying habits
have changed. As consumers consolidate their shopping into one
or two visits to a supermarket a week, they are no longer visiting
small local shops on a daily basis. The habit of picking up a
newspaper as they pass a newsagent or shop in a local general
store is being broken.
31. Given some of the bleak reports from local newspapers
of advertising revenues that have already dropped by up to 40%
and the forecasts for further decline that we have heard,
it would be easy to assume that the future for printed local newspapers
is bleak. As we have heard, however, many local newspaper publishers
are rising to the challenges and growing an online presence which
compliments their publications, and utilising their position as
key providers of local news, information and advertising.
32. Ofcom statistics show that in 2002 32% of people
used local newspapers as their main source of local news. By 2008
this had fallen to 23% over the same period. The internet as a
primary source of local news had risen from 1% to 4%, and 25%
of those accessing local newspaper websites did so instead of
reading the hardcopy.
The Newspaper Society described the internet presence of local
newspapers as a reason for "cautious optimism":
While regional press print advertising revenues
were down 15.8%, their internet advertising revenues (although
still tiny in revenue terms in comparison with print) grew by
an estimated 19% in 2008. Online recruitment advertising is growing
at an even faster rate for local newspaper websites (+17.1% year
on year) than for the big specialist recruitment sites like Monster,
Jobsite and Fish4 (many of which are owned by newspaper companies)
(+5.6% year on year). Local newspaper websites have positioned
themselves well to capture advertising migration and are quietly
stealing share from the specialist recruitment sites [which] demonstrates
effectiveness of local newspaper website advertising.
33. As highlighted by the Newspaper Society, a number
of the large advertising websites in the UK are actually owned
by local newspaper publishing groups. For example: Jobsite and
Findaproperty are owned by Northcliffe Media; Exchange & Mart
is owned by Newsquest; and Fish4 is co-owned by Newsquest and
34. Local newspaper publishers DC Thomson (DCT) described
to us their own attempts at innovation using internet technologies:
To meet these new demands, DCT have put into
place a digital strategy consisting of website creation, development
and integration with our print titles. We believe a complementary
internet strategy is important for our future, although this strategy
is costly to implement and the return from online publishing is
way below that traditionally enjoyed by the print product.
35. The development, maintenance and promotion of
websites by local newspapers is costly, however some of that cost
can be offset by recouping lost classified advertising from the
print edition through the website. Trinity Mirror pointed out
to us that the economies of scale which could be achieved through
consolidation would enable them to develop local digital services,
which is something we examine later in this chapter.
36. Local newspapers' share of the online market
could be helped by new BBC proposals. The BBC Executive's Putting
Quality First report,
published in March 2010, outlined proposals to "refocus"
the BBC's online presence. This included a proposal to restrict
local BBC websites in England to carrying just news, sport, weather,
travel and local knowledge. The BBC report also proposed that
- [...] there is at least one
external link on every page of the website where editorially appropriate,
making the best of what is available elsewhere online an integral
part of the BBC's offer to audiences;
- Doubling the number of monthly 'click-throughs'
to external sites from 10m a month to over 20m.
37. We welcome the BBC's proposals to increase
the number of external links on their websites. We recommend that
every local BBC website should link to the local newspaper websites
for that area.
38. The views of local media groups themselves about
the structural and economic pressures they face have been well
documented. However, there are some who believe that this crisis
for local newspapers is partly of their own making. The NUJ have
strong views on the reasons why the local newspaper industry is
in such a dire position. It argues that local media groups failed
to invest in new technologies when times were good in the 1980s
and early 1990s when profit margins of 30-40% were commonplace.
39. In January 2009 Nicolas Sarkozy, the President
of France, announced a series of measures designed to help French
national and local newspapers. President Sarkozy pledged 600m
in aid to the French newspaper industry as well as a free subscription
to a newspaper of their choice for all 18 year olds living in
France. The impact
of these measures remains to be seen, but it is unlikely to be
a model adopted in the UK, where state subsidy of the press has
traditionally been regarded as a threat to its independence.
40. The long term impact of the recent loss of
advertising income streams on local newspapers remains to be seen.
The economic downturn shows signs of recovery, and this should
manifest itself in some recovery of advertising revenues for local
newspapers. However the adverse impact that the growth and popularity
of the internet has had on newspaper purchasing and advertising
does not look set to reverse. There is a significant generational
shift in reading habits, and the internet is fostering a younger
generation of electronic news consumers on which newspapers need
41. Local newspapers have recently suffered from
an unprecedented downturn in revenues. Some local newspaper publishers
have profited from diversifying their online presence with advertising
websites such as Jobsite and Fish4, however, the industry is still
in a precarious position. The state subsidy of national and local
newspapers, as has been seen recently in France, is not the solution.
Newspapers should remain independent of state funding and control
and attempt to profit from diversifying their online presence
as best as they can.
Consolidation and the media merger
42. Like all UK businesses, media companies are subject
to merger regulations. The UK merger regime is designed to preserve
both plurality and competitive rivalry between firms, and hence
protect consumers from any negative competitive effects of consolidation.
43. The general framework for the assessment of mergers
(including media mergers) under UK law is set out in the Enterprise
Act 2002, which came
into force in 2003. The Office of Fair Trading (OFT) carries out
a relatively short 'first phase' examination of a proposed merger,
at the end of which a decision is taken on whether a more detailed
'second phase' examination by the Competition Commission is warranted,
or whether the merger should instead be cleared by the OFT (with
or without remedies). The Competition Commission determines the
outcome (clearance, prohibition or remedies) of merger cases referred
to it by the OFT.
44. The merger control regime applicable to newspaper
mergers was significantly scaled back in 2003 to make it less
burdensome. For the most part, therefore, UK newspaper-on-newspaper
mergers are now subject to the same general merger regime as most
other industries in the economy. Under the previous (Fair Trading
Act 1973) regime, a transfer of a newspaper that met the criteria
for the application of the regime was unlawful and void if it
proceeded without the prior consent of the Secretary of State.
With certain limited exceptions, the Secretary of State could
not consent to qualifying newspaper transactions without a reference
to the Competition Commission.
45. However, as Claire Enders pointed out to us,
media firms are still subject to some additional, "heavier"
burdens specific to the industry.
Cross-media ownership rules place certain restrictions on the
ownership of different forms of local and regional media. The
rules are complex, but are summarised below:
There is a national '20%' rule:
i. no one controlling more than 20% of the national newspaper market may hold any licence for Channel 3;
ii. no one controlling more than 20% of the national newspaper market may hold more than a 20% stake in any Channel 3 service;
iii. a company may not own more than a 20% share in a Channel 3 service if more than 20% of its stock is in turn owned by a national newspaper proprietor with more than 20% of the market.
There is also a regional '20%' rule: no one owning a regional Channel 3 licence may own more than 20% of the local/regional newspaper market in the same region.
Rules on local radio ownership require that there are at least three/local/regional commercial media voices (in TV, radio and newspapers) in addition to the BBC in developed markets.
46. The OFT's review of the local and regional media
merger regime was published in June 2009
as a result of a recommendation made by the Government in its
Digital Britain report and examined ownership and competition
in regional media, focussing particularly on local newspapers.
The OFT's report did not recommend any legislative changes and
concluded that the current merger regime "is well placed
to take into account developments such as competition from the
internet because it is evidence-based and capable of reflecting
and that no further OFT research was warranted in this area.
47. John Fry, Chief Executive of Johnston Press,
disagreed. He told us that in applying the current merger rules
the OFT look narrowly at just newspapers and regard everything
else as outside the scope, "whereas we all know that we are
competing with a wide range of media."
Mr Fry went on to give the example of local newspapers competing
with national newspapers and the likes of eBay and Auto Trader.
Sly Bailey, Chief Executive of Trinity Mirror, set out what she
hoped would be changed:
We are not asking for all the cards to be chucked
up in the air and for there to be no control over mergers. What
we are asking for simply is that there is an understanding that
reflects the media markets that we now operate in.
48. Media groups such as Trinity Mirror and DC Thomson
and Enders Analysis argue that consolidation has "greatly
aided the survival of some of those marginal titles which 10 years
ago would otherwise have already folded"
and furthermore "is key to its [local media's] survival,
and uppermost in the strategies of publishers for the near future."
49. The benefits of consolidation for local newspaper
groups were summarised by Trinity Mirror as being:
i. Synergies [combinations with greater effect
than the sum of their parts] in functional areas such as senior
management, HR, IT, Finance, Marketing and office costs would
lower the fixed cost base of the business and improve profitability;
ii. In areas where there is an overlap of titles,
cost-sharing in all departments, from editorial and sales to printing,
distribution and premises would improve profitability of both
titles and increase the likelihood of both titles surviving
iii. In areas where the population and/or advertiser
base cannot sustain two titles indefinitely, a merger may result
in the closure of one title but a strengthened and sustainable
improvement in the profitability of the other, thereby enabling
communities to continue to be served by the regional press;
iv. Benefits of scale across the business, from
newsprint procurement to improved access to capital markets;
v. Combined cash-flow providing greater stability
for the combined entity and improved ability to service debts
and pension liabilities in the face of increasing pressures of
a declining advertising market;
vi. additional cash to invest in digital development.
50. Trinity Mirror went on to argue that the merger
of local newspapers would not have a negative impact on the competition
for local advertising, as advertisers can, and do, now go online.
The use of targeted advertising by internet sites such as Google
has also increased competition as previously it was only local
newspapers and the Yellow Pages that could match local
adverts to local audiences.
51. In response to the criticisms of the media merger
regime made by local newspaper groups John Fingleton, Chief Executive
of the OFT, told us:
I am not convinced that the mergers regime and
the way it operates is a particular problem. It has not blocked
any mergers, and we are very open to giving people advice, guidance
and whatever else is needed, but we must protect consumers and
businesses who in turn compete to supply consumers as advertisers,
and if we ever had concerns, that is where we have raised them.
52. Mr Fingleton said that the merger regime had
allowed six newspaper mergers in recent years, four of which had
been cleared by the OFT at Phase 1, one which had been remedied
and subsequently allowed to go ahead, and one which had been referred
to the Competition Commission and subsequently cleared. He also
told us that in the past three years no local newspapers had taken
up the OFT's offer of free confidential advice on mergers.
53. With regards to the impact of mergers on competition
for, Mr Fingleton said:
We would have to make sure, for example, that
if local businesses could only advertise through a particular
medium, but, for example, national retailers had much wider options
available, the ability of national retailers to have online and
to be able to switch between online and internet-based, as opposed
to local print media, would not necessarily protect the local
person who is trying to get to the market. So you could end up
with quite big distortions of competition at the retail level,
whereby you say, well, we do not care about the small local business
whose only means to the market is through these publications.
So we are very centred on the customer, who in this case is the
advertiser, who acts as a proxy for the final consumer.
54. Other objections to the consolidation of local
newspaper groups were voiced by the NUJ who opposed any relaxation
of the merger regime on the grounds that it could impact on press
standards and result in job losses:
We do not believe newspaper media ownership regulations
should be relaxed to allow greater concentration of local and
regional newspaper ownership. Consolidation of newspaper groups
has been a major factor in reducing resources for newsgathering.
Further consolidation would accelerate the trend which saw Newsquest,
for example, cut 2000 jobs in three years.
55. In November 2009, after a public consultation,
Ofcom published a report to the Secretary of State for Culture,
Media and Sport reviewing the cross-media ownership rules. This
report recommended some relaxation of the of the local ownership
rules to "benefit citizens and consumers by helping to ensure
that local content continues to be commercially provided."
Specifically Ofcom recommended:
Liberalising the local cross media ownership
rules so that the only restriction is on owning all three of:
local newspapers (with 50% plus local market share); a local radio
station; and a regional Channel 3 licence. This liberalisation
will increase the flexibility of local media to respond to market
pressures. Consumers still rely on television, radio and press
for news so we are not recommending complete removal of the rules.
56. Although these recommendations would not significantly
alter the media merger regime, they could allow the cross-media
ownership of local newspapers and either regional television news
or radio. The Department for Culture, Media and Sport has not
yet responded to these recommendations but we believe, if adopted,
they would be beneficial to local media groups.
57. The evidence we have heard from local media
groups about the need to modify the merger regime and cross-media
ownership rules is persuasive. We welcome the recommendations
made by Ofcom in their report to the Secretary of State on media
cross-ownership rules, and urge the Government to implement them.
However we believe more far-reaching reform is needed. In order
for local newspapers to survive in a changing economic and technological
world, they need to be regarded as competitors in a multi-media
landscape. Despite the evidence given by the Office of Fair Trading,
we believe that the current media merger regime does not fully
reflect this. We recommend that the Government re-examine the
arrangement by carrying out a consultation on a possible multi-media
Local authority publications
58. During our inquiry we have heard much evidence
of the increasing trend towards local authorities publishing and
distributing their own free publications. The Local Government
Association (LGA) actively encourages councils to operate their
own newspapers or magazines as a means of communicating with the
public, and in 2005 the LGA launched a 'Reputation Campaign',
which sought to encourage local authorities to improve their communications
with residents. One of the 'core actions' that formed part of
this campaign was the publication of a council newspaper.
59. The LGA conducted a survey of council publications
in 2009 and nearly all respondent authorities (94.5%) produced
a newsletter, magazine or newspaper. Of these, quarterly publications
were most common, accounting for 32.4%, while 14.4% published
editions monthly or more frequently. On average, it cost authorities
£70,000 to produce the publication over the financial year
2008/09, employing the equivalent of one full-time person.
60. All of the local newspaper groups who gave evidence
to our inquiry commented on local authority newspapers, and the
overwhelming consensus was critical. The principle arguments they
made against council publications were:
- Insufficient distinction between
local authority publications and independent newspapers;
- Diversion of advertising spend away from the
- The inclusion of public notices in council publications
rather than the traditional press;
- Content not sufficiently objective or independent
(including allegations of "council propaganda").
61. Trinity Mirror reported that local authority
publications had increasingly moved away from traditional four-page
information sheets to publications that openly competed with commercial
newspapers for advertising.
Tony Watson, the Managing Director of the Press Association, told
us 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
62. However, there is another side to the argument.
Hackney Borough Council pointed out that although there might
be an element of competition for advertising between council papers
and local commercial newspapers, often the production of council
newspapers was contracted out. Hackney Council had awarded a four
year £4 million print contract to Trinity Mirror for the
production of Hackney Today.
63. We held an evidence session with local councillors
representing the LGA on 27 October 2009. They brought along some
examples of the publications produced by their councils. Two of
those which we saw were in a magazine format and clearly stated
they were council publications, one did not: Hammersmith and Fulham
Borough Council's H&F News looks very much like
a local newspaper. It is a tabloid in format and, in the 20 October
2009 edition which we saw, there was nothing on the front cover
that indicated it was a local authority publication. H&F
News follows the format of a local newspaper, with news, features
and sport, as well as carrying a substantial amount of classified
advertising, including extensive recruitment and property adverts.
This is a very different format from other council publications.
For example, Stevenage Borough Council's Chronicle and
Portsmouth City Council's Flagship are quarterly and monthly
publications respectively, both in magazine format, clearly state
they are published by the local authority, carry no classified
advertising and are solely for the purpose of providing public
information on local authority services.
64. The edition of H&F News that
we saw also contained an article entitled: "Businesses brace
for huge rates rise,"
which contained extensive quotes from Conservative Councillor
Mark Loveday, of Hammersmith and Fulham Council, on Government
policy, with no balancing viewpoint. We questioned Councillor
Loveday about this and he said:
I would be surprised if you find a quote from
any politician other than a member of the cabinet of the council.
The reason for that is that that is the advice that has been given
historically to political parties of both persuasions when producing
65. The Department for Communities and Local Government
(DCLG) does issue some guidance that applies to local authority
newspapers and magazines. Their Code of recommended practice
on local authority publicity
contains the following guidance on the content and style of local
- Any publicity describing the
council's policies and aims should be as objective as possible,
concentrating on facts or explanation or both.
- Where publicity is used to comment on, or respond
to, the policies and proposals of central government, other local
authorities or other public authorities, the comment or response
should be objective, balanced, informative, and accurate. It should
aim to set out the reasons for the council's views, and should
not be a prejudiced, unreasoning or political attack on the policies
or proposals in question or on those putting them forward. Slogans
alone will not be an adequate means of justifying or explaining
the authority's views or their policy decisions.
66. However, the DCLG guidance does not cover the
format of local authority newspapers and magazines, nor does it
specifically address any of the issues raised by local newspaper
groups such as direct competition with local newspapers for advertising
67. The Chief Executive of Ofcom, Ed Richards, told
us he thought the area of local authority publishing was "completely
and that it was a "missing area".
John Fingleton, Chief Executive of OFT, told us he did not think
there was a case for the OFT to answer with regards to local authority
newspapers and magazines and competition for advertising. He believed
that there: "may very well be a problem in terms of harm
to the democratic process resulting from that"
but that that was for Government to examine, not the OFT.
68. The Government's final Digital Britain
report, published in June, concluded that:
While local authority information sheets can
serve a useful purpose for local residents and businesses, they
will inevitably not be as rigorous in holding local institutions
to account as independent local media...the Government is therefore
inviting the Audit Commission to undertake a specific inquiry
into the prevalence of this practice, its impact and to make recommendations
on best practice and if restraints should be placed on local authority
activity in this field. 
69. The Audit Commission review was predominantly
concerned with examining the cost effectiveness of councils' spending
on publications and did not address the impact of local authority
publications on independent local newspapers. The role of the
Audit Commission in the examination of council newspapers was
outlined by its Chief Executive, Steve Bundred, in a press notice
in September 2009:
The Commission's role and expertise do not lend
themselves to examining the health of local newspapers or isolating
the impacts of specific local authority practices on commercial
bodies. This element of the Digital Britain invitation
appears better suited to regulators with a specific competition
70. The findings of the Audit Commission's review
of council publications were published in a letter dated 22 January
2010 to Stephen Timms MP, Minister for Digital Britain.
The Commission concluded that the "current accountability
framework provides adequate safeguards against misuse of public
money for political ends" but also recommended that "councils
should review their editorial policy to ensure that it is politically
neutral and publicly defensible."
71. Subsequently the Newspaper Society has written
to the OFT to ask if it will now be taking this matter up. As
the Society's Communications Director explained:
It would be unfortunate, given the concerns expressed
by the OFT, by Digital Britain and by ministers at a senior
level within the Government, if the market impact of local authority
publications on the commercial local media industry was not examined
at all and if no-one was able to make any recommendations to Government
on whether constraints should be placed on those local authorities
which may be overstepping the mark".
72. We discussed this issue with the then Minister
for the Creative Industries at the Department for Culture, Media
and Sport, Siôn Simon, who told us that the Government or
OFT could not do anything regarding council newspapers until the
Audit Commission had completed its study.
Mr Simon also told us that he had tried to contact the Audit Commission
to discuss this matter, but that they did not return his call.
73. There is a real problem with local authority
newspapers and magazines that needs to be addressed. While it
is clear that most of these publications, such as Portsmouth City
Council's Flagship, are legitimate communications from
a council to its citizens, this cannot be said for all local authority
publications. Publications such as Hammersmith and Fulham Borough
Council's H&F News effectively pose as, and
compete with, local commercial newspapers and are misleading to
the public. It is unacceptable that a local authority can set
up a newspaper in direct competition to the local commercial newspaper
in this way. Nor should any council publication be a vehicle for
74. The current DCLG guidance in this area is
currently being breached. The DCLG should set up a system to monitor
this situation closely. However we believe these guidelines, even
if adhered to, do not go far enough. There should be specific,
detailed guidance for local authority newspapers and magazines
which should state that it be mandatory that all publications
of this type make clear, not only on the front page but throughout
the publication, that they are a local authority publication.
75. The Audit Commission's review of council publications
did not examine the impact that council newspapers are having
on commercial local newspapers. We agree with the Audit Commission
that it is not their role to do so. We recommend that the Office
of Fair Trading should conduct a review specifically on the impact
of council publications on commercial local newspapers.
Public service reporting and the
future for local journalism
76. We have already discussed the vital role that
local newspapers serve in communities, providing necessary scrutiny
of local government and other public institutions such as courts,
health trusts and education authorities.
77. The implications of a decline in local newspapers,
in terms of quantity and quality, are far-reaching. Reporting
on public institutions is a key function of all news media but
at a local level it is usually solely the local newspaper that
provides this service. We are concerned that there are signs that
the problems in the local media industry are leading to a scrutiny
78. Many local newspaper offices are no longer situated
in the communities they serve. In the Manchester area the Rossendale
Free Press, Accrington Observer and the Rochdale
Observer, then owned by Guardian Media Group, have relocated
their offices with those of the Manchester Evening News
in the centre of Manchester. Others we have heard about include
the Wharfe Valley Times
and Long Eaton Advertiser.
This could have an impact on the 'localness' of these newspapers
as they are no longer 'on the beat' in their communities. It may
also affect the identity of the titles and the relationship they
have with their readership who may live dozens of miles away from
the newspaper offices.
79. In evidence to us, the NUJ expressed its concern
at the downsizing of local newspaper offices, citing many examples
of local newspapers cutting down on staff and resources:
Five day a week titles such as the Reading (Evening)
Post are now to be published twice-weekly. Fewer editions mean
late or breaking news will be lost or localised content is cut.
Hundreds of pages of editorial coverage have been lost every week.
Job cuts among specialists mean there will be a loss of expertise.
For example the papers in Newcastle lost their rugby correspondent,
in Gloucester they lost their health correspondent, in Liverpool
their Parliamentary correspondent. The story is the same across
large parts of the newspaper industry.
At many centres, news desks, sub-editors and
journalists are being moved to centralised locations, often dozens
of miles away from the communities served by the titles. It means
key decisions about what to cover and how to report it are being
taken by people who may have very limited knowledge of the local
80. The NUJ believed that these cuts would have a
negative impact on the quality of print journalism. It suggested
that if there was not enough resources in newsrooms to gather
original stories and produce original content, staff on news desk
would end up re-writing content they received from news wires
and from the internet. This practice was described as "churnalism"
in the book Flat Earth News, by Nick Davies, and is a subject
that we examined in our recent inquiry on press standards, privacy
81. The NUJ believed that "it is not just newspapers
but public service journalism which is under threat."
This sentiment is shared by the Press Association and others.
Paul Bradshaw, Professor of online journalism at Birmingham City
University, considers that it is journalism that needs preserving
rather than local newspapers. He described the up and coming 'hyper-local'
movement as a natural reaction to what is perceived as a deficit
in public reporting.
We examine these initiatives in more detail in paragraphs 253
82. As already mentioned in paragraph 14, local newspapers
and local journalists can be seen as the base of a 'news pyramid'
underpinning the news industry in the UK. Trinity Mirror described
the role that local newspapers play as employers and in the development
Regional newspapers are significant employers
with a wide geographical spread. In 2007, the last year for which
detailed figures are available, a Newspaper Society ('NS') survey
showed that the industry employed over 41,000 people, nearly 12,000
of whom are journalists. The NS estimates that total employment
had fallen to 35,260 (-4%) in 2008 of whom 11,200 (-7%) were journalists.
It is not too high a claim to say that regional
newspapers have long been the training ground for UK print journalism.
They have invested heavily in training and it has been a tradition
of longstanding that young journalists find their feet or cut
their teeth on local papers. There isn't a newsroom on any national
newspaper that doesn't have a very significant number of journalists
who started in the regions. Indeed many high profile television
and radio journalists started their careers in regional papers.
83. The Press Association, who we visited at their
headquarters in Howden, East Yorkshire, in July 2009, believes
that a possible solution to the problems faced by local newspapers
would be to develop a model of public service reporting, akin
to some of the aims of public service broadcasting. Tony Watson,
Managing Director of the Press Association, described the need
for a re-evaluation of the way in which local journalism is funded:
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
84. The Press Association's idea of a public service
reporting model would operate by deploying Press Association journalists
to report on events at public institutions such as courts, health
trusts and police authorities at a local level who would then
provide independent content that could be supplied free to local
85. The Press Association argue that if a model of
public service reporting were adopted in the UK it could be at
least part-funded by a contestable public fund in the same way
as independently funded news consortia (IFNCs), which we discuss
in detail in paragraphs 115 to 139. Tony Watson told us of a pilot
scheme that the Press Association would be running, in partnership
with Trinity Mirror, that would test how much unreported material
there was at local level, and what the uptake for this content
would be. The funding
for this pilot is undisclosed, although Mr Watson did say that
it would not come from the industry.
86. The Press Association's proposal has also attracted
criticism. On our visit to Yorkshire in July 2009, we visited
the Yorkshire Post which is owned by Johnston Press. The
Chief Executive of Johnston Press, John Fry, told us that he did
not agree with the Press Association's calls for a publicly funded
public service reporting model and argued that there was no place
for public subsidy. Mr Fry went on to say that he also disagreed
with IFNCs, as he would prefer regulation to be reduced and consolidation
to occur naturally under market forces.
87. The importance of reporting on local institutions
and local democracy cannot be overstated; without it there is
little democratic accountability. This reporting must be independent
and good quality in order to inform the public and maintain their
88. Therefore we welcome the Press Association's
proposals for public service reporting and the launch of their
pilot project. This model could alleviate some of the pressure
on local newspapers and could well be a solution to the gap that
has emerged as local papers are increasingly too under-resourced
to report on the daily activities in courts and local authorities.
89. Despite the bleak reports we have heard about
the future for local newspapers, we believe they will still be
relevant for some time to come, not least because there is still
a population of newspaper readers as well as digital 'have-nots'.
However, to survive local newspapers need to innovate and invest
in new technologies. Now more than ever people are turning to
the internet and digital media for their news, providing an opportunity
to for local newspapers to capitalise on their positions as longstanding
local content providers.
90. For a long time local newspapers have made
relatively little change to their business models. Now, along
with the other traditional media platforms of television and radio,
they face a vast array of digital and internet services, providing
relatively easy market entry, all vying for advertising revenue
and readerships. While some economic factors are cyclical, other
changes of a structural nature are likely to be permanent. As
is clear from the evidence we have heard from local newspapers
themselves, local newspapers must innovate and re-evaluate the
traditional model of local print media in order to survive in
the new digital era.
DIGITAL AND BROADCAST POOLS
91. The Press Association currently operates a 'digital
pool' whereby Press Association journalists cover national events
in text and video and make the content available to clients, at
cost, on the Press Association video wire.
These clients are national and regional newspapers who are increasingly
using video content on their websites. Although the pool covers
national events this reporting does still have a regional appeal
and relevance. For example an honours ceremony at Buckingham Palace
will include local people commended for activities in their communities.
92. The Press Association's digital pool operates
alongside the broadcast pool which is made up of the BBC, ITN
and Sky, who share video broadcast content from events where only
one camera is permitted. The Press Association is not part of
the broadcast pool and traditionally has been denied access to
its content. Recently the broadcast pool has made some of its
content available to the Press Association, although at considerable
93. Tony Watson, Managing Director of the Press Association,
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.
94. Mr Watson went on to give the example of broadcast
pool footage of a Government press conference on swine flu that
the Press Association was denied access to which, he argued, was
in the public interest to distribute as widely as possible. The
Press Association also told us that event organisers could be
confused about who had access to the broadcast pool, and might
assume that by allowing the broadcast pool access they were allowing
the coverage to be used by local and regional newspapers, which
is not the case.
95. Helen Boaden, Director of BBC News, told us that
the members of the broadcast pool were "in discussions"
about the situation with the Press Association, and stressed that
the BBC could not act unilaterally in the pool. Ms Boaden went
on to say that "the Press Association does not actually bring
enough in terms of people and resource to contribute to the pool."
96. It is anachronistic to distinguish between
broadcast and non-broadcast journalism. There is a convergence
towards multi-platform news journalism and therefore access to
video footage of national events, which often have a local or
regional angle, should not be exclusive to broadcasters. The BBC,
ITN and Sky are all able to use the broadcast pool content online
as well as on television and it is against the public interest
to deny local and regional newspapers this opportunity.
97. There needs to be clarity regarding who has
access to footage from, what are currently, single camera assignments.
If the members of the broadcast pool are not prepared to make
the content available to the Press Association at a reasonable
cost, then the Government should ensure the right of access for
the Press Association digital pool reporters alongside the broadcast
pool at national events.
11 Q 46 Back
Ev 174 Back
"Guardian Media Group sells regional business to Trinity
Mirror", Guardian Media, 9 February 2010 Back
Press Association website, www.pressassociation.com Back
Q 11 Back
Ev 231 Back
"Johnston bad news", Financial Times, 12 March
2009, p 24 Back
Johnston Press, Interim report, August 2009, johnstonpress.co.uk Back
Ev 151 Back
Ev 243 Back
Ev 168 Back
Ev 168 Back
Ev 175 Back
Q 8 Back
Q 8 Back
Q 14 Back
Ev 163 Back
Ev 172 Back
Ev 231 Back
Q 44 Back
Q 44 Back
Johnston Press, Interim report, August 2009, johnstonpress.co.uk
Q 70 Back
Q 19 Back
Ev 231 Back
Ev 173 Back
Ev 234 Back
Ev 171 Back
Ev 245 Back
Ev 234 Back
Ev 224 Back
Ev 233 Back
BBC Executive, Putting Quality First: The BBC and Public Space,
March 2010 Back
Ibid., p36 Back
Ibid., p37 Back
Ev 150 Back
"Sarkozy pledges 600m to newspapers", The
Guardian, 23 January 2009 Back
Enterprise Act 2002 Back
Ev 221 Back
Department for Culture, Media and Sport, "What we do - broadcasting",
Office of Fair Trading, Review of the local and regional media
merger regime, June 2009 Back
Q 50 Back
Q 61 Back
Ev 233, 226 Back
Q 19 Back
Ev 223 Back
Ev 233 Back
Q 369 Back
Q 385 Back
Q 385 Back
Ev 155 Back
Ofcom, Report to the Secretary of State for Culture, Media
and Sport on Media Ownership Rules, 17 November 2009 Back
Ofcom, Report to the Secretary of State for Culture, Media
and Sport on Media Ownership Rules, 17 November 2009 Back
Local Government Association, Reputation Campaign, reputation.lga.gov.uk Back
"Council magazines not a threat to the local media",
Local Government Association press release, 27 April 2009 Back
Q 61 Back
Ev 236 Back
Q 103 Back
Ev 253 Back
"Businesses brace for huge rates rise", H&F News,
20 October 2009, p 5 Back
Q 257 Back
Department for Communities and Local Government, Code of recommended
practice on local authority publicity, April 2001 Back
Department for Communities and Local Government, Code of recommended
practice on local authority publicity, 2 April 2001 Back
Q 390 Back
Q 388 Back
Digital Britain, final report Back
"Audit commission will not examine impact of council newspapers",
Newspaper Society Press Release, 10 September 2009 Back
Letter to Rt Hon Stephen Timms MP from Steve Bundred, Chief Executive,
Audit Commission, 22 January 2010 Back
"Audit commission will not examine impact of council newspapers",
Newspaper Society Press Release, 10 September 2009 Back
Q 604 Back
Q 603 Back
Ev 200 Back
Ev 151 Back
Ev 153 Back
Culture, Media and Sport Committee, Second Report of Session 2009-10,
Press standards, privacy and libel, HC 362-I Back
Ev 153 Back
Q 500 Back
Ev 231 Back
Q 77 Back
Q 95 Back
Q 78 Back
Ev 280 Back
Q 80 Back
Ev 280 Back
Q 457 Back
Q 461 Back