Memorandum from D C Thomson & Co
DC Thomson & Co Ltd ('DCT') is a private media
company formed in 1905 under the management of the Thomson family to run their
DCT newspaper titles
[Source: National Readership Survey; ComScore]
We supply our readers with mainly local news, and some
coverage of national and international news, put together by our editorial
teams. Our local news coverage is focused for example inter alia on local
government and events, policing, firefighting and crime, charity, school and
sports events, and the stories of our residents, local businesses, services,
farmers and other organizations. We celebrate
our local heroes, including soldiers sent abroad to
Circulation revenue is an important stream for most of our newspapers; one title, The Aberdeen Citizen, is free to readers and relies only on advertisement for its revenues. Circulation of paid-for titles is generally on the decline (Table 2), leading to a reliance for revenue growth on cover price increases, difficult to implement in a recessionary environment.
Circulation of DCT newspaper titles
Our titles also supply advertisement services to local authorities or government services (District Councils, NHS Trusts, armed forces et al), local (and national) businesses, services and farmers, and individuals. Advertisement revenues have also been on the decline in past years (and very significantly in the last year) due to a structural shift of spend on classified advertising to the Internet (especially recruitment and motors, but also property), and more recently due to the recession. Our advertisement revenues are also being affected by the organized retreat of the public sector from local print media (see below) as a result of:
· the rise of the publicly-funded and supported publication;
· the withdrawal of statutory publication requirements for notices of public interest; and
· the reduction or elimination of discretionary spend on recruitment in local media.
Our purchasers and our advertisers are DCT
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. (We also expect to have to shortly commit to spend significantly to upgrade our newspaper printing facilities to significantly extend their working life bearing in mind that the bulk of our revenues from physical copy sales and from advertising come from the printed medium.) As a result, we are facing an inevitable very considerable compression of our margins as revenue declines significantly while our costs rise.
Contribution to public policy objectives
In the pursuit of our normal business activities,
we also serve important public policy objectives. The most important one is
supplying purchasers/readers with information on their community and environs.
For example, on Tuesday the 7th of April 2009, the
· "Italian quake toll tops 150 as search goes on";
· "Teenager hurt in another skylight plunge" (warning youths against climbing onto roofs);
· "Plea over football fan's body in
Inside we reported inter alia on diamond wedding anniversaries, sports camps, the new look of the Fife Chamber of Commerce, Dunfermline's museum plans, convictions for crimes, the latest news on Scotland's champion curling and cricket teams, and tennis champion Andy Murray.
This news content is often repurposed for broadcast on television and radio, or is republished in local weekly newspapers. Our journalists generate leads and stories for all local media and even some national media on occasion. Although to an extent lifted from our own titles most of the other local media (mainly weeklies) benefit in one way or another from the work our journalists do. If the main voice of local journalism is weakened or damaged it is likely that other media will be also be weakened or damaged. Many of these titles have already cut back fiercely on their local journalism and in our view rely on us and other companies and titles like ours.
However, not all local communities are rich enough today to support a local media outlet, and many communities do not have a local media outlet, print, radio, or TV. We do not believe that every single local community must have a local media outlet, just as the Government has determined that not every community can support a post office. We also believe that commercial media is best able to judge market opportunities.
We also consider that plurality is a much more subtle concept than counting up the number of "voices" in local media, whether the number of media channels or the number of suppliers in each channel. Plurality also depends on the existence of access to media, literacy (a barrier with more complex media such as the Internet), engagement and desire for participation in public life.
There's an intriguing fallacy behind the view that a rise in local newspaper title concentration will reduce plurality (except in the obvious manner of losing one voice). Many local communities are unable to support more than a single local independently-owned newspaper title. Given current trends in revenues, there is no doubt that many more local communities are headed in this direction. But that local "voice" is irretrievably lost when the single local independently-owned commercial media title is forced to close.
In our view, consolidation will significantly help local communities retain and develop their local media voice and will enable them importantly to be independent. And in our view major titles such as ours for example the main daily regional or local morning paper or evening paper of an area needs to be strong so as to be able cover matters widely since if they do not, that is a loss of diversity in itself but also for the smaller weeklies which to a large extent survive off them editorially anyway, and those smaller titles will just find life even more impossible and unsustainable unless of course they were under the umbrella of the same main host or regional title which is generally not at present allowed under competition rules.
Plurality also depends on the editorial approach of local media. We offer the news in a generally independent manner, not least because it is important that our readers trust what they read. We do have strong editorial views and our readers section also reflects strong local views, but we do not have any consistent partisan or politically aligned or motivated approach to reporting the news. This kind of approach is not as typical for many of the national papers or their regionalised editions. And so we feel even more strongly about the importance from a democratic point of view and plurality point of view that it is important that the daily morning and or evening papers in an area should be able to be and allowed to be strong.
Such independence is also not typical of publicly-funded local media products and services, which are designed as propaganda to support the local electoral strategies of party politicians. This is why we believe that plurality will be reduced if publicly-funded local media products and services crowd out commercial local media, either by sapping our advertiser base, reducing prices of placements or drawing our readers to a substitute local media product.
To be fair, most of our readers consult many types of media on a regular basis, so they are not 100% reliant on their local newspaper. For most of our readers, a local newspaper is one among other sources of information. We view the trust of our readers as a core central objective, and believe they will reach their own opinions, based on all the sources of news they consult or are informed by, from the press, to the Internet, radio or TV, or even conversations with colleagues, friends and family.
However, there is one substantial group of readers whose choice of media is more restricted: Seniors. This customer group does not have the same access to the Internet as younger and more skilled people, and cannot exercise the same media choices. Their reliance on local newspapers, TV and radio is very high, despite Lord Carter's long-term vision of a Digital Britain. Although seniors may have retired from the work force, they are often very engaged in local politics and local community life, on which they and the local community rely. Many seniors contribute their time to community activities. We believe the newspaper is a core local communications channel for this group.
Readership base of The Courier, 2003-2008
[Source: National Readership Survey]
For the future, our core business objective is to continue to serve our readers and advertisers in our local communities. Our view is that we are best able to serve our clients and shareholders in the absence of government interventions in our marketplaces, of which I will name a few:
1) Merger regulations. We are an
interested party to the OFT
1) Unfair competition for advertisers and readers of replacement print media products or services, funded by the public purse. The Local Government Association (LGA) survey of 199 responses of local authorities (of a total of 353) indicates that at least 188 local authorities operate a newsletter, and 132 of these 188 newsletters (three of four newsletters) carry some advertisement. The Newspaper Society has an established position on the issue which we support. We are encouraged that the Secretary for Culture recognizes the unfair competition such publications imply for commercial media.
3) The Killian Pretty Review - Planning Applications: A faster and more responsive system (Final Report), published in November 2008, recommends removing the mandatory requirement for local authorities to publish planning statutory notices in newspapers. In line with the concerns expressed by the Newspaper Society, DCT does not believe it is the right time for Government to be denying readers the right to be informed about such notices in their local newspaper. Our newspapers reach a large population and many readers do not have a choice of media to be informed on such matters.
DCT believes we can continue to produce quality local news under our existing business model. A policy of subsidization of local journalism would relieve us of a significant component of our costs. This might safeguard journalists' jobs in the short term, but would pose risks to our editorial integrity, and thus undermine our readers' trust in our independent voice. A policy of tying advertisement spend to editorial support at any level of government is a more subtle means of interference in editorial integrity, but just as dangerous. We believe that local communities are best served by commercial media with a full independence of voice.