Memorandum from the Scottish Daily Newspaper Society

 

1. The Scottish Daily Newspaper Society (SDNS) is the representative body for the publishers and editors of seven major groups including Aberdeen Journals, D C Thomson & Co Ltd, Herald & Times Group, Scottish Daily Record and Sunday Mail Ltd and The Scotsman Publications Ltd whose 13 titles can be described as Scottish national and regional press. They account for aggregate weekly sales of over 6 million and in addition deliver over 5.1 million online unique users each month.

 

Associated Newspapers and News International Newspapers are also members in respect of the Scottish editions of their UK national titles which are understood to be outwith the remit of the inquiry. This submission therefore relates solely to what might be termed the indigenous press.

 

2. Our newspapers are currently operating under tremendous pressures. In brief these are:

 

long term decline in sales of printed newspapers

economic downturn severely affecting advertising revenues

migration of classified advertising to the internet

changes in communications technology with instant news available from online publications, video, mobile technology, podcasts etc.

 

We are suffering from a cyclical downturn as well as structural change. The impact of this combination has resulted in sharply deteriorating revenues necessitating action to reduce costs including, regrettably, the loss of jobs.

 

3. In order to address these challenges, our respective members have invested substantial resources in their digital publishing operations which are now firmly established as an integral part of the publishing mix. While this investment is yielding significant growth, digital revenues generally are still at the stage where the represent a relatively small proportion of total income.

 

4. We are seeing a period of enormous political, economic, social and technological change. Those four key variables affect consumer behaviour. Twenty years ago there was no internet. There was no 'Metro'. The media landscape has changed beyond recognition and it continues to change at a rapid rate. The key strategic challenge for the industry is its ability to adapt and to innovate. The industry is doing that with technology at the heart of innovation in helping to streamline the business.

 

Consumer behaviour has changed dramatically. The reduced frequency of buying newspapers and multiple copies of newspapers is having significant effect with people perhaps buying one daily newspaper three days rather than six days a week.

 

5. As yet, there have been relatively few newspaper closures in Scotland and those which have gone have been free weeklies which of course are most vulnerable in a depressed advertising market. Therefore access to local information is substantially undiminished due to the continuing availability of paid daily and weekly newspapers.

 

6. Quality journalism and content are key to the success of newspapers. News gathering, however is expensive and it is inevitable that the number of journalists employed will be influenced by advertising and cover price revenues. As indicated earlier, sharply deteriorating revenues, which have been of the order of 35-40 per cent for many publishers in the first four months of 2009 compared to the corresponding period in the previous year, have necessitated action to reduce costs including a reduction in the number of journalists employed.

 

7. 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 13.5M. It is our strongly held belief that daily and weekly newspapers and their online services have long been an essential meeting place for people seeking new employment. It is our view that any financial savings claimed by CoSLA need careful scrutiny against the value and effectiveness of securing the best people through the services of the newspaper industry.

 

We are also deeply concerned that the Scottish Government plans to bring forward regulations to allow for the publication of public information notices electronically. They will remove the obligation on local authorities and others to place public notices in regional and local newspapers, estimated to be worth 6.4m in 2005/06 according to the analysis referred to in the preceding paragraph. We consider that there would be a serious risk of such action leading to more secretive, less open government and to many grass roots issues being decided without consultation and debate.

 

Broadband take-up in parts of Scotland is quite low e.g. 32% in Glasgow according to Ofcom's Nations and Regions survey in 2008, and compares extremely poorly against the household penetration of newspapers. We do not understand how the Scottish Government could contemplate disenfranchising large numbers of the public by relying on less effective information channels.

 

More generally, we are concerned about local authorities and other public sector bodies using their privileged position of public funding to provide services fully met by daily and local newspapers operating in a commercial environment to generate revenues based on audience reach. They can have a profoundly negative effect on the financial viability of our newspapers and their related websites.

 

8. We do not seek public subsidy for newspapers nor do we believe that local radio or television should receive subsidy to provide news. It greatly concerns the SDNS that Ofcom may be contemplating a pilot project offering a subsidy to STV. We would object in the strongest possible terms to what could only be construed as a serious distortion of the market. The company dismantled the former Grampian TV news gathering operation, yet here it is seeking taxpayers' money to expand its local news provision. In effect it wants to restore what it destroyed.

 

All sectors of the media should be competing on a level playing field and while that may not be possible because of the uniquely privileged position of the BBC that distortion of the market should not be exacerbated by Ofcom giving any credence to the begging bowl approach of a commercial operator.

 

Last year the Scottish Broadcasting Commission, appointed by the Scottish Government, came out opposing public subsidy to STV for providing what it called a bare minimum of Scottish content in return for the benefits of remaining in the public sector broadcasting framework.

 

9. We have made representations to the OFT that the rules on newspaper and cross-media ownership and competition need to be amended to take account of the realities of the Scottish media landscape and to allow flexibility in meeting the exceptional circumstance in which the industry find itself.

 

10. We are extremely wary of partnerships with the BBC. The truth of the matter, at least in Scotland, is that the BBC employs relatively few journalists in the field compared to the Scottish newspaper industry and for many local stories the BBC actually feeds off newspapers.

 

May 2008