Examination of Witnesses (Questions 460
- 479)
WEDNESDAY 10 OCTOBER 2007
Mr Richard Wallace
Q460 Baroness McIntosh of Hudnall:
That is exactly the kind of issue I was hoping you might raise.
Mr Wallace: I have every confidence in our core
readership that once all the arguments were explained sufficiently,
certainly on an issue like that, there is a knee-jerk reaction
on those kinds of issues, however, when you go into it in any
depth at all it is not quite as simple as that, and you often
find if you get into a debate with them about it they are kind
of like, "Yes, okay, fair point."
Q461 Lord King of Bridgwater:
I am interested in the first point you made where I think you
said to the Chairman inevitably you will be a Labour-supporting
paper in the final analysis and that the die-hard Labour voters
are your core readership. What we all know in politics is that
there are fewer and fewer die-hard voters on all sides of the
political spectrum. It is interesting also that where you previously
would have dominated the scene, you have been overtaken by a proprietor
who certainly does not just wait for his readers to tell him what
he thinks, who changes sides regularly, and who definitely sees
that he is in the business of leading. I am talking about what
I think you would call a traditional proprietor; Mr Rupert Murdoch
at The Sun.
Mr Wallace: Indeed, he leads.
Q462 Lord King of Bridgwater:
Do you not see in this position that you are actually a prize
that would be worth playing for where you could have more influence
and you could lead both with the political parties and with your
readership?
Mr Wallace: I do not know. One
of the wider questions about what are the presses for is that,
frankly, this country needs a paper like the Daily Mirror.
At the moment you have this crazy situation with the Telegraph
now going for Labour, you have got The Mail worshipping
at Mr Brown's feet; everything is up for grabs here.
Lord Maxton: I had not noticed!
Baroness Howe of Idlicote: It changed
last week.
Q463 Lord Maxton:
A week is a long time in politics!
Mr Wallace: This is the thing. Again, this is
another illustration of those core traditional readers, whether
of the Telegraph or The Sun, et cetera, who are
died-in-the-wool Tories, those things are breaking down. If we
start joining that particular party, it is not for us really.
That gives us, frankly, clear blue water. It is a very competitive
market, as you well know, and that is one of the things that gives
us clear blue water. Yes, we might be regarded in some quarters
as staid and perhaps even old-fashioned, but I do not think that
is necessarily a bad thing.
Q464 Lord King of Bridgwater:
There is a quote here: "We need to get used to the idea that
today's newspapers are not necessarily about news".
Mr Wallace: Yes, that is correct.
Q465 Lord King of Bridgwater:
That is your quote.
Mr Wallace: Yes.
Q466 Lord King of Bridgwater:
And you see yourself moving much more towards issues and interest
stories?
Mr Wallace: There is a much broader question.
It is very, very difficult now to avoid the news. There is television
in shopping malls, there is ticker tape. If something happens,
you kind of know about it, and you have to be locked away in a
dark room all day not to know about it, certainly with the rolling
24-hour news of "a cat gets stuck up a tree" which we
seem to be told about, such is the voracious demand for news.
Therefore, if for instance a cabinet minister were to resign right
now, by tomorrow morning when most of our papers are being bought,
people are going to be sick to death of that fact and, yes, I
will have it in our newspaper and, yes, there will be analysis
of that resignation, but is it going to be on the front page?
Probably not.
Chairman: I would like to bring in Lady
Bonham-Carter at this point because we were thinking about the
news agenda in the light of some of the quotes that Lord King
mentioned.
Q467 Baroness Bonham-Carter of Yarnbury:
We have recently been in America and seen a lot of the newspapers
there—and I noted that you said you had worked there at
one point—and we were interested to discover that there
is a very strict separation between editorial and news. Indeed,
there are separate editors and they do not appear to talk to each
other, they have a separation.
Mr Wallace: Exactly.
Q468 Baroness Bonham-Carter of Yarnbury:
What is your feeling about that way of running a newspaper?
Mr Wallace: My personal view—and I think
the Americans are guilty of this—is that you end up navel-gazing,
there is a lot of to-ing and fro-ing about who is responsible
and where the lines are drawn, et cetera. Ultimately, one of the
reasons we have such a powerful, strong, entertaining and great
press in this country is because it is decisive, and they make
decisions on the hoof every day and entertain in the way they
present that rather than having long, endless debate about (i)
whose responsibility it is to decide something and (ii) what they
are going to decide. You read the New York Times and it
is a great newspaper but you have really got to make an effort
to read it. They make it quite difficult for you to enjoy their
wares. I believe a lot of that is the way they do have that structure;
there is a lot of to-and fro-ing rather than actually getting
on with delivering the news.
Q469 Baroness Bonham-Carter of Yarnbury:
The Chartered Institute of Journalists has recently asserted that
it is more and more impossible to distinguish between news and
comment. Is that not a problem for the audience?
Mr Wallace: The bigger problem in America is
with American television, and I think television generally is
becoming a bit of an issue as far as what is comment and what
is news. People like complaining about the weather in this country
and they like complaining about the press, that is just the way
it is, but part and parcel of that people also like buying our
newspapers, and they understand when they come to the party that
there is opinion in-built there and they understand that. One
of the reasons why they choose the Daily Mirror over The
Sun or vice versa is because of at one end the slightly raucous
opinion and the slightly more thoughtful opinion at the other.
That is part of the process of why they buy the paper. When they
come to say, for instance, looking at the BBC or the television
news, the lines do change, they do expect impartiality, et cetera,
there.
Q470 Baroness Bonham-Carter of Yarnbury:
Going back to what Lord King was saying you are saying as a newspaper
editor that comment is what sells rather than news?
Mr Wallace: We are really navigating in new
waters for us because at the same time if there is a major news
event, a 07/07 or what have you, people come running to the newspapers.
It is interesting in our market that they come running to the
Daily Mirror because there is a sense that this is a serious
story, something terrible or marvellous has happened, we need
to get what this is all about and get it properly, so you often
find that we sell a lot of papers as a result of those issues.
Again papers still lead the agenda. You turn on the Today
programme or Jeremy Vine on Radio Two and nine times out of 10
it is a story that was in one of the morning's papers that will
dominate the discussion and the debate. So we are still at the
centre of public life, as we always have been, yet when there
is not a major story, when there really is not very going on certainly
as in the popular end of the market for the last couple of months
(bar the McCanns, which is another phenomenon entirely) then we
struggle frankly, because a person is going to say, "I've
got a busy day." My brother is a civilian, as I call them,
and I say to him, "When do you buy a paper?" and he
says, "If I have to fill the car with petrol and there is
a queue and there is a headline I like, then I'll buy it."
He has not got the time. The traditional having your paper delivered
or picking one up on the way to work has died out because of the
nature and way our lives have changed.
Q471 Chairman:
You are more a magazine.
Mr Wallace: The word that I use with my staff
is to become "useful". Whether it is explaining issues
of the day, and everybody knows, for instance, they need to feed
their children more healthily and they want to dress more fashionably,
but they want to do it on a budget et cetera, so one of our jobs
is to find out how you can do that. Is eating organic food better
for us or worse for us, because obviously in our market every
pound counts. It is a usefulness so, yes, to some extent there
is a magazine element to that. As I said, newspapers have always
been all things to all men because we have had to do everything,
but now the whole media market-place is fragmenting so there is
a niche product. If you want celebrity in living colour then you
go to Heat magazine or OK magazine or whatever,
if you want sport you go to wherever. At the same time we are
trying to corral all these interests under one roof.
Q472 Baroness Bonham-Carter of Yarnbury:
On the big news story are you saying that if the citizens want
the impartial take on a big news story then go to the BBC?
Mr Wallace: 07/07 is a great example actually.
One of the things newspapers are very good at, and what we are
excellent at, even though I say so myself, is when a terrible
thing happens, it is all over the news, we know how many people
have died and how many people have been injured, we know the bare
bones and the bare facts, and we know the running order of what
happened, but what people want to know is why did this happen,
how did this happen, and that is where we come into play, and
television in those major news events cannot really begin to provide
that analysis until some little time afterwards because they are
about moving pictures, and if they have got some great moving
pictures they are going to be repeatedly showing those rather
than saying, "Why did this happen?" As I said, once
people get over the initial shock of these events they very quickly
want to know why has this happened and how has this happened,
and that is where we come into play. That is why we do so well
in those situations because people come back to us.
Chairman: I want to go back to the issue
of circulation and all that. Bishop of Manchester?
Q473 Bishop of Manchester:
Mr Wallace, I gather in the 12 months up to May 2007 The Mirror
lost 5% of its circulation. I wonder if you could put that in
the context of the last 10 years and describe what you see to
be the trends in circulation as far as they relate to The Mirror?
Mr Wallace: The last 20 years has been a difficult
time. I will give you just as a few for instances. In 1996 I think
there were around 110 TV stations and there are now 310. In 1996
there were around 2,500 magazines; there are now around 3,500
magazines. In 1996 4% of the population had access to the Internet;
in 2006 it was 71%. In 1996 I do not think text messages had even
been invented let alone sending news to your phones. The number
of platforms, to coin a contemporary phrase, that have become
available for the delivery of news and content (which is how we
are now meant to describe it) has exploded and as a result of
that, touching on the point I was making earlier, news is everywhere,
all the time now, and it is very, very difficult not to know what
is going on in the world, so therefore the essential aspects of
having your daily newspaper have gradually been eroded and at
this time continue to erode. I believe that we will plateau at
some point because I think there still will be a demand for newspapers.
They might even become luxury items in the future, who knows.
Q474 Bishop of Manchester:
What is the percentage decrease over that more extended period?
I ask this about The Mirror particularly because I gather
that your circulation has fallen at a greater rate than the others.
Mr Wallace: Absolutely. There are other factors
that come into play. We are premium-priced compared to our direct
competitors. At the moment The Sun newspaper is 20p in
the south, and we are 40p, so that comes into play. The other
big thing, which I have described as the "crack cocaine"
of our business, is the giving away of DVDs. My personal view
is that as an industry we have shot ourselves many times in the
feet because we are telling our audience that our product is so
useless we are giving you a film or we are giving you a new album.
It is quite extraordinary.
Q475 Bishop of Manchester:
Can I just interrupt you, what evidence is there that when you
do that it does boost the sales but, more importantly, do you
then retain any of the readers?
Mr Wallace: The most recent example—and
I think you will be hearing from him later and he will know the
exact detail—was the Mail on Sunday which gave away
a copy (the first time this has happened) of the American artist
Prince's new album. They spent, I am told, £1.75 million
buying and marketing that product and on that particular Sunday
they sold an extra 600,000 papers. The following Sunday those
600,000 sales had disappeared, ie people had come in for the free
bit of kit and gone away again. Yes, that gave them a very significant
lift on their circulation figures that month but in real terms
is that a lift? I do not know. Also budgets are different. The
Daily Mail and The Sun spend approximately £20
or £25 million a year on marketing and promotion, ie DVDs
and what have you; we are just under the £10 million mark,
so it is a straightforward slugging match at the moment. "Here's
a car with every paper". It is madness and it makes no economic
sense and we are a public company, we are a business.
Q476 Bishop of Manchester:
And of your lost readers have you managed to transfer any of them
to your website?
Mr Wallace: Again that is an on-going change.
It is not a case of readers disappearing and going off somewhere
else. They are just disappearing because they are getting out
of the habit. That itch that people now probably over 40 have
"Oh, I did not see a paper today, I feel a bit out of sorts"
has disappeared, which is obviously bad news, but there is a transformation
over into the Internet side. We are getting to grips with that
now because I believe that we need to be quite different on the
Internet than we are as a newspaper. People previously shovelled
their newspaper on-line and said, "Right, there you are",
but that is not what people want from the Internet, I believe,
so we have various, very exciting plans to do with the Daily
Mirror brand on-line which we will be unveiling in the new
year. That is the key because people who would never even have
the Daily Mirror in the house understand loosely what the
brand stands for—fair play or whatever it is—and so
I believe in the new digital world where people are surfing around
and there are all sorts of groovy new brands out there they will
think but how many of those can you actually trust. Hopefully
if you come across the Daily Mirror online you will think,
"You know what, I would never had have it in the house but
if I go here I know I am going to get the truth at near as damn
it." I think that will be important for us in the future.
Q477 Lord Maxton:
You are talking about free DVDs, what about free newspapers, I
do not know where they are free but when I travel down from Scotland
on Virgin first class I get a Times or Scotsman
given to me and the same on the West Coast. I am a member of a
gym and I get the Daily Mail there free. Do you do that
sort of thing?
Mr Wallace: In the business they are called
bulk sales where basically they are give-aways which you can declare
in your circulation. I do not have the figures to hand but all
those newspapers—
Q478 Lord Maxton:
These circulation figures therefore—
Mr Wallace: Basically you can give away and
they line the hotel rooms around the world. There is no purchase
made there and yet at the same time they are allowed to include
those within their circulation figures. Basically every paper
we sell we sell for 40p. Very quickly on the broader point about
free newspapers per se, again that is a huge market. You are sitting
on the Tube and there is a blizzard of it. Frankly, if you have
got a 15-minute journey, getting a free paper at your underground
station or your bus stop is pretty good value. It passes the time,
you can flick through the news, and it does not cost you anything,
so why would I want to buy my daily newspaper now. Again, it is
a big problem for us.
Q479 Baroness McIntosh of Hudnall:
This is directly relevant to what you have just been saying because
it is a question about income. What proportion of the income that
your business as a whole needs is coming from advertising? As
between what you can generate with the newspaper and what gets
generated through your other outlets like your website, what is
the proportion now?
Mr Wallace: In 1996, advertising accounted for
37% of our revenue against 62% of sales and in 2006 it was 33%
against 63%, so revenues are tough. We have all read in the last
18 months that suddenly everybody is going on-line. For the first
time last year on-line advertising spend passed national newspaper
spend—I think it is £2 billion against £1.9 billion—and
they expect on-line spend by the end of this year to be £2.75
billion, so that is a lot of money sloshing about out there. That
having been said, there is evidence and feedback we are getting
back from advertisers that the world loves to go to a great new
place "isn't this a happening place?" but it is about
getting feedback and getting reaction and getting eyeballs and
the Newspaper Marketing Association has been very bullish about
this. If you want to advertise your wares, newspapers are still
the best place to do it because people actually read those ads
and look at them whereas we have all used the Internet and we
all automatically tune out those banners. Nevertheless, the long-term
threat is huge. If you have something like Google where they are
refining it at the moment so when you go to a car page, or what
have you, suddenly adverts for cars appears. There are drawbacks
in that if you read a story about a car crash adverts for cars
appear, so to it is not exactly foolproof! Nevertheless it is
a huge threat. Very quickly on the much broader aspect of the
press in the future, if everything goes on-line and becomes subject
to Google-isation who is going to be doing investigations and
who is going to be doing that kind of journalism?
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