Examination of Witnesses (Questions 800
- 819)
WEDNESDAY 14 NOVEMBER 2007
Mr Tim Bowdler and Mr Mike Gilson
Q800 Chairman:
Let us go back a moment, Mr Bowdler. Do you think free newspapers
are the future as far as the regional press is concerned? Basically
you are saying, I think, that paid-for circulation is important
but, when you look at the figures, the revenue you get from paid
circulation does not compare with the revenue you can get from
advertising. If you have free newspapers and the advertising revenue
can still be maintained, it is not any particular skin off your
nose, is it?
Mr Bowdler: I do not doubt that the mix will
change as we look ahead five/ten years from now. My own view is
that we will almost certainly sell fewer newspapers. However,
I do believe that paid-for newspapers will still be an important
part of the mix. Particularly when you look at the weekly paid-fors,
where circulation has remained broadly stable for the last 10
years, I see no reason to suppose that they will still not be
important channels in their markets. But I think the mix will
change. You will see more free newspapers, you will see more niche
publications. For instance, in Leeds we now publish a newspaper
which is delivered free to high-rise apartments, aiming to reach
the young, aspiring professionals of the City, and we tailor the
content to meet their needs. I think we will get cleverer at segmenting
the market-place and use more formats than we have hitherto, but
the paid-for newspaper will remain a part of the mix.
Q801 Chairman:
Even in the big cities, you think.
Mr Bowdler: Even in the big cities.
Q802 Chairman:
I cannot help thinking that going down the street in Central London
you can hardly walk for 10 yards without someone thrusting a free
newspaper in your face. It seems that against that sort of competition
it is going to be extremely difficult.
Mr Bowdler: Yes, but I would not take London
as being a typical UK market-place. The vast majority of the UK
is very different from that. Yes, we have free newspapers being
given away in some of our larger communities and, indeed, free
newspapers delivered door-to-door in the vast majority, but even
here in London I think the Evening Standard will continue
to sell newspapers, as it does in quite reasonable quantities
today.
Q803 Chairman:
You are quite confident about the future of regional newspapers.
Mr Bowdler: I am optimistic about that, yes,
but the mix will change. It will be a different looking business.
Not least, of course, we will have invested more and be engaging
more deeply with our communities through other channels: digital
channels and through websites and so forth and mobile platforms.
Chairman: Thank you very much. Lady McIntosh.
Q804 Baroness McIntosh of Hudnall:
I would like to pull one thread out of that, if I may. If you
think there will always be a place for paid-for newspapers within
this spectrum of opportunity to get news in print, what is the
particular function that paid-for newspapers will continue to
fulfil in your view? What will I get from my paid-for newspaper
that I will not get from my free sheet amongst your titles?
Mr Bowdler: If you lived in Pocklington—
Q805 Baroness McIntosh of Hudnall:
I nearly did once.
Mr Bowdler: Then you know where it is.
Q806 Baroness McIntosh of Hudnall:
Yes, I do.
Mr Bowdler: So you have an advantage over some
of us, I guess. It is in East Yorkshire. We sell about 4,000 newspapers
in Pocklington and for the community there it is a vital source
of local news. We have a household penetration there well in excess
of 50%. Yes, there is a free newspaper in Pocklington but it is
very, very slim by comparison. It does not have the content that
that paid-for newspaper has, so in many communities the paid-for
newspaper will carry news and information and related content
which will continue to appeal to people who have an embedded interest
in their local community. I think there is every reason to believe
that, for many, that will still continue to be the case.
Baroness McIntosh of Hudnall: Thank you.
Q807 Lord King of Bridgwater:
I would like to go back to Lord Fowler's introduction. I was trying
to work out why you think Lord Fowler was willing to sell and
why you wanted to buy. What are the drivers? What are the key
surges that you get from getting bigger and bigger all over the
country?
Mr Bowdler: First of all, Lord Fowler was chairing
a company which was owned by a private equity company and private
equity businesses typically will hold businesses for a fairly
limited period. I think they were at some point definitely going
to sell that business. For Johnston Press, Regional Independent
Media was an excellent fit geographically: we already had newspapers
in Yorkshire; it extended our footprint into Lancashire, for example;
they had some newspapers in Scotland where we publish already.
If you look at the benefits of consolidation, clearly there are
efficiency benefits as a larger group. We can consolidate press
rooms, pre-press departments, the backroom activities in the business,
so there are financial advantages which come through that and
our results since then, with RIM, demonstrate that. Also, I believe
it provides a stronger industry generally. After all, we invest
very heavily in our business. In the last two or three years,
we have spent well over £100 million on building some major
new press rooms, press rooms which are state of the art. They
are environmentally probably the most efficient you will find
anywhere in the world. We do not just print our own titles; we
print for independent publishers, so they also get the benefit
of the investment we are making. In those terms, it is positive
and beneficial for the industry as a whole. Similarly, our investment
in websites online not only provides our own newspapers with good
quality websites but, equally, we licence that capability to independent
publishers as well.
Q808 Lord King of Bridgwater:
How many print plants do you have now compared with 10 years ago
for the newspapers you represent?
Mr Bowdler: Today, in mainland UK, we have approximately
nine. Ten years ago, those same businesses—we did not own
all of them—would have had more like 20/25.
Q809 Chairman:
As Lord King has raised the subject, the choice is between selling
and going public, of course. That is the other option.
Mr Bowdler: Yes, you were not short of choices.
We made the best offer.
Chairman: Maybe.
Q810 Lord Inglewood:
I suppose, Chairman, I ought to explain that I am non-exec Chairman
of the Cumberland Newspaper Group, a smaller rival to Johnston.
I dare say you would like to buy us, if the price was right. And
we would like to buy you, if the price was right.
Mr Bowdler: If you look at the share price today—
Chairman: I do not think we are here
for dealing!
Q811 Lord Inglewood:
You have kindly provided us with a schedule of some of your titles
when you changed printing times. I would be interested to know
what reaction to this there has been. On the part of editors and
journalists, on the one hand, were they supportive of this? And,
secondly, what has been the impact of the change in printing times
in terms of your readers and your sales?
Mr Bowdler: Maybe I will comment after Mike
Gilson because Mike was editor of The News in Portsmouth
when we made these changes.
Mr Gilson: There is an example in the schedule
there of the Portsmouth News going to an early edition
on Friday. That was a decision that had arisen from the newsroom
and came out of a perception, almost out of the window, that Friday
was a different kind of day from the rest of the week. More and
more people were going home earlier on Friday. There was a different
feel about Friday. We had a big "What's On" leisure
guide and one of the thoughts there was that our time on the shelf
was much smaller than we thought, and to get it out earlier in
the market was the better option to give it better shelf life.
In all this business we are talking about stabilising. We are
not going to sit here and say we were three or 4% up, but it stabilised
the Friday sales in putting it out earlier for us. My office at
the time was set out on the main artery for Portsmouth and if
you looked out of that window at two o'clock, when we were still
putting out our last edition, you were seeing streams and streams
of people in Portsmouth going home, so from a commercial point
of view it made sense. Clearly from a journalistic point of view
there were issues there: the deadlines had to come forward. Evening
papers are an interesting conundrum because people think that
by "evening" you are still printing news at four or
five o'clock, and of course you never were. In that one specific
instance, however, it was something that was supported by the
journalists and worked, in terms of stabilising that Friday sale
and getting this out with our other offering. That was our experience
in Portsmouth.
Mr Bowdler: More generally, we do consult with
our editors and newsrooms whenever we make these changes. Very
often, the initiative has come from them, but not always because
clearly we do close presses. We had an example of a 40-year old
press in Scarborough which was not giving the readers and the
advertisers sufficient colour: it was simply uneconomic to replace
that press and therefore we decided to relocate the printing.
But, generally speaking, this is done for good marketing reasons,
looking at what the consumer wants and the advertiser will benefit
from, and with reference to the editor and to the newsroom.
Mr Gilson: Journalistically, the worry in the
past would have been that we would miss something, but of course
now, with our multimedia outlet, that does not arise.
Q812 Lord Maxton:
Does that mean that on your website, for instance, you are constantly
updating news on The Scotsman?
Mr Gilson: Indeed, yes. The Scotsman
has a fantastically successful website: over 3.2 million unique
users a month, 17 million page impressions, is a huge success,
and that is constantly being updated as we go through the day.
Q813 Lord Maxton:
During the day?
Mr Gilson: During the day, yes.
Mr Bowdler: But even when you look at our weekly
newspapers they are updating their websites through every day.
Q814 Lord Maxton:
Why would you buy The Scotsman in the morning?
Mr Gilson: Different people want different things.
There are different reading habits: there is putting the newspaper
in front of you—the feel of the newspaper. There are all
kinds of things that will keep newspapers in the mix but, yes,
there are things we do with scotsman.com now, in terms
of business briefings, business alerts, different ways that we
are responding to the way people want their news. That mix makes
it, not problematic, but obviously there is a different role for
The Scotsman.
Chairman: Lady Bonham Carter.
Q815 Baroness Bonham Carter of Yarnbury:
You talked earlier about the consolidation, the amalgamation of
your newsrooms. How has this affected the number of local journalists
you employ?
Mr Bowdler: I misled you. We have not consolidated
the number of newsrooms at all. Our newsrooms have stayed very
local. We believe very fundamentally that this business can only
succeed and flourish if you have feet on the ground: journalists
in local communities, offices in local communities—so we
have not changed that one jot. We have provided you with some
information about pre-and post-acquisition staff numbers and you
can see that they have not changed so far as the number of journalists
employed is concerned. The number of journalists we have employed
in this business has remained remarkably stable over a 10-year
period if you look at it on a like-for-like basis. Indeed, if
you look at the proportion of our workforce who are journalists,
that has increased over the same period from around 25% to around
30% today. That area of business continues to be one in which
we have invested heavily and, indeed, is where we believe we have
to maintain the resource: at the "coalface".
Q816 Baroness Bonham Carter of Yarnbury:
But you would agree that you have centralised things?
Mr Bowdler: Let us be clear about the "things"
we are talking about. We have centralised or regionalised things
like printing. You are talking here about heavy-investment hardware,
where it simply is impractical to invest in a myriad of different
locations. We have regionalised things like credit control, pre-press
(in other words, the production process behind the scenes), accounting.
We are quite clear: there are manufacturing, if I may call them
that, aspects of the business which are behind-the-scenes, which
do not affect the public, which are invisible, if you like, from
their point of view, and those are things that we can rationalise.
There are front-facing things—and they are essentially journalism
and salespeople—which it is vital that the communities still
see there in their market-place, can talk to, can put faces to
names, and we have continued to invest in that resource at the
local level.
Q817 Baroness Bonham Carter of Yarnbury:
You have not lost to the local element?
Mr Bowdler: No, we have not.
Q818 Baroness Bonham Carter of Yarnbury:
What is your definition of local?
Mr Bowdler: Pocklington.
Mr Gilson: He keeps coming back to that.
Baroness McIntosh of Hudnall: Perhaps
I can tell you about Pocklington.
Baroness Bonham Carter of Yarnbury: Thank
you.
Q819 Baroness Eccles of Moulton:
I would like to ask a quick question about distribution. You were
talking about how your new print times meant that the papers were
available to the public a bit earlier and in a more inappropriate
way, but I see from your schedule that Scarborough and Sheffield
have both relocated to Dinnington. I do not know where Dinnington
is.
Mr Bowdler: It is just by Sheffield.
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