Examination of Witnesses (Questions 1440
- 1450)
WEDNESDAY 9 JANUARY 2008
Mr William Lewis
Q1440 Baroness Eccles of Moulton:
The other sources of income, some of which you have described,
are they going to become less important as your advertising package
increases or are you going to have to make sure that they grow
as well in order to meet your increased costs?
Mr Lewis: Dave King's challenge is to try and
maintain the income which we based our past on and at the same
time, working with other colleagues, grow the income and manage
the income from our new products and services. That is the challenge
that has been set for him.
Q1441 Baroness Eccles of Moulton:
My last question is do your proprietors set budgets with you which
demand or require that increasing profitability, a bigger margin
on your bottom line year on year?
Mr Lewis: We would anticipate trying to grow
the profits of the business and increase it year on year. Clearly,
that is a natural aspiration for any private organisation, that
is what we exist to do fundamentally, but one has to take into
account the economic environment in which you are operating. Most
of our income still comes from the UK; like all of us we do not
know what the year ahead is going to produce, as an example, so
we anticipate an upward shift in our profitability but we have
to see what the environment brings.
Q1442 Baroness Eccles of Moulton:
The implication of what you say is that the group is profitable.
Mr Lewis: The group is absolutely profitable.
We are probably north of £30 million—we would like
to make more by the way—so we are in good financial shape.
One of the issues we face is that some of our competitors are
not-for-profit, seem to specialise in not having to make money,
such as the BBC, or actually making quite large losses. That is
quite a difficult thing to compete with, which is an issue for
debate.
Baroness Eccles of Moulton: It makes
your answers particularly interesting; thank you.
Q1443 Lord Maxton:
Can I just go back a little bit, to some extent following on that
but go back to the on-line. How do you ensure you attract these
readers; what do you spend in terms, for instance, of getting
onto the front page of the search machine. Do you do that, do
you actually spend money with Yahoo, Google and so on to ensure
that your news stories and your newspaper are there on the front
page?
Mr Lewis: We do two things. The first one is
about recognising what our customers want when, so we talk about
three peaks in the day. The morning is very, very important for
UK customers so we have to work very hard in the morning to provide
a wonderful website experience for people who have just got to
work or gone onto their computer at home or whatever to see updated
news on Obama shockingly not being beaten by Clinton. That is
the first peak of the day. The second one, which is our biggest,
is lunchtime where television is particularly possible, where
people on the east coast of America join the people in the UK
and in Asia before going to bed to get their fill of the day,
so it is a lunchtime peak and it is very, very important to us.
There is also an afternoon peak, people going home in the UK but
also the west coast waking up who want certain things. Those are
our three main drivers and those are the deadlines that we work
to and obviously, in addition, there are newspaper deadlines.
On top of that we have worked very hard at improving our search
engine optimisation process; we probably started doing this before
anyone else where we have appropriate tagging on stories so that
when you go onto Google and search for Gordon Brown, if there
is a particular news story from Gordon Brown, we will be up there
and it will be something that you can find.
Q1444 Chairman:
Do you pay for that?
Mr Lewis: We are moving and have moved to doing
it more ourselves.
Q1445 Chairman:
Can I just go one step further in the future. I think you are
wildly optimistic in saying you look ten years ahead. If you go
back ten years and see how the digital media has changed in that
ten years, it is moving faster now than it was then and I think
for you to be able to predict ten years from now to 2017 what
is going to happen is very optimistic. One example: Amazon are
in the process in America of producing what essentially is the
weight and size of a paperback book, on which you can download
your newspaper and any other newspaper that they decide to include.
All right, it is the USA but it will come here almost certainly
within the next 12 months. I will be able to read the Telegraph,
therefore, or any other newspaper, sitting on the train, sitting
in here, sitting in my office, wherever I might be, as if I am
reading a paperback, and also be reading the latest novel as well
by the way, switching between the two. Why would people be buying
a newspaper in ten years time?
Mr Lewis: The structure we have set up and why
we have got flexibility in our structure is that we do not know
what is going to be hot in two years time or ten years time. You
are right in re-interpreting my comment in that respect, so what
we have got is an environment where we are much more integrated.
If we recognise all of a sudden that this Amazon device is the
hottest device, we can swing our work flow to fulfilling the needs
of the customer in that device, that is the whole point of trying
to bring in flexibility. I would take a much more fundamental
point, which is that given that you do not know and we do not
know, fundamentally, although I would argue that paper will be
a core part of the offering still—we may have to disagree
on that—what the industry really needs is to be given the
flexibility, unencumbered by onerous regulation, to get on with
it. This industry in this country has a real chance of being a
global leader actually, but we face a series of dangers. We are
already at a crossroads now and my competitors are not just The
Times, Daily Mail and the Financial Times, they are
on-line folk, specialists in America, or there is some kid in
a bedroom in China developing a software system that is going
to cause my business editor a heart attack because it will do
all that he does now, but from his bedroom. This is the world
in which we now live and the great fear we have is that there
is not recognition of that amongst policymakers, that these are
really defining moments for this industry, that we already have
too much regulation. We have to push back the regulation, let
us get on with it and free us up to the best of our abilities
to make the right bets so that in ten years time your children,
grandchildren and so on do have an industry, a great media industry,
that they can go and work in, otherwise it will not be there.
Chairman: Thank you. The last question from
the Bishop of Manchester.
Q1446 Bishop of Manchester:
Mr Lewis, you have given an engaging and upbeat account of life
at the Telegraph this morning and it has been very good
to hear it all, so forgive me for ending on what might be a slightly
sour note as I quote from the Media Guardian on
Monday, Roy Greenslade saying, "I did get the feeling, enhanced
by some private comments from staff, that the Telegraph
had tried to accomplish too much too quickly".
Mr Lewis: Yes, I must say I would argue the
opposite actually, we have not moved fast enough and we need to
get our skates on. The clock is ticking and it is the customers'
clock because they are getting impatient and saying I can actually
get this stuff elsewhere, why is the Telegraph not providing
it, so I would like us to do faster actually because otherwise
I cannot stress enough, I think we have done enough to secure
our future, others will not have a future. If you are not responding
to these amazing events going on in our industry, you will not
have a future.
Q1447 Chairman:
One last point, Lady Eccles asked you about the economies and
you said that you were competing with the BBC, which you described
as a not-for-profit organisation, which is one way, I suppose,
of putting the BBC; you then said that there were newspapers that
you were competing with that were operating at a loss.
Mr Lewis: Yes.
Q1448 Chairman:
Which are they?
Mr Lewis: I think you can find the accounts
for yourselves. Our major competitors—
Q1449 Chairman:
We cannot find your accounts, can we?
Mr Lewis: You can actually. We have two sets
of accounts. Some of the people you have had in already giving
evidence are run, perhaps deliberately, not for profit and certainly
at a loss, so it does make it difficult. The issue about the BBC
is really that there is crowding out. People say what is the BBC
for, and I am not sure they know the answer to that either. Is
it for providing brilliant news coverage around the world in very
difficult circumstances, courtesy of the poll tax that we pay,
or is it to provide competition to the X Factor on a Saturday
night? I do not know, but I wish they would tell us.
Q1450 Chairman:
We have been round this course with this Committee already so
I do not think we will start on that at quarter to one today.
Mr Lewis, thank you very much, you have been very frank in the
evidence that you have given. Perhaps if there are any other issues
we have got, we could write to you.
Mr Lewis: Absolutely.
Chairman: Thank you very much.
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