Select Committee on Communications Minutes of Evidence

Examination of Witnesses (Questions 1563 - 1579)


Mr David Schlesinger, Mr Pierre Lesourd and Mr Tony Watson

  Q1563  Chairman: Welcome. I do apologise for keeping you waiting, but, as you know, having all been here, I think, throughout the last part of the evidence, we were slightly delayed with the Editor of The Sun. I would like to welcome all of you and we will come to your different organisations as we go through, but perhaps I could start in this way: what we are looking at is concentration of ownership, we are looking at provision of news, we are looking at, if you like, the objective provision of news, how the public are receiving their news and at how the public interest is being maintained. Now, as I looked at some of the papers before this meeting, you all put a very high price on being impartial, upon being independent, upon being non-party-political, so I just wondered if you could just say very briefly how this is achieved, and perhaps Reuters could start.

  Mr Schlesinger: When I joined Reuters in 1987, I was one of 1,581 journalists and today we have 2,400, so in 20 years we have grown significantly because we provide that kind of high-quality, objective news that our clients can use. Our clients in the financial services industry use it to make decisions on buying and selling and our clients in the media use it to fill their papers or to fill their broadcasts, so we cannot take a particular party view or a biased view because to do that would be to betray our clients and we would lose our place in the marketplace. We are successful because we are free from bias, so that is the commercial interest. There is also the practical interest that Reuters has the Founders Share Company which was set up in 1947, I believe, which has the Trust principles that everyone in the company from the Chief Executive to the newest recruits sign up to, so all 17,000 of us sign up to this. The Board of Reuters Group plc is charged with ensuring that the Trust principles are maintained and the Reuters Founders Share Company, which has its own Board of Trustees, monitors this, and, as a member of that group, I meet with them twice a year and I meet with the Chairman of the Founders Share Company, so we have that outside view to ensure that we keep on being independent, free from bias and that we provide the news to the best possible standards.

  Q1564  Chairman: Therefore, the whole system is underlaid on the foundation of the Trust principles which are laid down?

  Mr Schlesinger: That is right.

  Q1565  Chairman: Mr Watson, and it is curious to see you in this way because, when I last knew you, you were Editor of The Yorkshire Post.

  Mr Watson: Yes, indeed.

  Q1566  Chairman: And I was Chairman.

  Mr Watson: You still are.

  Q1567  Chairman: I will take that as a declaration of interest. Do you broadly follow the same line?

  Mr Watson: Yes, absolutely. I think it would be commercial suicide for us to operate in any other way. I think we would reinforce that in terms of individual journalists. We have a set of guidelines that, when people join the Press Association, they are absolutely clear about our standards on impartiality and accuracy, so I would absolutely concur with David's points there.

  Q1568  Chairman: And AFP? Firstly, perhaps you could just tell us a little about AFP because we knew a lot about Reuters and we know quite a lot about the Press Association, but AFP has a formidable reputation around the world. I think you are the biggest, if not one of the biggest, in the world.

  Mr Lesourd: Yes, one of the biggest, I would say. Basically, there are three large news agencies worldwide, which are Reuters, AP on the American side and we boast to be one of these three, so we are present in most countries. We have bureaux in 110 countries, our headquarters is in Paris and we are the oldest news agency, we were created in 1835, I believe, and at the same time we have common creators with Reuters because it was Mr Havas and Mr Reuters who created the first news agency and then they divorced in some way. Our headquarters is in Paris and we have autonomous regional centres with their own budgets, their own technical facilities and so on. We have one in Hong Kong for Asia, we have one in Washington, in Montevideo for South America, one in Nicosia for the Middle East, which used to be in Beirut, but we had to leave Beirut a few years ago, and another one in New Delhi which is the newest one. We have 1,320 staff journalists which includes text, photographers and now more and more video and multimedia producers and we are producing in eight languages, and English is the fastest-developing language for services inside the agency.

  Q1569  Chairman: Is that because it is the biggest language developing in the world?

  Mr Lesourd: Yes, absolutely. Well, clients are asking more and more for English. I used to be the Head of the Asian Service in Asia on the media side and we have no more French clients. Everybody is in English or Chinese because we are producing also a service in Chinese.

  Q1570  Chairman: I judge you to be French, so it must be quite hard to say that!

  Mr Lesourd: Obviously it is a debate, but it has been accepted largely inside the Agency because in terms of revenues and development, the AFP can only develop on the international side because our domestic market is not in great shape, I would say, and the French newspaper industry is not in good health, so we cannot expect to develop a lot in France itself, so our development is outside, like in the UK, for example.

  Q1571  Chairman: Just to finish that, impartiality?

  Mr Lesourd: Yes, we have since 1957 a very rigid statute and Article 2 of this statute stipulates that AFP's mission is to report events free of all interferences or considerations likely to impair the exactitude of its news and under no circumstances is it to pass over legal or actual control of the ideological, political or economic group, and our statute, for example, prohibits direct government subsidies.

  Q1572  Baroness McIntosh of Hudnall: Can I just ask you about your relationship with your customers because you are unusual as news providers in that you do not sell directly to the consumers of the news, you go via newspapers and broadcasters. Can you tell us a bit about how you decide what news to collect, as it were? Do you do it on the basis that you know what the providers want and you work, as it were, on commission from them or do you set the agenda by deciding what news you want to provide, and how does the economics of that work? Is it similar between the three of you or does it vary?

  Mr Schlesinger: From the point of view of Reuters, we actually do sell directly to consumers as well because we have the financial services customers where we sell to banks and brokerages and that is actually where the group gets about 90% of its revenue, so that is very important to us.

  Q1573  Baroness McIntosh of Hudnall: Can we talk about, as it were, the headline news.

  Mr Schlesinger: Even within the media part of Reuters, we are selling more directly to consumers as well because we have,, our family of websites where we have something like 23 million unique visitors per month, so we do sell directly, but to the broadcasters and to the newspapers, your question, it is obviously a relationship. In order to keep the contracts coming in, we have to give them the news that they need, but they give us those contracts because they trust our judgment to report the areas in the places where they are not. Reuters has 190 bureaux around the world and, by and large, the newspapers and broadcasters who subscribe to us do so because they cannot afford to have, and do not want to have, that same kind of international bureau structure, so they trust us to tell them what the important news is in China or in the Middle East and to report that in a way that they can then use.

  Q1574  Baroness McIntosh of Hudnall: Has the concentration of your resource worldwide varied greatly over the years? It is an obvious question, but are you now devoting much more resource to China and India than you were and in what way have you made those decisions?

  Mr Schlesinger: Absolutely. I actually joined Reuters in Hong Kong in 1987 and at that point when I went to the Hong Kong bureau we had probably half a dozen people and now there are more than 30. I was then the China Bureau Chief between 1991 and 1994 and we had again half a dozen people and now there are 24 ex-patriots and a total staff of well over 100, so yes, over the years we certainly have put much more resource into that.

  Q1575  Chairman: Financial is the kind of big thing that you do, is it not, now?

  Mr Schlesinger: Well, when I talk both within the company and outside the company, I make the point that in fact the political and general news moves the markets, so, whilst financial clients are very important to us, they need to know the coups, wars and earthquakes as much as any newspaper-reader. In fact, they need to know in a more timely way.

  Q1576  Lord Corbett of Castle Vale: Mr Schlesinger, can I take you back to the Reuters Trust in the context of your being bought by the Thomson Corporation because the Thomson Corporation, through a holding company, is in fact going to be the biggest owner of the new company. Where does that leave the conditions of the Trust?

  Mr Schlesinger: We are currently under offer and we are waiting for that deal to be approved first by the EU and the Department of Justice in the United States and then by shareholders. The way the deal is structured, the Thomson family and its arm, the Woodbridge Corporation, have undertaken that the Trust principles will apply to the entire Thomson-Reuters Group, not just the part that was originally Reuters, so they are taking the Trust principles for the entire group. Very importantly, the family has undertaken that Woodbridge, which will end up owning 53% of the shares, so the controlling shareholder of the new group, they have undertaken to vote their shares to support the Reuters Founders Share Company in any question regarding the Trust, so they have undertaken to vote their majority shareholding to support the Trust principles.

  Q1577  Lord Inglewood: How can you undertake to do something in the future like that?

  Mr Schlesinger: I am not a lawyer, I am sorry, but within the articles of the deal they have made that undertaking and in fact they needed to in order to get the Reuters Founders Share Company to agree to the deal. I am not clear on the exact mechanism for it, but I know that they have done it.

  Q1578  Baroness Thornton: Just following up on an earlier question which was about the economics of the relationships with clients and how that works, who pays and how and when is what we wanted to explore a little bit, so could you, all three of you, very quickly say? For example, if you subscribe to Reuters, do you also pay for stories?

  Mr Schlesinger: Within the media, people pay on a subscription basis, so they sign up on a contract for a period of time where they pay us monthly and they get what they subscribe to, whether it be the full service or a partial service.

  Mr Watson: Similarly, a subscription service. Unlike Reuters, we do not have any consumer-facing product; it is strictly a B-to-B business.

  Q1579  Baroness Thornton: So you do not charge or people do not pay per usage?

  Mr Watson: No, it is a fixed tariff for varying contract lengths.

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