Examination of Witnesses (Questions 1563
- 1579)
WEDNESDAY 16 JANUARY 2008
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 reuters.com, reuters.co.uk, 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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