Examination of Witnesses (Questions 2340
- 2359)
WEDNESDAY 26 MARCH 2008
Mr David Montgomery
Q2340 Lord King of Bridgwater:
So, the answer to that question is actually "yes".
Mr Montgomery: I am glad to say that, in the
last two years, I have only had one direct government approach
to me to criticise an editor in chief and indeed the politician
concerned suggested that the editor in chief might be removed.
My reaction to that was, if you do that, it almost writes him
a guarantee in blood for life because we are not going to come
under political pressure and dismiss an editor. We could not operate
a newspaper business if we came under that pressure and succumbed.
Q2341 Lord King of Bridgwater:
Have you felt any great sensitivity and comment as to why our
major newspaper is owned by a British financial institution rather
than by a British newspaper man?
Mr Montgomery: I think our answer is that although
we are the shareholders and our money would be European or probably
global, not so much British, and indeed if you look at our line-up
on our management team, we only have one English executive director.
We have a very good mix of people: we have two Norwegians, two
Irish, a Dane and we have obviously a Dutchman and two Germans,
so we are a very mixed European team. In some ways, although we
are shareholders of these newspapers and technically the financial
owners, we do not really own them in terms of their ethos or culture.
The communities they serve really own the newspaper and, if the
communities do not support the newspaper, there will not be a
newspaper. That is why we insist that when we appoint editors
and managers, they live in the community and they play a wider
role within that community and they are seen. In our small Norwegian
newspapers, the editors and the managers and indeed many of the
journalists are recognised when they walk down the street and
they are stopped and they get called up if a paper does not get
delivered on time. Our approach is that we support completely
local people running these local businesses and making decisions
operationally and editorially and that works.
Lord King of Bridgwater: Until you get
a complaint! That is very interesting.
Q2342 Chairman:
Just to sum that part up, you are saying that you are totally
hands off and therefore you would have no views on who should
win the Berlin elections or the German elections.
Mr Montgomery: Of course I have personal views
about it and I am interested in it but they could not impinge
on the tradition or the culture of the newspaper, nor would they
impinge on the editor in chief's absolute right to determine content.
Q2343 Chairman:
Not only the content but editorial view.
Mr Montgomery: Comment as well, yes. Just so
that there is no mistake about it, when I say that we do not have
these problems in Europe, what I am referring to is that we do
not have any instance where a proprietorial influence would be
brought to bear because of that tradition of giving responsibility
to the editor to secure the historic stance of the paper. First
of all, the tradition of the individual franchises is very much
cemented, it does not change. Berliner Zeitung comes out
of the East German culture; it remains left of centre and it supports
the SPD and you would not interfere with it. It is a little like
the Daily Mirror. The Daily Mirror will not change
to being a Tory paper because—I have forgotten what it is—84
or 85% of their readers will vote Labour come hell or high water
and it does not matter whether there is a good Prime Minister
or a bad Prime Minister, Labour is enough for them to remain royal.
I think we can say that, with many of our franchises in Europe—and
it is not many of them, it is only the bigger papers—where
there is a direct political line, it has been there for scores
of years and in some cases hundreds of years and you just would
not interfere with that commercially as it would be very damaging.
Chairman: I would like to move on.
Bishop of Manchester: Before I come to
my main question, I would like to return to something to which
you made a passing reference earlier and that was the suppression
of the news about Prince Harry being out in Afghanistan and that
presumably is something that does not happen all that often. I
know that there was the famous suppression of news over Mrs Simpson
broken, I think, by Bishop Blunt of Bradford!
Chairman: In the church news!
Q2344 Bishop of Manchester:
From your point of view, what are the acceptable criteria for
somebody in your industry to enable an agreement for the suppression
of news? We are interested in news in this Committee. It seems
to be quite a serious issue when there is an agreed suppression.
So, how does that come about and at what point would you be saying,
particularly in the days when you were an editor, "I am sorry,
we cannot go there"?
Mr Montgomery: I have not come across these
instances in Europe at all but where I came across it in the UK,
suppression was almost always based on public safety. So, if there
was a kidnap and a child's life was at stake, you would have no
choice but to say, "We must not publicise this; we must give
the police a chance to do what they are going to do" and
you will there is unanimity among all the news media to observe
that blackout and indeed we all know that we went through and
still go through terrorist alerts and again news organisations
are very sensitive of that and will suppress information that
would harm the public in some way. It is pretty obvious, is it
not?
Q2345 Chairman:
But that does not happen in Europe.
Mr Montgomery: No, I am sure that it will happen
in individual countries in Europe but I have not been confronted
by any instances of being asked to suppress information for that
reason, but I do not see that it would operate any differently
in Europe if the occasion arose. Do not forget, as I move around
Europe, just as an ordinary traveller in Europe, I am aware that
the UK is very different from the countries we work in. There
is much less security. Angel Merkel came to a New Year concert
in Berlin which I attended and there did not appear to be any
security presence in the building at all. Coming in or going out,
there were no checks, nothing, which would not be the case here
in the UK and, within Berlin indeed, the only streets that are
obviously guarded are the ones with the British and American Embassies.
We are dealing with a different situation in our countries with
much lower security. I mentioned the one instance which we were
confronted with which was the republication of the Mohammed cartons
in Denmark and only then was it deemed by the police locally that
the editor in chief herself would be at risk but probably nobody
else.
Q2346 Baroness Eccles of Moulton:
I cannot resist asking you, why did she make that decision?
Mr Montgomery: She believed that the cartoonists'
lives were being threatened and, as a mark of support against
terrorist threats, she republished the original offending cartoons
which actually were not in her newspaper originally, they were
in a rival newspaper originally, but it was a mark of solidarity.
Q2347 Bishop of Manchester:
May I come to the question which I wanted to put to you. You have
engaged with us, if I may say so, with great charm this morning.
I am trying to discover beneath all this the man who apparently
has a ruthless management style and is guilty even of merciless
savagery. You may or may not wish to comment on that, but I wonder
if you could say to us something about the way in which you approach
balance between what you have already described very clearly as
the highly competitive nature of newspapers and the whole industry
plus the high quality newsgathering which presumably you are committed
to and hopefully most people in the newspaper industry are committed
to and then, thirdly, the funding that is necessary for enabling
that high quality newsgathering to take place within this competitive
environment. How do you, in whatever style you may or may not
wish to describe as being your own, do that and, looking into
the future, do you feel that it is going to continue to be a possibility
that adequate funding high quality newsgathering in this competitive
climate is an equation that makes sense?
Mr Montgomery: I guess that you pose the question
to the challenge that the whole industry faces and, as I said
earlier, we cannot survive on the traditional business model of
one set of people producing one set of content for one newspaper.
If you like, I do have a zealous determination to change the business
model and that clearly creates friction, as we see in Germany
at the moment, and that evangelical approach is very much that
we have to understand and value properly the great rich content
that we, as newspaper publishers, gather every day, day in and
day out, and use that content more effectively. That means changes
to working practices, it means greater efficiency within the business
and greater productivity. We have reduced our workforce over the
last year by 10%, but we have a much greater productivity. We
have more products being produced, more online work being done
and more cross-media work by journalists. Five years ago, that
would not have been possible. There would have been resistance.
People would have said, "No, we only work in one particular
area of the media". That resistance has slowly turned into
grudging acceptance and I would say that, in the last year, in
most of our territories, it is beginning to turn into enthusiasm,
but it has not been without a certain amount of pain and criticism
of me and other mangers as well. So, the answer for the future
is to understand that this rich content which can be directed
in different ways and in different forms is what we are really
about. One day, I hope that our company will no longer own printing
machines. We will be a pure content company. Of course, we will
still print newspapers but it can be done by a professional third
party. We will see ourselves not as a newspaper business but as
a content company. We will also see ourselves as a consumer company
where the trust we have among our audience can be translated into
other commercial activity with that audience. What I am talking
about is a revolution and I have been very direct in explaining
that to all of our staff across Europe and clearly there are some
people who would like to see the old world survive and these changes
not come about. I do not know whether we, as a management team,
have all the right approaches—we will not have—but
my clear feeling is that, unless we change and make a new content
and consumer model for newspapers, some of these papers will be
threatened and their very existence will be in doubt.
Q2348 Bishop of Manchester:
How would you define success in terms of the publications that
you operate, putting aside profit because obviously you want to
make a profit where that is possible? What are the other measures
of success which to you are important?
Mr Montgomery: Creativity is what this business
is about. One of my arguments has been that there are many humdrum
newspaper jobs including in journalism and I have got into a lot
of trouble because I have said that the age of the sub-editor
is going to disappear, that we have come to the end of the road,
and more and more we are encouraging the people who originate
the content to directly publish it either in print or online,
preferably both, and we have the technology to be able to do that.
I was a sub-editor, so clearly I am seen as being treacherous
to that fine craft, but indeed it is a craft where many of the
skills have become redundant because I could still look at any
piece of typewritten paper and tell you how many column inches
it will make but my skill has been overtaking by technology and
increasingly those humdrum tasks are not necessary. My objective
is to say that we will make every journalist creative, not just
a processor but creative; we will make every journalist a publishing
star in their own right. To recognise that creativity and unique
professionally-produced content and what we might do with it not
just in print is what the mission is. If we get there, it will
clearly be a very satisfying result.
Q2349 Lord Grocott:
You were describing your view as being one of a content and consumer
model. As you know, we are particularly interested in news coverage
and political coverage particularly. How important do you think
that will be in your content and consumer model?
Mr Montgomery: I actually think that it will
be more and more important and the reason is that it is no longer
a one-way street. It used to be that intellectual journalists
would produce a piece of comment or some story of political nature
and it would be then disseminated through print and the reader
would like it or lump it, but today it is a two-way street and
the reader wants to engage, be part of the media experience and
participate in the experience. So, I think that we will get as
a result much richer content developed in that two-way model.
The public want instant gratification. They want to know the news
immediately online and they want to react to it. So, journalists
have this wonderful opportunity today of having a deeper and richer
relationship with their consumer, and obviously reader contributed
content and opinion has to be moderated in some way and again
that gives the individual journalist great strength because they
are trained to be able to edit content and to decide what will
strengthen the story. I think that the whole of journalism is
changing and political journalism will be affected by that as
well.
Q2350 Lord Grocott:
Are you saying that historically, let us say over the last 20
years, in your view, news, current affairs and political coverage
has been inexorably improving due to the pressures that you are
describing?
Mr Montgomery: I think that journalists and
national newspapers are criticised frequently for all manner of
things from sloppiness to subjectivity, but the reality is that
the market and the consumer is protected by choice. We want more
and more choice in terms of both printed and online content and
the fragmentation of television and, for anyone to base their
support for the newspaper industry on a publication which is high
quality and objective is, in my view, wrong because every time
a journalist puts pen to paper, they are going to have their own
point of view and every time an editor selects the running order
of content, either on a front page or in a news broadcast on TV
or radio, it is a subjective judgment. So, the only way in which
you are really going to get a clear impression of what is happening
is to have an ability to choose a variety of products, news products,
and certainly our strategy in part is to create more routes to
market and to create more products for every form of content.
Q2351 Lord Grocott:
But just to look at the evidence, from your very broad experience
in Europe that we have heard about, which is extremely interesting,
whilst you describe the market as being highly competitive in
the newspaper industry almost wherever you go, I do not think
I am misrepresenting you in saying that it is particularly ferocious
in the United Kingdom with, whatever it is, 11 national newspapers
and a much smaller number in other countries. Is this ferocious
competition that exists in the United Kingdom, affected presumably
at least in part by consumer choice, leading, in your view, to
a higher quality of news and current affairs and political coverage
in the United Kingdom than exists elsewhere in Europe?
Mr Montgomery: I do not think my colleagues
in the editorial departments in our papers in Europe would say
that they are lacking in terms of quality or depth of serious
news coverage. I think again the different characteristics of
the UK and Europe come into play here. The regional franchises
in the UK are much smaller and have got much less market penetration
than they do in Europe. For instance in Maastricht, where we have
the local daily paper, we have 95% of daily print coverage and
the national newspapers have only got 5%, so the regional franchises
tend to be more high quality and more comprehensive in coverage
than they would be in this country, and I think that is purely
because the national newspaper market here has got huge penetration.
I cannot remember what it is in Birmingham, you might remember,
but I think the Birmingham Post has got about 14,000 daily
copies in Britain's second city and in Maastricht we have got
nearly 200,000 copies.
Chairman: I just want to move on if I
can. I think the proper comparison is probably the Evening
Mail and not the Post.
Q2352 Baroness Scott of Needham Market.
To follow on on this question of localness,
when you were looking at the success of Johnston and Trinity and
the way that they had consolidated, what was your assessment of
what had happened to the content of their newspapers. As opposed
to all the financial and economic arguments for consolidation,
what did you perceive was happening in terms of content?
Mr Montgomery: Consistently
newspapers in those groups have improved in quality and in breadth
of coverage because they have had to, and to some extent financial
consolidation benefits have helped fuel that development, but
all papers in the UK are bigger, have broader coverage, have better
content offering, and generally they do a better job, and I think
it is partly because of consolidation and it is partly of course
because of competition. As I said earlier, we have to try a lot
harder and we have to be more creative. The other distinction
that you should be aware of is that we pay our journalists in
Europe much better than British journalists are paid in the regional
markets (I am not talking about nationally) where in some of our
countries, for example Scandinavia, we would be paying our regional
journalists at least 50% more than regional journalists here in
the UK.
Q2353 Baroness Scott of Needham Market:
Thinking about for example the paper in Maastricht, what is the
localness about that that makes people in Maastricht want to buy
that as opposed to anything else? In other words, what is the
nugget of what you have to hold on to in that newspaper, no matter
was else you do in terms of back office and costs and everything,
to hold on to keep the readers?
Mr Montgomery: To be close to the community
in every respect. That is not just the editors, it has also got
to be the managers; they have got to live in the community; they
have got to understand it; they have got to be part of that society.
It is very important and our experience is the more local you
can get the better it is for the individual franchisers. We have
many instances of local paper launches within the group where
you are getting right down into city neighbourhoods—we are
about to launch another one in Berlin in the next month—and
it is just about as close as you can get to people. That is what
publishing is all about. When you live in Drammen in Norway, why
go to MySpace when you go into the local newspaper which you have
grown up with and it has got all the information about your neighbours
and friends on-line as well as in print? We used to own those
local communities in print. Our objective now is to own those
local communities on-line as well. Again in Norway, because of
the ingenuity of the editor, they opened a new airport at ¾stfold
in southern Norway and the local editor launched an on-line site
to support the local airport, complete with a flight booking system
for his local customers, and the reality is that these local newspaper
franchises are now becoming content businesses serving the community
much more widely than they would ever have imagined five or ten
years ago.
Q2354 Baroness Scott of Needham Market:
My last question, and this is a personal one really, in your world
and the way you want to be remembered for what you have done,
how much of this agenda is about success financially and commercially
and how much is about your view of the importance of local news
to communities? In your view of what an ideal Norway should look
like, how important would these sorts of publications be?
Mr Montgomery: First of all, my duty is to shareholders
to make sure they get a proper return. The management of these
businesses of course is not like, in my view, other businesses
and there is a personal side to it, but I think, as I have been
privileged to go round these different countries in Europe and
see the local communities, you realise how important the papers
are to the continuance of tradition and society. You look at Berlin
which has been through something that we cannot imagine, or indeed
Warsaw where I think 200,000 people were annihilated in a matter
of weeks and every family has got a story, the newspapers reflect
that background and people are very wedded to them and it transcends
party politics. The loyalty of these local newspapers has got
to be to the community, and what is good for the community is
good for the readers and good for the newspapers. Many of the
issues you have raised about political influence simply do not
arise because it is the community that drives the policy of the
newspaper.
Q2355 Baroness Eccles of Moulton:
Mr Montgomery, I have got four short, quick questions to ask you
all relating to the European Union. The first one is whether the
European internal market has in any way made life easier or more
difficult when it has come to acquisitions and mergers? The second
one is, what are the biggest challenges you have faced when acquiring
European titles? The third one is related to that, which is, have
you attempted to acquire titles and not been able to because the
rules have got in the way or other things? The last one is, which
countries have the toughest cross-media ownership restrictions?
Mr Montgomery: The answer is that the internal
market works very effectively. Every country of course has its
own regulation in terms of media ownership, and we have been confronted
recently by the NMA in Holland, which insisted that we got rid
of a small group of weekly newspapers which overlapped with the
company that we acquired in November. We announced last week that
we have indeed sold those newspapers on the instructions of the
NMA.
Q2356 Baroness Eccles of Moulton:
The NMA being?
Mr Montgomery: The NMA is like our Monopolies
and Mergers Commission, the competition regulator.
Q2357 Baroness Eccles of Moulton:
But that is a country matter not a European matter?
Mr Montgomery: Yes, we have had to get clearance
in terms of Europe and we have not had any difficulty in that
respect. This was an internal Dutch matter and when I say "to
meet their requirements" we actually agreed with them when
we went through the inquiry. As there are in most countries, there
is an inquiry that takes place when there is a transfer of newspaper
ownership, and we agreed during that inquiry that there was a
competition issue and we disposed of the papers last week. That
would not be unlike what happened here in the United Kingdom where
when Trinity merged with the Mirror Group they had to dispose
of the Belfast Telegraph.
Q2358 Baroness Eccles of Moulton:
So you have been there before?
Mr Montgomery: Quite so. The regime is not that
much different, to be honest, and indeed we have bid and failed
to buy newspapers in Europe, but purely for commercial reasons
not because of any regulatory blockage, and clearly we have encountered
some concerns about foreign ownership nationally but we have dealt
with them. I think the Norwegians were somewhat suspicious to
start with but we have seen demonstrated month after month a very
energetic business run by quality Norwegian managers without interference
from group, and as that company has grown in power and launched
new products, the local Norwegian management are recognised as
being the engineers of that and therefore any concerns that there
would be interference have just vanished. We have now discovered
that we can operate in the European scene generally, provided
we stick to the rules of not interfering in the traditional culture
of the products. As I responded to you, the communities and the
politicians care very much about their newspapers. You asked which
regime is more difficult and it is probably Germany, who for very
high-minded and important reasons will not allow contiguous mergers
between the different states, so if you own a paper in Berlin
you cannot own one in Brandenburg but you can own one in Hamburg;
as we do. They see that there could be some spillage between adjoining
states which would then diminish the individual culture of the
newspapers concerned. I actually do not think that is right because
you would commercially imperil your newspaper if it was tainted
by someone else's culture, and that is why I have stressed a number
of times during this session that you have to have local people
running those local businesses.
Q2359 Chairman:
You are saying as far as you are concerned there are no what I
might call `invisible' barriers to you taking over, say, papers
in Germany for example? There is no opposition to it? There is
no preference given to German buyers over British buyers?
Mr Montgomery: You always get the impression—and
I will not be specific about countries—that there is a political
class always who would prefer their own nationals to own media
products, and it is behind the scenes, but people conform publicly
to the now-accepted tradition of media changing hands for commercial
reasons rather than having a political agenda in the background.
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