Select Committee on Communications Minutes of Evidence

Examination of Witnesses (Questions 2340 - 2359)


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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