Examination of Witnesses (Questions 2600
- 2619)
TUESDAY 20 MAY 2008
Lord Rothermere, Mr Charles Sinclair and Mr Kevin
Beatty
Q2600 Baroness Bonham-Carter of Yarnbury:
There are not very many.
Mr Sinclair: But there have never been that
many. The great independent news-gatherers have been very few.
They have all had remarkable resilience over the years. I think
we are able to get the news we want from Reuters, AP, PA; these
are very professional organisations; very, very good at their
job; thoroughly impartial. No, we do not have an issue in terms
of the paucity of news sources.
Q2601 Chairman:
It is true, is it not, what Lady Bonham-Carter says, that there
is sometimes an assumption, because there are so many new platforms
and new ways of actually delivering the news, there has also been
a vast expansion in news production and news-gathering but that
really has not taken place—that one does not follow from
the other? Much of the news which is provided in these different
ways is actually coming from the traditional providers of news,
as you have mentioned, like PA and AP and all those people?
Mr Sinclair: I think that is true.
Q2602 Lord Maxton:
Except that anybody who wants to has access to news provision
from anywhere in the world; they are not dependent upon Reuters
or somebody providing them with the stories from the United States,
China or wherever it might be; they can actually directly access
the news sources in those specific countries?
Mr Sinclair: Yes.
Q2603 Lord Maxton:
You were rather late online, however, certainly at the Daily
Mail in going online. You were late into that particular market.
I remember at one point you used to have a website and basically
you said, "If you want to read what's in our newspaper go
and buy it"! You obviously have changed your policy on that.
Was that a Board decision, or was it an editorial decision?
Mr Sinclair: It was not a Board decision. The
facts of the matter were that the Daily Mail was quite
late online, and I think the view broadly was that, with one or
two honourable exceptions, the newspapers around the world were
not making a good job of putting their newspapers online. The
Mail has come to this rather late, really just in the last
18 months or so; but, having decided what to do, is now doing
it really rather well. One other paper has got a well-established
track-record in this area, theguardian, and we are, in
number terms, catching them up very rapidly indeed. In a very
short time we are now the second largest attended newspaper website.
Q2604 Lord Maxton:
How much of that is international, because I think The Times
now says they have more readers online abroad than they do—
Mr Sinclair: A very significant amount.
Q2605 Lord Maxton:
How does that influence your advertising selling? If you know
that these adverts are going to be looked at by people in the
United States, you obviously sell that advertising in a different
way than if it was in this country?
Lord Rothermere: Alan Rusbridger recently said
in a conference that he felt theguardian's future was as
a global newspaper, and I would share that view. It is not easy
to monetise. We actually have a relationship with The Washington
Post at the moment for selling our US traffic, which is where
the vast bulk of overseas traffic comes from. We believe that
we are going to have to invest in this area and there is a huge
opportunity for us on the global sphere. We recently are a junior
partner in the launch of a newspaper in India where we own 24%
of the equity, which is not a copy of the Daily Mail but
very similar to the Daily Mail, called Mail Today;
and we are looking at building a website in India as well. We
do think there is a lot of global potential for the Daily Mail.
I think we are the sixth or seventh largest newspaper online in
the United States.
Q2606 Lord Maxton:
In terms of consolidation, which you say you are not particularly
happy with the way it has gone for you, do you use your Daily
Mail website to link to some of your other organisations,
even if it is just to The Mail on Sunday, for instance,
so that your readership can go on line and link through to The
Mail on Sunday?
Mr Beatty: We do actually. If you look at our
Mail presence on line, The Mail on Sunday and the
Daily Mail actually share a web address called "MailOnline".
Where it is appropriate, and where we feel that the audience on
that particular site will value it, we will link it, for example,
to our job site. This is an acquisition we made some years back.
Yes, where we think it is appropriate we will try to keep customers
of one brand and acquaint them to become customers with other
brands.
Q2607 Chairman:
Lord Rothermere, just going back to what you were saying on expanding
globally, do you foresee a position in which there will be Mail
titles in several other countries overseas?
Lord Rothermere: With foreign ownership restrictions,
and various regulations and restrictions on our ability to produce
the kind of newspaper with the kind of editorial independence
that we enjoy in Britain, it is difficult; so we are restricted
by that. Online is a far more open architecture, and we invested
quite a lot of money in India to launch this paper with Mr Purie
of Today Media. Online the same is not true. For relatively little
extra cost we can grow our circulation or unique user-base quite
easily.
Q2608 Chairman:
In an ideal world you would like print and online as well; you
would like both, would you?
Lord Rothermere: We have not really gone that
far. In an ideal world: of course.
Q2609 Lord King of Bridgwater:
When you said "little extra cost", we have had other
evidence about what a challenge it is for journalists who have
to cope with working for a daily paper, whichever it may be, and
keeping up with online requirements of breaking news and stories
having to be got out. We have had the question about how many
journalists, and any increase in the journalists, to which I think
the answer is there is not really. So how does this work?
Lord Rothermere: We have actually increased
our journalists for our online entities, both in the regional
newspapers and in the national newspapers. In fact journalists
who are able to deal with both media are much more expensive,
and it is a much more competitive marketplace. One of the foundation
stones for the success, we believe, of our newspapers is our investment
in editorial. If the editor thinks that a journalist can do more
work then that is really his decision. However, we do not take
a silly view: if we are going to invest in expanding our business
than we are prepared to invest in expanding our business.
Q2610 Chairman:
Does that mean there are more journalists now working for your
regional group of newspapers than there were five or ten years
ago?
Lord Rothermere: I cannot answer that specific
question, I am afraid, unless Mr Beatty knows.
Mr Beatty: I would say it is roughly the same.
We have obviously sold a few titles over the years and we have
purchased a few titles over the years but, yes, because we have
actually expanded the number of titles. We have gone from a core
of traditional metropolitan evening newspapers, to free newspapers,
to magazines, to digital websites. Yes, I think the numbers would
show that we are actually expanding our number of journalists.
Q2611 Chairman:
How many journalists do you employ over the whole ballpark?
Mr Beatty: We would need to give you a more
detailed answer perhaps or write to you but somewhere around 2,500
to 3,000, and that does not include the number of people who are
not trained journalists but a part of the editorial process, and
all of the people who contribute across our operation.
Q2612 Chairman:
Just to go back, you said 60% of the revenue of the Mail
now comes from the cover price. Is that more or less than it used
to be? Did you used to get more in advertising?
Lord Rothermere: We put the cover price up three
weeks ago, so it is recently considerably more. It has been tending
towards cover price recently because the advertising markets are
weakening, but it is normally around 60:40, if not 55:45. It varies,
to be honest, but roughly in that range.
Q2613 Chairman:
That has been the same over the last, say, ten years or so?
Lord Rothermere: We have never been in a situation
where we get more advertising than circulation; although I do
remember a time in 2000 when we were about 50:50 but, unfortunately,
it was very brief.
Q2614 Baroness Eccles of Moulton:
If we could turn, Lord Rothermere, for a moment to looking at
the future of the newspaper industry; but, before going to that
in a more general way, could you just tell us a bit about your
regional newspapers, because not everybody is finding it very
easy to sustain their regional newspapers in a strong and thriving
way. From everything you have said to us so far it would appear
that you have a strong and optimistic view of the future. I would
like you to tell us whether that does also include your regional
market?
Lord Rothermere: The regional newspaper market
is clearly challenged by the internet and the shift of classified
advertising to national classified-based portals. That has actually
been happening for a long time. Auto Trader started the
trend and it was not even on the internet, it was a magazine.
However, these newspapers are extremely trusted and valued by
their local communities and that level of trust, in the research
the newspaper society has undertaken, is greater than even for
the BBC, which is the most trusted media brand in Britain other
than the local newspapers. We firmly believe that if we handle
that trust in the right way, and that trust is linked with our
advertisers as well as our readers, that there is going to be
a successful business model in the future. However, there are
risks. It is a changing landscape but we are working and very
focussed on this issue.
Q2615 Baroness Eccles of Moulton:
Presumably your regional newspapers derive quite a lot of their
income from classified advertising?
Lord Rothermere: Yes.
Q2616 Baroness Eccles of Moulton:
A large amount of that must have migrated now onto the internet?
Lord Rothermere: In fact it has been very resilient.
It is hard sometimes to understand how much classified advertising
has moved on to the internet, particularly in the recruitment
sector; but I think our recruitment revenues last year in 2007
were the highest we have ever had—or certainly some of the
highest we have ever had. I think it is undoubtedly the case with
automobile advertising there has been a transference to the internet.
However, we are investing in our own portal called "Motors.uk".
In those areas, where our sales people have been selling a newspaper
with that portal, we have seen increased market share. So there
are some green shoots of recovery for us in that area. In property
we are up against a behemoth in the form of Rightmove; but where
again we have a portal—we have two portals actually, FindaProperty
and Primelocation—and where we have newspapers, we are able
to talk to our agents. We have a large degree of success, with
the exception of some of the shareholders of Rightmove who have
a moratorium on advertising on our internet portals.
Q2617 Baroness Eccles of Moulton:
It sounds as if you are not too gloomy about the future of your
regional sector, because you are able to use all forms of media
to support it?
Lord Rothermere: Yes.
Q2618 Baroness Eccles of Moulton:
Could we just for a moment look at the two arguments about the
possibility of consolidation. There is the argument, with the
changing scene and developments in the multimedia world, that
a number of newspapers are under considerable pressure in order
to be able to maintain standards, the quality of journalism etc
etc. Therefore, in order to be able to maintain those standards,
consolidation is an answer. That is one argument. The other argument
is that diversity of sources of news etc is very, very important
and consolidation would operate against that. I have simplified
the argument to a rather ridiculous extent. What is your view
about how the industry is going to go? Is it going to tend to
move in the direction of more consolidation, or will it be able
to retain and maybe even increase diversity?
Lord Rothermere: I think, at the moment, the
way in which the Competition Commission is interpreting the definition
is not helpful and will not help any further consolidation. I
think, personally, that in a multi-media world I would very much
like the competition authority to look beyond just newspapers
and take into account the wider sphere of advertising, and I understand
that they are beginning to do that. If they do then I think there
will be more room for consolidation.
Q2619 Baroness Eccles of Moulton:
Which you would not be against?
Lord Rothermere: The arguments for consolidation
are strong in one area, but they are not complete—it is
not a home run, so to speak. So I am not sure it will happen in
its entirety. Certainly, in terms of presses and in terms of some
of the other synergies and IT infrastructure, there are some strong
arguments for consolidation. If I may, I would like Mr Beatty
to answer this question because he is very much more focused on
it.
Mr Beatty: Lady Eccles, we do not, actually,
as a group, see consolidation and diversity as mutually exclusive,
for the reasons that we have said earlier; we believe that we
have diversity across all of our newspaper brands and digital
brands. We actually do believe that in order to be able to resource
good quality journalism then the synergies that Lord Rothermere
has just mentioned are very necessary. Some newspapers have been
saved as a consequence of that approach.
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