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Corporate greed rules
150/Tim Gopsill
DATELINE: 25/2/06
When Sean Dooley retired in December after 18 years as editor of the Sentinel, Stoke-on-Trent’s evening paper, he made some trenchant criticisms of the way the owners, Northcliffe Newspapers, were running their business. Some of their decisions, he said, "can best be described as corporate bollocks designed more to produce a result on paper than to secure the future for the business, the staff or the shareholders.
"Everybody chases the Holy Grail of producing what we produce for the least possible cost ... The focus is all on saving cash and pushing up the profit margins a few points."
A couple of days earlier Northcliffe’s own parent company, the Daily Mail group, had stunned the City by putting the 70-year-old subsidiary on the market. The group owns 112 papers, 16 of them dailies, and is valued at £1.5 billion.
It didn’t surprise the staff, who had worked out out that the massive round of cost-cutting and job losses now under way was intended to boost the price for a sale. They know what Dooley was talking about. "Aim Higher" was the "corporate bollocks" title the company gave the plan; "Aim, Fire!" was the journalists’ version.
When the Northcliffe sale was announced the journalists on the Western Daily Press in Bristol put themselves up for auction on eBay. A fifth of the staff - 36 journalists - were facing the sack. "Be warned, though," they put in the ad. "We have standards. Anyone wanting a bunch of cynical hacks to recycle press releases and churn out advertorials had better look elsewhere."
Northcliffe is selling up because it can’t extract sufficient profit from their papers. Last year’s operating profits were £102 million, on turnover of £520 million - a 20 per cent return that elsewhere in industry would be regarded as phenomenal. In provincial newspapers, however, Northcliffe’s rivals are making even more: Trinity Mirror, the market leader with 20 per cent of sales, Newsquest, with 18 per cent, a wholly owned subsidiary of the giant US publisher Gannett Corporation, and Johnston Press, the fourth biggest (15 per cent), all turn in more than 30 per cent profits. Northcliffe has 16 per cent of the market.
The groups compete by cutting costs, and it seems Northcliffe has decided that it cannot cut enough. Charles Sinclair, chief executive of the Daily Mail group, said: "We won't go so far (cutting cost) that good journalism will be compromised because good journalism is what delivers audiences for our advertisers."
No doubt some of the rival groups would like to have a try but even the present lax regulatory regime (enforced by the Office of Fair Trading in the case of newspapers) is likely to baulk at the possibility of one of the other three getting their hands on the group. The betting in the City is it will go to a venture capitalist that would finish off the surgery and sell it on at a profit. At that stage it could be broken up into regional parts, and that’s when the other groups could swoop. Johnston has already expressed interest, but it has just spent £160 million buying the Scotsman, Evening News and Scotland on Sunday in Edinburgh.
The industry has seen a frenzy of takeovers. When the Northcliffe titles are sold there will not be a single big-city paper with the same owner it had 12 years ago. There is a handful of papers owned by smaller groups (see table).
The reason is that there is so much money to be made. Since they got rid of the print unions publishers have been able to use technology to slash the costs of production. Local papers now are milk cows, churning out cash for the shareholders and for investment by the groups in new technology ventures that will take time to show a profit.
The NUJ has not been in a position to offer much resistance. In the 1990s it was "derecognised" in virtually every office. Since 2000 it has clawed back a lot of ground and has succeeded, in an industry where pay levels are notoriously low, in getting the very lowest salaries, paid to trainees, significantly raised.
General Secretary Jeremy Dear says: "These huge, wealthy media companies have a myopic interest in profit but are blind to the fact that they have a duty in a democracy to provide the public with high quality news.
"Time and again they buy up newspapers, cut staffing to the bone, pay professional journalists poverty wages and squeeze the lifeblood out of respected local titles, then sell up and move on."
Part of the papers’ profitability lies in their local and regional monopolies. Northcliffe, for instance, covers the whole West Country west of Bath and the whole of the north and east Midlands (see table) - a great swathe of England from Stoke to Hull. If the eventual sale is referred by the OFT to the Competition Authority the CPBF and others should argue that these monopolies are broken up, and conditions put on the deal that require the papers to be returned to some kind of local control, as existed before the big groups started scooping them up.
WHO OWNS YOUR LOCAL DAILY?
Ownership of evening papers around Britain
TRINITY MIRROR (20% of the market)
Birmingham, Liverpool, Newcastle-upon-Tyne, Cardiff, Middlesbrough, Huddersfield, Coventry
NEWSQUEST (18%)
Bradford, Darlington, Oxford, Southampton, Bournemouth, Weymouth, Southend, Brighton, York, Swindon, Blackburn, Worcester, Colchester
NORTHCLIFFE (16%)
Bristol, Bath, Aberdeen, Swansea, Gloucester, Cheltenham, Derby, Leicester, Hull, Nottingham, Stoke-on-Trent, Lincoln, Scunthorpe, Plymouth, Torquay, Exeter
JOHNSTON PRESS (15%)
Edinburgh, Leeds, Sheffield, Halifax, Peterborough, Blackpool, Preston, Scarborough, Portsmouth, Sunderland, Hartlepool, Leamington, South Shields
OTHER COMPANIES
Glasgow, Manchester, Reading and Guildford, Wolverhampton and Wellington, Norwich and Ipswich, Oldham, Carlisle and Barrow, Dundee, Cambridge and Burton-on-Trent
All regional morning papers are all owned by the same company as the evening titles in the same cities.
Last modified: Saturday, February 25, 2006
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Notices
Events & Announcements
World Press Freedom Day
More reporters are currently imprisoned in Turkey than in any other country in the world. Only a matter of weeks ago lawyers failed to persuade a Turkish court to release a 76-year-old journalist from a Turkish internet news station.
World Press Freedom Day on Friday May 3, 2013 is being marked in Britain by a rally to highlight the dangers facing journalists in Turkey and in this podcast, Nicholas Jones speaks to Barry White, Organiser at the Campaign for Press and Broadcasting Freedom, and Sam Bamford, the TUC's policy officer for Eastern Europe and Africa about the importance of a campaign to highlight international press freedom.
The World Press Freedom Day rally is being staged by the National Union of Journalists at the NUJ head office, Gray’s Inn Road, London WC1 on Thursday May 2, 6pm-8pm.
DATELINE: 27/4/13
UK launch of EU media campaign
DATELINE: 13/3/13
The UK launch of a 'European Citizens' Initiative' calling for EU rules against concentration of media power will take place on Thursday March 21 from 11:00am – 12:30pm in Committee Room 4A at the House of Lords, London. Guest speakers will include actor and activist Hugh Grant (pictured), media consultant Claire Enders, Professor Steven Barnett, Barry McCall (President of the NUJ) and Marc Gruber (Director of the European Federation of Journalists).
A European Citizens' Initiative is an official petition, like a Downing Street petition. If it succeeds in gathering a million signatures across the EU, the Commission is obliged to respond.
This petition calls for the EU to act to protect media pluralism and press freedom.
CPBF Annual General Meeting
DATELINE: 1/3/13
Make a note in your diary
Saturday 13 July 2013 from 10.00am
NUJ HQ, 308/312 Gray's Inn Road, London WC1.
Leveson, media ownership, CPBF future work.
DOWNLOAD FREEPRESS NOW
DATELINE: 26/3/10
Download Freepress in PDF, ePub or mobi format. Issue 194 now available.
MEDIA FOR ALL CONFERENCE
DATELINE: 26/3/10
Papers from the Media for All Conference
MEDIA MANIFESTO
DATELINE: 26/3/10
The media’s job is to inform and entertain us but we rely on them too to tell us what our rulers and representatives are up to. In the run-up to the Iraq war the government used spin and disinformation in the media to create panic and mislead people. The truth is coming out now, but we need stronger, more independent media to be able to scrutinise governments and make informed choices.
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Previous stories
Media Ownership
Transnational corporate censorship threatens British music
Satisfying the advertisers
Ottakar’s Demise
Set the Media Free - Media Watch Global
Mayor calls for OFT to reconsider proposals
Media policy dominated by 'cosy cartel', says report
Clear Channel move in on Glastonbury
It’s Money That Matters
Getty acquisition deadline
Distribution Danger
VLV pushes for launch of Free-to-Air Digital Satellite
CPBF responds to OFT proposals on magazine distribution
OFT opinion threatens small magazine publishers
Monitoring Murdoch - a blogger speaks
IFJ welcomes 'First Step', calls on Berlusconi to quit TV
Protecting public service broadcasting
The News Monopoly
'New communists' worried by software patents
Scottish Media Group Announces Sale
