The past is coming back to haunt today’s press
Old rules, laws and agreements which pre-date the rise, and even the existence of the Internet, are threatening to cause mayhem in both the regional and national newspaper industry, writes Raymond Snoddy.
The 32-year old agreement entered into by Rupert Murdoch to enable him to buy The Times and The Sunday Times has returned to haunt the News Corporation chairman and news that the Office of Fair Trading (OFT) has decided to look at the creation of David Montgomery’s Local World consortium could cause pandemonium for the radical venture.
The potential plight of Local World, the venture bringing together the Daily Mail and General Trust’s regional titles and Yattendon’s Iliffe News and Media, complete with a 20% stake held by Trinity Mirror, may not be as high profile as Rupert Murdoch’s battles with The Times’ independent directors. But Montgomery’s attempt to find a new economic model for local and regional newspapers is very significant and could herald a new wave of consolidation.
Local World would be the fourth largest regional group and would clearly have ambitions for further expansion if it is not blocked, or undermined, on competition grounds.
If the OFT were to launch a full investigation and then decide to refer the issue to the Competition Commission, Local World could be tied up in hearings and knots until 2014 – the year when the new Competition and Markets Authority takes on its powers.
In the meantime, little could happen except that the economic foundation of the regional press could deteriorate further with the danger of more closures.
In 2009 the OFT reviewed its legislation framework and decided it was flexible enough to reflect changing market conditions and could make special concessions for “failing” enterprises.
Then in 2011 came the Kent Messenger-Northcliffe deal involving a handful of small newspapers in Kent. The OFT decided that in those areas, local businesses would enjoy less competition in advertising, and referred the deal to the Competition Commission. As a result two newspapers closed with the loss of a couple of dozen jobs and local businesses had even less competition on advertising rates.
It illustrated in microcosm a major flaw in current competition legislation in the UK – a tendency to define markets too narrowly and, whatever the authorities claim, give too little weight to the plight of industries facing major structural change and sometimes fighting for their lives. In search of perfect competition – competition is actually reduced.
At the other end of the scale the Competition Commission has had a chilling effect on new ventures in the UK through trying to anticipate the possibility of future – rather than actual damage – to competition.
The block imposed on Project Kangaroo, which eventually re-emerged in a different form as YouView, probably cost the UK a technological lead in taking video direct from the Internet to the television screen.
Maybe – just maybe – the Competition and Markets Authority (CMA), which will take over the roles of both the OFT and the Competition Commission under the chairmanship of Lord Currie in April 2014 will provide a fresh and more realistic approach.
Meanwhile it’s not just the BBC which has acting people in charge all over the place. John Witherow could be acting editor of The Times and Martin Ivens, acting editor of The Sunday Times for quite a while yet after the independent directors put down their collective foot and refused to rubber-stamp the Murdoch appointments.
The independent action of the six-strong group has been widely praised for standing up to Murdoch, although they could do nothing to save the editorship of James Harding.
The issue is, of course, tied up with Murdoch’s desire to integrate the two titles – something expressly forbidden without Government approval.
Most industry observers would conclude that the days of stand-alone, or even partially stand-alone Sunday newspapers, is over.
But some would still say a deal is a deal and that Rupert Murdoch should not be allowed to ride rough-shod over what he has agreed – even if it was 32 years ago.
Let him go cap-in-hand to Prime Minister David Cameron and see how he gets on.
After all that has been allowed to happen at News International and the damage to the reputation of the UK newspaper industry that has resulted, it’s very tempting to reach for the two-finger salute.
Alas it’s a temptation that has to be resisted.
The Times is probably losing more than £35 million a year, even though some of that may be frontloaded from the rest of the group for tax reasons.
The underlying reason for Murdoch picking such a fight now has to be related to the plan for a separate float for Murdoch’s newspaper interests, plus a thin sugar coating provided by the Australian TV businesses.
US investors have absolutely no interest, to say the least, in News Corp’s newspaper business and Murdoch would undoubtedly have won praise and a share price increase if he had put them all up for sale. That could have cost the UK The Times.
Some former Times staffers believe The Times and The Sunday Times would prosper if released from the Murdoch shackles. It’s just about possible but it would be one hell of a risk and survival could come at the cost of even more journalist jobs through increased levels of integration.
Over the years the independence of The Times from The Sunday Times has been costly in more ways than one. Historically, both sides have barely spoken to each other and there has often been the ludicrous situation where the papers have bid against each other for book serialisation rights – dramatically driving up the price.
Rupert Murdoch deserves no favours from anyone and correct procedures should be observed, but it is hard to argue that the Government should now hold him to rules created 32 years ago in very different circumstances.
So it goes like this: the OFT should have a look and make sure the law is being observed and then decline to hold a full investigation into Local World on the grounds of the greater good of an industry facing major challenges.
And although it may stick in the craw, the Government should also decide – as it has the power to do – that a greater degree of integration of The Times and The Sunday Times should be allowed to go ahead.
It would give The Times the best chance of survival.