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ELLC/S3/10/R7

7th Report, 2010 (Session 3)

Report on the Scottish local newspaper industry

Remit and membership

Remit:

To consider and report on (a) further and higher education, lifelong learning, schools, pre-school care, skills and other matters falling within the responsibility of the Cabinet Secretary for Education and Lifelong Learning; and (b) matters relating to culture and the arts falling within the responsibility of the Minister for Culture and External Affairs.

Membership:

Alasdair Allan (from 20 May 2010)
Claire Baker
Alieen Campbell (until 20 May 2010)
Kenneth Gibson (Deputy Convener)
Kenneth Macintosh
Christina McKelvie
Elizabeth Smith
Margaret Smith
Karen Whitefield (Convener)

Committee Clerking Team:

Clerk to the Committee
Eugene Windsor

Assistant Clerk
Emma Johnston

Report on the Scottish local newspaper industry

The Committee reports to the Parliament as follows—

Introduction

Background

1. At its meeting on 4 November 2009, the Committee agreed to hold evidence sessions on the state of the Scottish local newspaper industry.

2. The Committee’s decision to consider this issue was prompted by the increasing number of media reports concerning the difficulties facing the local newspaper industry and, in fact, the newspaper industry as a whole. The combination of declining circulation and the current economic recession has exerted downward pressure on advertising revenues and newspaper publishing companies’ finances and, although no paid-for weekly has, to date, ceased publication in Scotland, the possibility remains.

3. The issue has been raised a number of times in the Scottish Parliament as the topic of four parliamentary debates1 and in questions to the Scottish Government.

4. The UK Parliament and other devolved administrations have also considered this issue. In particular, in the House of Commons, the previous Scottish Affairs Committee published its report, Crisis in the Scottish press industry, on 13 July 20092 and the previous Culture, Media and Sport Committee undertook a broader inquiry. Its report, The future for local and regional media, was published on 6 April 2010.3

5. The Committee agreed a number of issues which it wished to pursue—

Current state of the Scottish local/ weekly newspaper industry

  • What evidence is there that the industry is facing challenges?

Reasons for the decline of the Scottish local/ weekly newspaper industry

  • Is a decline in the industry caused by the current economic recession, wider technological changes, such as the rise of the internet, or broader cultural changes resulting in people having weaker links with their communities? Are there any other factors which are impacting on the industry and, if so, what are they?

  • What is the impact of the economic recession? To what extent have advertisers cut back on advertising in local/ weekly newspapers?

  • How has the increased use of the internet as an alternative to the printed media affected the industry? Specifically—

  • o as an alternative source of local news

    o as an alternative source of public sector job vacancies

    o as an alternative for advertising public notices

  • To what extent do free council or community run newspapers rival local/ weekly newspapers?

  • How will the proposals for an independently funded news consortia set out in the UK Government’s Digital Britain report impact on the Scottish local/ weekly newspaper industry?

  • To what extent do the UK competition rules restrict news providers’ options to consolidate news gathering and reporting?

Implications of a decline of the Scottish local/ weekly newspaper industry

  • What is the impact on the journalism profession and journalists? What is the impact on other professions who work in the newspaper industry, such as photographers and printers?

  • What is the impact on the consumer, especially those without access to the internet?

  • What is the impact on the quality of journalism and reporting of local issues?

  • What is the impact on local communities and the representation of a local cultural identity?

  • Does the current set of circumstances present any opportunities to the industry?

6. The Committee launched a call for written evidence and 13 submissions were received. The Committee also held oral evidence sessions.

7. Extracts from the minutes of these meetings are set out in Annexe A. Further information on the written and oral evidence received is set out in Annexes B and C.

8. The Committee thanks all those who took time to submit written evidence and give oral evidence to inform members’ understanding of this issue.

Definition of ‘local newspaper industry’

9. In its evidence sessions, the Committee considered the Scottish local newspaper industry. This excluded UK and Scottish national titles, such as The Scotsman and The Herald, as well as Scottish regional titles, such as The Press and Journal and the Courier. The Committee is aware, however, that many of the issues it has considered over the course of the evidence sessions apply equally to the regional and national newspaper industry.

10. Many respondents and witnesses referred to the titles included in these sessions as weekly publications, as many are published on a weekly, as opposed to a daily, basis. The term ‘local newspaper industry’ is used throughout this report, however, to refer to local publications published daily and weekly.

The importance of the scottish local newspaper industry

Role in supporting local communities

11. A number of written submissions stressed the importance of local newspapers, as a means of reporting local news, informing a local readership, representing communities’ views and holding decision makers to account on local issues.

12. The Scottish Daily Newspaper Society (SDNS) stated that—

“As most people recognise, local newspapers are integral to the communities they serve. Indeed, some go further by maintaining that local journalism is the bedrock of local democracy and public life. Certainly, there is no other part of the media providing the depth of coverage of local news and events in towns and villages throughout Scotland; reflecting the concerns of their communities; holding local government to account; or campaigning on local issues. They are the voice of their communities and, above all, are trusted.”4

13. Professor David Hutchison made a similar representation, arguing that—

“Local papers at their most basic provide readers with information as to what is happening in their areas – socially, educationally and politically. They also provide a variety of commercial information through display and classified advertising. They can be forums for vigorous public debate, they can themselves campaign on issues of importance, and they can hold those in authority to account, while also allowing such individuals and organisations the opportunity to present their views. And they can make strong contributions to the creation of a sense of community.”5

14. The submission from The Shetland Times illustrated the role of local newspapers in representing local opinion, with an example of its coverage of proposals to site a windfarm on the island. The newspaper funded an opinion poll into public attitudes towards the proposals, which helped focus its editorial position. The submission concluded that––

“the cost of this [opinion poll] was met from advertising and sales revenue and not from the taxpayers’ pocket. I believe it is important that the community continues to be served by an independent local press.”6

15. Some witnesses also highlighted the “unique resources”7 of local newspapers in providing the “collective cultural and historical memory of an area”.8

Training ground for journalists and other industry professionals

16. Much of the evidence received highlighted the role of local newspapers in providing the “entry point and training ground”9 for journalists and other industry professions, such as photographers.

17. Martin Boyle, from Cardonald College, which is one of the three NCTJ (National Council for the Training of Journalists) accredited further and higher education training centres in Scotland, stated that about 90% of the college’s students who go into the newspaper industry start in local newspapers.10

Challenges facing the industry

18. At the Committee’s meeting on 13 January 2010, representatives of newspaper publishers stated that newspaper revenue is made up of circulation revenue (approximately 20%) and advertising revenue (approximately 80%).11 Both these revenue streams are currently facing significant challenges.

Circulation revenue

19. Whilst all commentators agreed that local newspaper circulation has declined over recent decades, the overall picture given by newspaper companies was reasonably healthy. Scottish and Universal Newspapers (S&UN) referred to the high (70% – 90%) penetration rates of some of its titles and stated that—

“although circulation is falling, the situation is not as bad as we had first envisaged, and we will probably end the year with a 6% year-on-year decline. … All in all, I would say that circulation across Scotland, particularly for local newspapers, is still performing reasonably well.”12

20. At the opening of his written submission, Professor David Hutchison argued that the newspaper companies that dominate the local newspaper industry in Scotland are still achieving profits of over 10%, which “is less than they have been used to making but rather more than many businesses in other areas of the economy are achieving”.13

Television

21. During oral evidence, Ofcom argued that the increasing choice of local media, particularly television, has accounted for the long term decline of local newspapers. Ofcom referred to statistics which show that most people in Scotland use television as their main source of news and less than 30% use local newspapers.14

Internet

22. Over the last 20 years or so, the internet has become an increasingly important source of news and information. This has fundamentally changed the way that people consume news. The growth of the internet has also impacted on newspaper sales and, consequently, the revenue generated from both circulation and advertising. The impact on advertising revenue is discussed later in the report.

23. The internet provides an alternative source of news to readers, through blogs and news aggregators such as Google News. It is argued that such sites have lured some readers away from newspapers and reading original copy. The internet also provides an alternative format for newspapers themselves to publish their own news stories, editorial comment and other content online and this has, to date, been available free.

24. Throughout the evidence received, there was a consensus amongst witnesses that newspaper publishers have “missed a trick” in their use of the internet. Professor David Hutchison, in his written submission, argued that “it is clear that not holding the line on charging for access from the beginning was a major strategic error by the press”.15

25. S&UN, however, spoke of the difficulties of monetising newspaper on-line sites and recovering some of the investment made.16 Johnston Press plc, in oral evidence, went further, stating that—

“The fundamental challenge is that people expect content for free in the digital arena. Content is very expensively gathered, and it is easily spread on the internet. High-quality, properly researched journalism … cannot continue to be given away for free. Increasingly there will be a move towards charging for certain content.”17

26. There was agreement that there is neither a successful business model for newspapers migrating to the internet nor for newspapers having no internet presence. Johnston Press plc highlighted the difficulties facing newspaper companies—

“Significant investment is required to develop a digital business and to maintain our print businesses. If we are challenged by both the economic environment and distortions in the marketplace through subsidies for other businesses, that makes our long-term survival extremely difficult.”18

27. Professor Neil Blain commented that—

“It sounds paradoxical. There is not a great model for the continuation of print journalism in its present form, but neither is there one for the internet. There is not a happy solution.”19

28. A number of commentators felt that newspapers needed to be more innovative and creative in embracing the digital world. The National Union of Journalists (NUJ) suggested that—

“Not enough imagination goes into newspapers’ use of the web. Their websites should provide something different from the paper and feed an interest in it. They should give tasters, use humour and use video footage. Papers have to invest in that. I disagree with the suggestion that that requires too much investment. To take the future forward, they need to invest in that area.”20

29. During the debate on the Scottish newspaper industry on 28January2010, the Minister for Enterprise, Energy and Tourism stated that “existing business models are rapidly becoming outmoded as new technology and changing consumer tastes all impact directly.” The Minister went on to state that “we all know that our local newspapers can prosper in the internet age by continuously adapting, innovating, copying what works elsewhere and taking advantage of technological change, and we intend to help them to do so”.21 He went on to highlight a forthcoming summit for local newspapers about remaining profitable through the digital revolution.

30. When the Minister gave evidence to the Committee, he spoke of the “challenge” for newspaper companies to ensure that “they ramp up the digital side and have a mechanism to make revenue from digital to cover the print costs”.22

31. Newspaper company representatives also expressed concerns over the possibility that other news sites, including BBC news online (discussed in the next section of the report), may use stories sourced from local newspaper websites. It was said that this inhibited the ability of newspaper companies from making returns on the investment made in local journalism. Johnston Press plc stated that—

“The people who are making money out of the content are not the same people who are generating content. … Search engines have a fundamental role to play in the digital landscape, but it is the local press who are out gathering the news and who are the first source of news. The problem in the digital arena is that news is easily picked up by other organisations and spread for free. The BBC website will contain quite a bit of news from the Edinburgh area or whichever area of Scotland is of interest to you, but I am quite sure that the BBC did not originate that content.”23

32. Professor Neil Blain, however, argued that the nature of local stories is too community focused to be used on national news sites. He stated that “I would have thought that local newspapers are the least likely to find what they do duplicated in a serious way elsewhere”.24

Competition from BBC website

33. Various written submissions set out newspaper publishers’ concerns that public money through the BBC licence fee was being used to support BBC initiatives at local level, particularly BBC news online, at the expense of local newspapers. In its written submission, Johnston Press plc stated that—

“the BBC has been largely free to pursue its on-line ambitions paid for via a £3 billion pound annual licence fee, which leaves it well cushioned from current economic turbulence. Johnston Press is extremely concerned about the profoundly negative effect unrestrained subsidy can have on the financial viability of newspaper and fledgling websites being developed by commercial media companies at no cost to the public purse.”25

34. In its submission, DC Thomson also referred to the perceived threat by the BBC at local level. It concluded that “we believe that we are better able to compete in the absence of an expansion or strengthening of the BBC at local level”.26

35. The NUJ dismissed this argument, however, stating that this issue had never been raised before the recession, when newspaper companies’ profits had been healthier.27 A number of other commentators also put forward the view that BBC news online does not tend to post a high number of local stories as its focus tends to be at UK and Scottish national level.

36. The Committee is aware that the BBC Trust recently consulted on the BBC strategy review, which recommended halving the number of sections on the internet and reducing expenditure on its online content by a quarter by 2013.28

Geographic location

37. It is clear that, whilst newspaper circulation has fallen, the decrease differs greatly between some titles. S&UN believed that ‘the more parochial a paper is, the stronger it becomes”.29 Johnston Press plc went on to argue that—

“As a general rule of thumb, the smaller and more remote a community, the better its newspaper’s circulation has held up. We are particularly challenged in the central belt, where there is a greater competition, and in larger communities, in which there has been more growth in competitor media.”30

38. Professor David Hutchison also asserted that there are significant variations in circulation declines (based on his own analysis of 12 papers between 2005 and 2009)—

“The Airdrie and Coatbridge Advertiser declined by 24%, the Buchan Observer by 20%, the Dumfries and Galloway Standard by 16%. But the West Highland Free Press declined by 8%, the Fraserburgh Herald by 5%, the Annandale Herald by 4% and the Shetland Times by 1%.”31

39. Professor David Hutchison raised a number of possible factors which could explain this variation, including chain ownership, size of newspaper, “styles” of journalism as well as geographic isolation.32

Cultural factors

40. The cultural changes of recent decades may also, to some degree, account for the decline of local newspapers. People increasingly move around and do not necessarily feel the same loyalties to their communities as in past times. Globalisation has led to the consolidation of many small shops and companies into multi-nationals and chains, decreasing the need for local advertising. Dunfermline Press Limited stated that—

“The decline of the high street has reduced numbers of local independent retailers who have historically been core advertisers in local press. This also compounds the reduction in community allegiances that have developed – which again makes the local paper less relevant to peoples’ lives.”33

Quality of journalism and editorial priorities

41. In his written submission, Professor David Hutchison posed “the very important content issue: is what is offered in local papers good enough to attract paying readers on a regular basis?”34 Mr Hutchison went on to state that—

“A paper which is alive, reflects what is going on in its community, pursues particular issues vigorously and avoids too much of the scrappy ‘local notes’ kind of content is likely to be best placed to survive. … But local websites produced by enthusiastic amateurs will never be a substitute for decent journalism produced by qualified people who know what a good story is, can distinguish between fact and rumour, and who will not expose themselves and their editors to charges of defamation and contempt of court.”35

42. Ofcom argued that the nature of content in some local newspapers has changed, with an increase in lifestyle and leisure features.36

Advertising revenue

43. As discussed in paragraph 18, advertising makes up 80% of revenue. Advertising revenue is mostly made up from the charges made for advertisements in the printed media; newspaper on-line sites generate relatively little income from advertising. During evidence, Johnston Press plc stated that on-line advertising accounted for 10% of its total advertising revenue in 2009 and S&UN confirmed that it accounted for 7% of its total advertising revenue in that year.37

Economic recession

44. Newspaper companies told the Committee that their advertising revenue had been affected by the economic recession as recruitment had fallen and consumers were postponing big purchases such as property and cars. DC Thomson reported that classified advertising had fallen 30% from the previous year, while employment advertising had declined by almost 50%.38 S&UN described falls in recruitment (56%), property (57%), motors (21%), local retail (15%) and other classified (14%) in 2009. It also highlighted that leaflets and inserts had decreased by 43% and reader holidays/offers by 30%.39

Internet

45. The internet has also become an important vehicle for advertising. Professor David Hutchison referred to research by the Advertising Association, which suggested that the internet has a 23.5% share of advertising in the UK and the print media has 29.5%.40

46. Johnston Press plc identified the migration of classified advertising to the internet as a “major area of concern”. It was estimated that, since 2005, Johnston Press Scottish newspaper companies have lost about 28% of advertising to the internet, accounting for the equivalent of a loss of £14m against what could have been expected in 2005. Johnston Press plc acknowledged that “a lot of the migration has happened already” but stated that there would still be some migration of classified advertising to the web.41

Public sector advertising

47. Through written submissions and oral evidence, newspaper publishers stressed the importance of public sector advertising to local newspaper revenues. Public sector advertising is mostly made up of recruitment advertisement and public information notices (PINs) (such as notices advising road closures/planning proposals) which are published by local authorities. S&UN stated that public sector advertising makes up approximately 10% of advertising revenue (7% from PINs, 3% from recruitment). Johnston Press plc said that public sector advertising accounted for 12.5% of its total advertising revenue.42

48. It is within the context of the recent economic recession that local authorities recently sought to reduce the amount of public sector expenditure on advertising in local newspapers. Online portals were developed to advertise recruitment and PINs. In its written submission, COSLA argued that—

“the recruitment portal and PINs portal will yield local authorities meaningful savings in both advertising costs and back office processes, whilst improving the service provided to users. It is a win win situation and one which councils cannot afford to ignore.”43

Public sector advertising – recruitment portal

49. The recruitment portal, myjobscotland.gov.uk, was launched on 5November 2008 as an online portal for over 30,000 local authority job vacancies per year. The website is operated by COSLA and part funded by the Scottish Government.

50. In its written submission, COSLA stated that Myjobscotland.gov.uk allows local authorities to “recruit from a wider pool of employees, support more effective recruitment practices, reduce advertising expense and improve efficiency and productivity”. It also highlighted annual savings of between £3-4m and stated that it “is deemed by COSLA and its member councils to be highly successful”.44 The submission did not give any indication as to how this degree of success was measured.

51. Other written submissions raised concerns relating to the advertising of public sector jobs on the internet. Some raised concerns that the portal is not the most effective method of advertising public sector vacancies. Newspaper companies set out the impact on newspaper publishers, suggesting a decrease in advertising income of £13.5m.45

52. COSLA’s submission referred to media partnerships with six newspaper and online recruitment groups and stated that these “allow the media companies to advertise all myjobScotland vacancies alongside their own recruitment advertising”.46 The Committee discussed these partnerships with newspaper publishers. S&UN highlighted that newspapers’ participation had increased the number of job hunters accessing the website who did not already work in the public sector and Johnston Press plc stated that it had participated in a trial but would be unable to support Myjobscotland.co.uk in the longer term without financial reward.47

Public sector advertising – public information notices

53. The possibility that local authorities would be able to publish PINs on the internet only, and not be required to publish in the local press, has been mooted for some time.

54. The Scottish Affairs Committee considered this issue in its inquiry and, in its response to the Committee’s report, the UK Government stated its view that there should not be a policy of publishing PINs solely online.48

55. On 17 December 2009, the Scottish Government published a consultation on possible legislative changes to allow public notices to be advertised online on a new PIN portal. COSLA’s written submission described how the portal would work. It also stated that councils spent approximately £6m in 2005-06 on publishing PINs in local newspapers and that migrating to the internet would reduce this by at least 40%, saving £2.5m a year.49

56. In addition to strong concerns being raised with the Scottish Government directly in relation to this proposal, there was significant comment made in the submissions received by the Committee from newspaper publishers. Concerns were raised that PINs would be less accessible if they were only published on the internet and that the change would result in a decrease of approximately 10% of advertising revenue.50

57. Following a campaign against this proposal, the Scottish Government announced on 17 March 2010 that it would not progress with its legislative proposals.51 It also stated that it would continue to develop the on-line advertising portal for the public sector.

Local authority publications

58. Some concerns were raised with the Committee in relation to local authority freesheets, suggesting that they were a threat to newspapers’ independence and competition for paid for advertising. When the Committee raised this issue, however, witnesses stated that free local authority publications were not a problem so long as they remained focused on local authority information and did not seek to attract paid-for advertising.52

59. Professor David Hutchison dismissed these concerns more robustly, arguing that—

“Any sane person knows that a local authority newspaper is not a newspaper in the normal sense of the term. … Most of the local authority news sheets that I have seen pose no threat to a good, well-run, lively local newspaper, other than the fact that they may include a little advertising.”53

Management issues

60. Some witnesses argued that some of the challenges facing the newspaper industry had been exacerbated by recent management decisions. Professor David Hutchison argued that some companies had “rather large debts to service” and went on to say that it could “also be argued that in the good times some of them were more concerned to go on the acquisition trail and to reward senior executives with remarkable generosity, rather than to invest in journalism and journalists on their papers”.54 Towards the end of his submission, he stated his belief that it was “perfectly legitimate to ask the companies which dominate the Scottish local paper market whether they have struck the proper balance among dividends, executive remuneration and well-resourced journalism”.55

61. The NUJ made a similar argument, arguing that “there was a dearth of investment and a lack of strategic approach when times were good, but the financial circumstances were among the best of any industry in the western world”.56 The NUJ went on to say that “I have to say, though, that the past year has been the most depressing since I left school and joined the industry, and much of that is down to major mismanagement of investment and in decision making”.57

62. Johnston Press plc acknowledged that “even my own group made a number of ill-advised acquisitions” but when asked whether executives were overpaid stated, “I do not have a view on that; I certainly was not one of them”. When asked whether dividends had been too high, Johnston Press plc said “the dividends were what was deemed to be appropriate at the time.” Johnston Press plc went on to acknowledge that “we did not possibly invest enough in journalism” and that “journalism is fundamental to what we do”.58

63. After the evidence sessions, the Committee considered the issue around company profits and salaries in the local newspaper industry further. The NUJ provided the following information—

  • Average journalist salaries – £15-20k (Clyde and Forth); £18-26k (Johnston Press plc and S&UN/ Trinity Mirror plc)

  • Average editor salaries – £24-30k with a company car

  • Executive pay – Former Chief Executive, Johnston Press plc, 2009 pay – £556k salary, plus £236k bonuses and 125,000 shares (increase of 36%); Chief Executive, Trinity Mirror plc, 2009 pay – bonus of £793k (equivalent to 110% salary), plus £240K pension contribution.

Scottish Government response

64. The Minister for Enterprise, Economy and Tourism, Jim Mather MSP, argued that it was not the role of government to make interventions in the industry and that the industry must respond to the recent technological and cultural changes to survive—

“It would be arrogant of Government—and is likely that it would be unsuccessful—to go around trying to fix industries. An evolutionary process is needed and the outcome depends on committed people who do the job day and daily. We are beginning to see signs that change is under way. Most of the major titles have made a good fist of their internet offerings, although they might still face the challenge of finding appropriate revenue steams and rewards for that. … The faster we can get the evolutionary process under way and accelerating, the better will be the results.”59

65. The Scottish Government held a summit for the local newspaper industry in February 2010. When discussing the remit and purpose of this event, the Minister re-stated the Scottish Government’s view that its role was to facilitate debate within the industry and not actively to address these challenges. The Minister stated “it would be pretty arrogant for us [the Scottish Government] to draw up a plan and impose it or seek to overlay it on an industry’s plan”. He went on to explain the purpose of the summit—

“It is very much a forum. It is about trying to establish a common cause, to achieve cohesion and to create a climate in which people feel that they can offer tangible help on a commercial basis. We create the correct climate. We have proved time and again that when you bring people together their altruism gets the better of them: people buy into a common cause and are keen to move things forward. That has been our experience sector by sector and also in communities.”60

Impact of these challenges

Impact on consumption of news

66. With the rise of the internet, the way that people search for and consume news has changed. Professor Blain suggested that people “browse and graze” when looking for information.61 Cardonald College referred to “a remarkable change in how we find information”—

“The internet has removed serendipity from the finding of information. In the past, people stumbled across things in a magazine or newspaper that they might have found hugely entertaining or interesting or important to them. The reality now is that people go online and use Google to search for the one thing that they want to know about.”62

67. A number of witnesses argued that much of the information available on the internet cannot be trusted as much as news content originated by journalists. DC Thomson highlighted the risk of “less professionally-produced news and greater reliance on volunteer news reporting and blogging, with associated risks of false information and unethical conduct in the gathering of such news”.63

68. The Committee discussed the long-standing issue that younger people generally tend not to read newspapers and that people are more likely to read a newspaper as they grow older. Professor David Hutchison argued that there had been a “major cultural shift” and that newspapers could not assume that young people would grow into newspaper readers.64

69. The Minister agreed with this point, asking—

“Will those who are fourteen-year-olds now be reading print media when they are in their 80s or 90s? I doubt it. The technology will have moved on dramatically in that timeframe.”65

Impact on consumers without access to the internet

70. Many commentators argued that newspapers were more accessible information media than the internet, highlighting the number of people without any, or regular, access to the internet and the lower broadband coverage and penetration across Scotland. The Ofcom Communications Market Report 2009 showed that 60% of households in Scotland had broadband access in the first quarter of 2009, compared to 68% across the UK as a whole. The figure was 39% for Glasgow.66

71. Johnston Press plc raised this point, arguing that “these penetration levels fall a long way behind the 82% reach for local newspapers and leave my company struggling to understand how the Scottish Government could contemplate disenfranchising large numbers of Scots by relying on less effective information channels”.67

Impact on local communities

72. Concerns were raised that any decline of the local newspaper industry would impact on its ability to support local communities and, in particular, to report local news, inform a local readership, represent communities’ views and to hold decision makers to account on local issues.

73. Cardonald College, spoke about a potential “democratic deficit” being created by poor coverage of local affairs and “information poverty”. He went on to detail the importance of journalistic reporting as “bloggers do not go into court rooms, Parliament or fatal accident inquiries; local journalists on the ground are the ones who can do that type of job.”68

Impact on journalists and other industry professionals

74. A number of respondents argued that the challenges facing the local newspaper industry are resulting in fewer trainees joining the profession. The importance of the local newspaper industry in providing an entry point and training ground for trainee journalists is discussed in paragraphs 16. DC Thomson argued that “if this avenue is blocked the totality of journalism both in newspapers and television may suffer”.69 Johnston Press plc argued that—

“We have a fundamental role as trainers and developers of journalists; we are the entry point to the profession. … if we are constrained as a result of revenue challenges and have to shed staff, those opportunities will obviously diminish.”70

75. Cardonald College reported that journalism is still a popular profession –courses are still oversubscribed by five or six times – but that decreasing numbers of graduates were finding jobs in local newspapers, partly because of low starting salaries.71 Professor Neil Blain highlighted the increased range of media jobs available for journalism graduates as “one of the implications of the expansion of new media and new forms of entertainment” and argued that “the question is not so much about whether journalism graduates are getting jobs but about the number of them who are getting jobs in traditional news and reporting roles”.72

76. Respondents also stressed the consequences of tighter resources for existing journalists in the newsroom. It was argued that journalists increasingly have less time to devote to developing stories (particularly investigative pieces), gaining in-depth local knowledge and reporting the stories traditionally covered by local press such as court cases and local council meetings. One witness described this as “making genuine, on-the-ground contacts by wearing out your shoe leather”.73 A number of witnesses also argued that content increasingly relied on cutting and pasting news releases rather than traditional reporting. The NUJ argued that a balance needed to be struck between maximising resources and allowing journalists to report—

“Rather than being stuck in the office writing advertising supplements, reporters should be out listening, and meeting and building contacts, which is the way to achieve a balanced press. Unfortunately, many journalists find themselves in the position of being completely overstretched.”74

77. Newspaper companies also gave evidence on the importance of good journalism to the local newspaper industry; S&UN emphasised that an “important and integral part of local newspapers” is their very strong base of correspondents, especially for the “more parochial” publications.75 S&UN also spoke of the need for local newspapers to maintain the story count to ensure that they remained relevant to communities—

“There is no question but that, if pressure is put on journalists or that resource is reduced, the effect on the title will be dramatic. It is extremely important that we keep the story count high and retain the ability to respond to challenges in markets, such as campaigning issues that need a bit of time and devotion.”76

78. In its written submission, The Shetland Times Plc wrote that, in times of recession, “obviously freelance services such as photographers and contributors will be the first to suffer and production costs and auxiliary services will also be affected”.77

Recent government initiatives to support the local newspaper industry

Proposals for channel 3

Proposals for independently funded news consortia

79. The Digital Britain report, published by the UK Government in June 2009, recommended the creation of independently funded news consortia (IFNC).78 The report states that an IFNC would be “a joining of interested parties who will provide a more ambitious cross-media proposition and enhanced localness compared with current commercial television regional news; but which, to maximise audience reach, will also broadcast in the regional news slots in the schedule of current Channel 3 Licensees”. Three pilot areas (one in Scotland, one in Wales and one in an English region) were to be set up in 2010 to run until 2012.

80. Newspaper publishers expressed concerns about this proposal, arguing that it constituted “something of a double edged sword”, allowing successful newspaper groups to pick up new media skills but leaving losers with a major competitive challenge.79

81. Professor Neil Blain, however, was unconvinced that IFNC would “reach deeply enough into the local. … That is what would make a big difference”.80

82. The Department for Culture, Media and Sport announced, on 13January2010, that two consortia, (Johnston Press plc, Herald and Times Group, Tinopolis and DC Thomson and STV, ITN and Bauer Radio) had been successful in phase one of the selection process.81

83. Following the recent UK general election, however, the UK Government decided not to proceed with the IFNC pilot. In a written statement to the House of Commons on 8 June 2010, the Secretary of State for Culture and Media stated that the UK Government does “not agree that subsidising regional news is the right approach”. The statement goes on to confirm that the money previously identified for the pilot would be used to support the roll-out of superfast broadband and that the UK Government had accepted Ofcom’s recommendations on reforming local cross-media ownership rules.82

Proposals for Scottish network

84. The Scottish Broadcasting Commission (SBC) was established by the Scottish Government to conduct an independent investigation into the current state of television production and broadcasting in Scotland and to define a strategic way forward for the industry. This was also to take account of the “economic, cultural and democratic importance of broadcasting to a modern, outward looking Scotland and its creative industries.”83

85. The SBC published its final report, Platform for success, on 8September2009.84 One of the report’s recommendations was the creation of a new Scottish network which would be “a digital public service television channel and an extensive and innovative online platform … funded out of the new UK settlement for public service broadcasting (PSB) plurality and should be licensed and given full regulatory support by Ofcom”.

86. In its response to the SBC’s final report, the BBC Trust highlighted concerns that a Scottish network should not impact on funding for the BBC and should be sustained by Scotland’s independent production sector. The report concluded—

“We welcome any initiative to secure future plurality of supply of PSB output for Scotland but would not support funding which in any way diminished or undermined the BBC’s own public service output and its ability to deliver the public purposes. …

The ACS [Audience Council for Scotland] considers that any proposal to enhance PSB in Scotland is in the interests of BBC audiences but warns that if funding for the channel was to come, even indirectly, from the licence fee, this would damage the BBC, compromise its direct relationship to Licence Fee payers and would not serve the interests of BBC audiences in Scotland. …

We look forward to hearing greater detail on the proposal for a Scottish network PSB digital channel including any analysis of audience needs and expectations, the audience proposition and editorial aspirations for the proposed channel. In particular, we would welcome further details on the strategic goals for the channel and the proposed governance arrangements.”85

87. Johnston Press plc referred to this recommendation and argued that “clearly, another subsidised outlet would be a challenge for us”.86

Media ownership rules

88. On 16 June 2009, the Office of Fair Trading (OFT) published its report, Review of local and regional media merger regime. The report concluded that the current media regime was sufficiently robust to take account of the current challenges facing the industry.

89. In the Digital Britain report, however, the UK Government asked Ofcom to undertake a statutory review of media ownership rules. In its submission to this Committee, Ofcom recommended that “a restriction be retained that prevents one person from potentially dominating the news agenda across all three platforms of radio, ‘local’ newspapers (with a 50% or more market share) and Channel 3 television”.87 Ofcom went on to argue that “if the rules are liberalised as we propose, they will permit a greater level of consolidation among television, radio and newspapers providers in Scotland, while still ensuring a number of protections for plurality”.88 Ofcom had previously abolished cross-ownership media rules for radio stations.

90. In its written submission, DC Thomson referred to the Local Media Alliance’s response to the OFT’s review of the local and regional media merger regime, which argued that “further consolidation would enable publishers to make necessary investments in media services and content, product quality, digital platforms and training, allowing them to capture economies of scale in relation to the management, distribution networks, printing and more efficient sales structures while repositioning their businesses for growth”.89

91. During oral evidence, Professor David Hutchison queried whether these relaxed rules would make much difference in Scotland as—

“If I own the local newspaper and the local radio station, I have a monopoly because, as we have all agreed, STV does not cover local news. The two out of three rule simply does not work in Scotland because if someone has two out of three, they could well have a monopoly”.90

92. During oral evidence, Ofcom stated that it did not expect “big mergers or acquisitions” in the next few years but did anticipate title swaps between newspaper owners. Witnesses also spoke about the current fragmentation of the industry and the potential development of a ‘hubs and spokes model’, whereby a cluster of local newspapers in an area would share a central head office with centralised ‘back office’ functions. Ofcom commented that “small groups of papers are owned by different proprietors across the country, so it is possible that relaxation of the rules could lead to some consolidation of titles between different owners”.91

Conclusions and recommendations

93. The Committee recognises the invaluable and historic roles of local newspapers in reporting local news, informing a local readership, representing communities’ views and holding decision makers to account on local issues. The Committee believes that these roles are important ones in supporting a healthy, pluralist and participative society.

94. The Committee also recognises the importance of local newspapers in providing a vital grounding for journalists, many of whom go on to national newspapers and television journalism although many also remain working for local newspapers throughout their career.

95. The Committee notes the technological and cultural changes that have altered the media landscape over recent decades. These changes and developments have also led to changes in the ways in which people access news and information and in which businesses advertise. It is imperative that the newspaper industry keeps pace with, and adapts to, these changes as appropriate to ensure that, as far as possible, newspapers remain relevant to people’s lives.

96. The Committee remains concerned, in the developing media landscape, about the potential impact on the newspaper industry of the proposals for television channel three. The Committee notes that the incoming UK Government has halted plans for independently funded news consortia. It remains unclear whether the proposals for a Scottish network, as recommended by the Scottish Broadcasting Commission, will be taken forward. However, if the proposals were to be developed, the Committee would ask the Scottish Government to assess what impact they might have on the printed media.

97. The Committee notes that some of the challenges facing the industry, especially those relating to advertising revenue, have been exacerbated by the current economic recession. The Committee hopes that the impact of these challenges will lessen as economic circumstances improve.

98. A business model which allows newspaper companies to compete with other news providers, whilst also generating enough profit to support the continuing and sustainable involvement of professional journalists in reporting news and generating quality content, must be developed. The Committee notes the Scottish Government’s position that responsibility for this lies with the industry. Nevertheless, the Committee recommends that the Scottish Government closely monitor the situation.

99. Although the Committee acknowledges that the public sector faces difficult budgetary decisions and cost pressures, the appropriate balance needs to be struck between the need to make efficiency savings and the need to ensure that citizens are properly informed about proposals that may affect their lives or their community. Accordingly, the Committee welcomes the Scottish Government’s decision to drop its proposals to require Public Information Notices to be published online only. The Committee believes that this will help to ensure broader access to public information across Scotland while also providing a degree of stability in supporting newspaper companies’ revenue.

100. The Committee notes the levels of profits still being made by newspaper companies. The Committee also notes the contrast between the remuneration packages of senior management in the industry and the salaries being offered to journalists entering the profession in local newspapers. The Committee also recognises the growing newsroom pressures on journalists. The Committee believes that the long term health and sustainability of the local newspaper industry rests largely on it being able to recruit and retain well trained professional journalists who have the skills and expertise to investigate issues of local concern, scrutinise local government and other institutions and report local news. The Committee believes, therefore, that it is essential that the management of newspaper companies take steps to make sustained investment in journalism. Such investment must ensure that journalists are supported, developed and fairly remunerated in order to play their vital role in the production of vibrant titles that will continue to find a market and ­– perhaps more importantly – carry out their important cultural, scrutiny and other functions in local communities across Scotland.

Annexe A: EXTRACT FROM THE MINUTES

1st Meeting, 2010 (Session 3), Wednesday 13 January 2010

Scottish local newspaper industry: The Committee took evidence from—

Jim Raeburn, Director, Scottish Daily Newspaper Society, Michael Johnston, Divisional Managing Director, Johnston Press Scotland, Bill Steven, Managing Director, Scottish and Universal Newspapers, Paul Holleran, Scottish Organiser, National Union of Journalists, Martin Boyle, Programme Co-ordinator for Journalism, Cardonald College.

2nd Meeting, 2010 (Session 3), Wednesday 20 January 2010

Scottish local newspaper industry: The Committee took evidence from—

Professor Neil Blain, Head of Film, Media and Journalism Department, University of Stirling, Professor David Hutchison, Visiting Professor in Media Policy, Glasgow Caledonian University, James Thickett, Director of Market Research and Market Intelligence, Ofcom, Alan Stewart, Head of Broadcasting and Telecoms, Ofcom Scotland.

9th Meeting, 2010 (Session 3), Wednesday 24 March 2010

Scottish local newspaper industry: The Committee took evidence from—

Jim Mather, Minister for Enterprise, Energy and Tourism, Elisabeth Stark, Head of Manufacturing and Economy Response, Richard Wilkins, Head of Broadcasting Policy and Scottish Arts Council/Scottish Screen Sponsorship, and Julie Kane, Head of Shared Services and Public Sector ICT Policy, Scottish Government.

20th Meeting, 2010 (Session 3), Tuesday 29 June 2010

Scottish local newspaper industry: The Committee considered a draft report. Subject to a number of minor changes, the report was agreed to.

Annexe B: ORAL AND ASSOCIATED WRITTEN EVIDENCE

1st Meeting, 2010, 13 January 2010

Written evidence

Johnston Press plc
Scottish Daily Newspaper Society

Oral evidence

Jim Raeburn, Director, Scottish Daily Newspaper Society, Michael Johnston, Divisional Managing Director, Johnston Press Scotland, Bill Steven, Managing Director, Scottish and Universal Newspapers, Paul Holleran, Scottish Organiser, National Union of Journalists, Martin Boyle, Programme Co-ordinator for Journalism, Cardonald College.

2nd Meeting, 2010, 20 January 2010

Written evidence

Ofcom
Professor David Hutchison

Oral evidence

Professor Neil Blain, Head of Film, Media and Journalism Department, University of Stirling, Professor David Hutchison, Visiting Professor in Media Policy, Glasgow Caledonian University, James Thickett, Director of Market Research and Market Intelligence, Ofcom, Alan Stewart, Head of Broadcasting and Telecoms, Ofcom Scotland.

Supplementary written evidence

Professor David Hutchison

9th Meeting, 2010, 24 March 2010

Oral evidence

Jim Mather, Minister for Enterprise, Energy and Tourism, Elisabeth Stark, Head of Manufacturing and Economy Response, Richard Wilkins, Head of Broadcasting Policy and Scottish Arts Council/Scottish Screen Sponsorship, and Julie Kane, Head of Shared Services and Public Sector ICT Policy, Scottish Government.

Annexe C: OTHER WRITTEN EVIDENCE

Bill Chisholm
COSLA
DC Thomson
Dunfermline Press Limited
Elizabeth McLaughlin
National Federation of Newsagents – Scottish Council
The Shetland Times
David Woodrow


Footnotes:

1 Scottish Parliament. Official Report, 7 January 2009 (Newsquest (Herald and Times) Ltd (Job cuts); Official Report, 23 April 2009 (Daily Record and Sunday Mail); Official Report, 23 April 2009 (Newspaper industry); and Official Report, 28 January 2010 (Newspaper industry).

2 House of Commons Scottish Affairs Committee. 4th Report (Session 2008-09). Crisis in the Scottish press industry (HC 401). Available at:

http://www.publications.parliament.uk/pa/cm200809/cmselect/cmscotaf/401/40102.htm

3 House of Commons, Culture, Media and Sport Committee. 4th Report (Session 2009-10). Future for local and regional media (HC 43). Available at:

http://www.publications.parliament.uk/pa/cm200910/cmselect/cmcumeds/43/4302.htm

4 Scottish Daily Newspaper Society. Written submission, paragraph 2.

5 David Hutchison. Written submission, paragraph 4.

6 The Shetland Times. Written submission, paragraph 6.

7 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3092.

8 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3042.

9 DC Thomson. Written evidence, paragraph 37.

10 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3051.

11 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3012.

12 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3008.

13 David Hutchison. Written submission, paragraph 1.

14 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3063.

15 David Hutchison. Written submission, paragraph 10.

16 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3013.

17 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3013.

18 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3011.

19 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3066.

20 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3058.

21 Scottish Parliament. Official Report, 28 January 2010.

22 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 24 March 2010. Col 3352.

23 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3013.

24 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3084.

25 Johnston Press plc. Written submission, paragraph 8.

26 DC Thomson. Written submission, paragraph 20.

27 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3040-1.

29 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3036.

30 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3010.

31 David Hutchison. Written submission, paragraph 8.

32 David Hutchison. Written submission, paragraph 9.

33 Dunfermline Press Limited. Written submission, paragraph 11.

34 David Hutchison. Written submission, paragraph 7.

35 David Hutchison. Written submission, paragraph 10.

36 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 24 March 2010. Col 3364.

37 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3012.

38 DC Thomson. Written submission, paragraph 13.

39 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3007-8.

40 David Hutchison. Written submission, paragraph 6.

41 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3009.

42 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3015-6.

43 COSLA. Written submission, paragraphs 15 and 16.

44 COSLA. Written submission, paragraphs 5 to 9.

45 Scottish Daily Newspaper Society. Written submission, paragraph 4.

46 COSLA. Written submission, paragraph 14.

47 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3016-7.

48 House of Commons Scottish Affairs Committee. 3rd Special Report (Session 2008-09). Crisis in the Scottish press industry: Government Response to the Committee’s Fourth Report (HC 981). Available at:

http://www.publications.parliament.uk/pa/cm200809/cmselect/cmscotaf/981/98102.htm

49 COSLA. Written submission, paragraph 10.

50 DC Thomson. Written submission, paragraph 23.

51 Scottish Government. (17 January 2010) Decision on Public Information Notices. Available at: http://www.scotland.gov.uk/News/Releases/2010/03/17120444

52 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3020-1.

53 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col. 3078.

54 David Hutchison. Written evidence, paragraph 1.

55 David Hutchison. Written evidence, paragraph 11.

56 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3041.

57 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3042.

58 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3038.

59 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 24 March 2010. Col 3349-50.

60 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 24 March 2010. Col 3351.

61 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3066.

62 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3046.

63 DC Thomson. Written submission, paragraph 46.

64 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3070.

65 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 24 March 2010. Col 3352.

66 Ofcom. (2009) Market Communications 2009. Available at: http://www.ofcom.org.uk/research/cm/cmr09/

67 Johnston Press plc. Written evidence, paragraph 15.

68 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3043.

69 DC Thomson. Written evidence, paragraph 37.

70 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3030.

71 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3051-2.

72 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3090.

73 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3049.

74 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3044.

75 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3031.

76 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010, Col 3029.

77 The Shetland Times. Written submission, paragraph 7.

79 Johnston Press plc. Written submission, paragraph 19.

80 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010, Col 3082.

81 Department for Culture, Media and Sport. (13 January 2010) Successful bidders announced for next stage of IFNC pilot process. Available at:

http://www.culture.gov.uk/reference_library/media_releases/6569.aspx/

82 House of Commons. Written statement, 8 June 2010. Available at:

http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm100608/wmstext/100608m0001.htm

83 Scottish Broadcasting Commission. Available at:

http://www.scottishbroadcastingcommission.gov.uk/about

84 Scottish Broadcasting Commission. (8 September 2008) Platform for Success. Available at:

http://www.scottishbroadcastingcommission.gov.uk/about/Final-Report

85 BBC Trust. (2008) BBC Trust Response to the Scottish Broadcasting Commission’s Final Report. Available at:

http://www.bbc.co.uk/bbctrust/assets/files/pdf/review_report_research/sbc_response.pdf

86 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 13 January 2010. Col 3009.

87 Ofcom. Written submission, paragraph 6.

88 Ofcom. Written submission, paragraph 7.

89 DC Thomson. Written submission, paragraph 36.

90 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3087.

91 Scottish Parliament Education, Lifelong Learning and Culture Committee. Official Report, 20 January 2010. Col 3100.