07:39 Thursday 14th March 2013
Bigger Breakfast Show
BBC Radio Cambridgeshire
[P]AUL STAINTON: The company which publishes several of our local papers here in Cambridgeshire has announced a huge drop in profits. Archant Media, owner of the Cambs Times, Ely Standard, Hunts Post and Wisbech Standard has reported profits down by almost 40%. The company is also facing a multi-million pound tax bill. So what does it mean for the future of those local papers? Well Steve Hewlett is a media commentator, and presents the Media Show on Radio 4. Morning Steve.
STEVE HEWLETT: Morning.
PAUL STAINTON: We know newspapers are struggling at the moment, particularly local newspapers, but this is huge, isn’t it?
STEVE HEWLETT: Well it is, although a 40% drop in profits from two point something million to one point something million, in profitability terms it’s not been huge for some time. Although you don’t have to go back very far to find local newspapers absolutely coining it. And it’s one of the problems that the local newspaper business has now, which is that at one stage it was so profitable that lots of big companies got involved, there was lots of consolidation, a lot of companies took on huge debts in order to buy more, because the rate of return on the investment was so high, and then found themselves crippled, not just by the circumstances afflicting local newspapers directly, but also by financing costs, and all the rest of it. The fundamental problem is this. There are two regional newspapers in the country, in the whole of the UK, or the whole of England anyway, that put on circulation, and one of them is in this group. It’s the Ipswich Star. But most local newspapers are seeing circulation decline. That’s the first thing. The second thing is, and this is commercially more significant, advertising is deserting them. The basic business proposition for local newspapers has always been classified advertising. And that is going online at a rate of knots. It’s better for sellers, it’s better for buyers. So local newspapers are being substituted. So the problem they’ve got is, given that on the upside there is plain demand for local news. People do want local news. But they’re a little bit stuck, partly because their paper is a) expensive, and b) it means that everything you print is out of date. So newspapers’ problems are summed up in two words, news and paper.
PAUL STAINTON: And they’re trying to go online a lot more these days, aren’t they? A lot of papers have gone on to weekly publication, but delivering the news online, which perhaps they think is the way forward. But how do you equate everything? How do you get everything going? If you’re losing your advertising, how do you pay for that?
STEVE HEWLETT: The advantage of going online is of course it’s much much cheaper, because you avoid the costs of print, which are very very substantial. The problem with going online is how do you monetise it? It’s often said that the point about the digital world is you substitute what we might call analogue pounds for digital pence. So the revenues online are generally speaking much much lower, and it’s not just local papers. The newspapers in general are struggling to find business models that will work in the Internet age.
PAUL STAINTON: And not everybody wants to read things online, and not everybody’s got the capacity to, have they?
STEVE HEWLETT: That’s true. I’m not saying there is no market for print. But the question is, how do you pay for it? As I say, they’re in a vice at the moment. It’s a pincer movement. On one hand mostly circulations are falling, so cover prices, if there is one, if they haven’t already gone free, is under pressure, or the revenues from that are under pressure. Secondly, the advertising proposition, based on classified advertising, the stock in trade of local papers for a very long time, that is going online, because it’s just easier. A lot of people used to say the reason people read the local paper is to find out how much their house is worth. (THEY LAUGH) Which is a joke.
PAUL STAINTON: Historically.
STEVE HEWLETT: And which of course may still be true. But if you’re really interested in how much your house is worth, there are websites out of number which will tell you in an instant flash. You don’t have to wait for the paper on Thursday. It’s there at the touch of a button.
PAUL STAINTON: Can you see an amalgamation of newspaper groups? Can you see some of these local papers disappearing, the Cambridge Times, the Ely Standard?
STEVE HEWLETT: There’s a chap called David Montgomery, who was once upon a time editor of the News of the World, ran the Mirror Group, and then went off to Germany to do various things. He’s back on the scene and has got Local World going, which is hoovering up large numbers of local papers and local paper groups. And you can see in the Archant press release they say the same thing. One way of cutting costs is to share more content between your local papers. So, in the case of this group, I think the idea is to share more content between the Ipswich Star, the East Anglian Daily Times, Norwich Evening News, Eastern Daily Press. The problem with that of course is that the one thing that the local newspapers have got going for them is that they are local. Nobody else really does this. In national newspapers, if you want to know what’s happened on a particular day, you can go online. You can look at free newspaper websites, or the truth is you can look at the BBC, which is online free at the point of use. Very difficult, you might think, for other people to make a business out of something that the BBC provides for nothing. But at the level of national and international news, if you want it, online is the place to go and get it. Why would you wait until tomorrow morning? Local news isn’t quite like that, because other people don’t do it. So the problem with one business response, which is to centralise and share more content and therefore reduce costs – the risk they run with that of course is that they kill the goose that laid the bronze egg, it’s no longer golden – which is that they’re very local now. This is completely out of my scope really, but I wonder .. the great thing that these local newspapers have got is they are local, and they have real local affinity, and real local identity. And what they’ve got to work out, easy to say and very hard to do, is how you make a business out of that local identity before the decline in the newspaper business destroys it.
PAUL STAINTON: And if you can work that out, you will be a rich man.
STEVE HEWLETT: If I could work that out, we wouldn’t be sitting here talking.
PAUL STAINTON: Exactly. Steve, lovely to talk to you. Very informative. Steve Hewlett, media commentator and presenter of the Media Show on Radio 4.