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Crisis in the Scottish press industry

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By The Drum Team, Editorial

May 13, 2009 | 54 min read

Last week, the Scottish Affairs Committee at the House of Commons grilled five key figures in the Scottish newspaper industry, as part of an investigation into a ‘crisis’ within the nation's press. (Continued)

Q170 Pete Wishart: There are impressive international examples. Closer to home The Courier and the Press and Journal seem to be doing okay, thank you very much.

Mr Hollinshead: If you have evidence to suggest that they are out-performing the marketplace, I would like to see it, because they are not.

Q171 Pete Wishart: That is what they are telling us - that they are doing all right.

Mr Hollinshead: We deal in this business every hour of every day. We understand our circulation figures because we sold The Record in 6,450 outlets tomorrow (sic). At four o'clock today I will know how many we sold and I will know how many Press and Journals have sold and how many Couriers have sold. It is our key currency; we understand circulation, and if you would like us to supply the ABC figures for you and the long-term ABC trends we can demonstrate that the Sunday Post, The Courier and other titles are all in the same boat here.

Q172 Mr Devine: I am still one of these sad individuals who reads seven or eight papers every day, and I actually live in the village where Susan Boyle lives. What is striking about that, and it is a good example, it is just about the sensationalism. You get into almost cut-throat. I have to say, Tim, it is affecting your paper as well. Only last weekend your political journalist 'phoned me. I told him that his facts were wrong; I told him his figures were wrong and yet he still printed the story where the figures were absolute nonsense. You do get the impression, at the moment, we are easy targets, so we just sensationalise everything that MPs are doing - their expenses and allowances and everything else - and that is a concern with regards to the quality newspapers. We cannot get The Herald down here now. We can get the Daily Record, we can get The Scotsman, we can get The Courier and we can get other newspapers - we can get The Irish Times, we can get The Irish Independent - yet we cannot get The Herald. I just find that a major concern.

Mr Blott: You can get The Herald. In fact, all the Westminster MPs have been given access to the electronic version of The Herald. You can read The Herald every day; that was an offer that was made. I am not sure how many of you have actually taken it up.

Q173 Mr Devine: I was not aware of it.

Mr Blott: I will send you the details to ensure that you can get access to the electronic version.

Q174 Mr McGovern: Is it a complete newspaper or just various articles?

Mr Blott: It is a complete newspaper and it is an electronic version, and you will be able to read it as you would a paper version. The fact is it is uneconomic for us to be able to deliver papers down to London.

Q175 Mr McGovern: The Irish Times do. They can do it viably, somehow.

Mr Raeburn: The Irish Times is a trust.

Mr McGovern: I do not know the details.

Q176 Mr Davidson: Can we move on? We have covered quite a number of the questions already, but if we could touch on the question of new methods of journalism, you have already dealt a bit with the question of online newspapers and what their impact has been. The question of crowd sourcing gave us some pause for thought earlier on. We understand that Newsquest are moving down this direction. Maybe you can just clarify for us the extent to which that is just something that is being driven by the desire to do it on the cheap, and to what extent you are going to be prepared to sacrifice quality in order to find other sources of information.

Mr Blott: I would say that if crowd sourcing is being in touch with the public and encouraging the public to supply information, that is something that newspapers have been doing since the year dot. So I do not think we are doing anything different. What we have done is launch community websites alongside the Evening Times and, indeed, with our S1 business. So we do encourage people to provide information to us, but we have always encouraged people to provide information to us.

Q177 Mr Davidson: I looked at The Scotsman today before I came in, and I could see what were, quite clearly, a whole number of recycled press releases from outside organisations, without any interpretation being added to them, and the like. Are you just simply lifting what people are giving you and slotting it in, in which case, those commercial interests, for example, who have operations that are there to generate these stories are going to influence the agenda unduly? To what extent are they out there investigating things, digging things up and examining things?

Mr Blott: I think that the record of The Herald, in terms of investigating and campaigning, is actually improving substantially recently, as opposed to going the other way. Certainly, from a recycled press release, I know from my own journalistic days, dealing with press releases, challenging information is a basic tenet of what a journalist does. I think the only publications that I would be aware of that use press releases without even changing them tend to be the very low-cost free newspapers, rather than quality newspapers. I would like to remind the Committee that on this table we probably employ more journalists than any others in Scotland. So it is quality that matters to us as well as it will matter to the people on this Committee. We are absolutely committed to quality but, as Michael quite rightly pointed out, it is the quality that we can afford to deliver.

Q178 Mr Davidson: Can you understand our anxiety, at a time when you are telling us how, collectively, hard-pressed you are financially, that you are also introducing crowd sourcing - to use the term, I think, you yourselves use? It does look to us as if this is substituting journalists by unpaid ----

Mr Blott: I think you are quoting evidence from Paul Holleran, as opposed to what we have actually said. What I said was that we have launched a series of mini-community sites, allied to our evening newspaper, and to our S1 internet business. I have not used that term "crowd sourcing". I have said that we encourage people to provide us with information.

Mr Johnston: As the only publisher of weekly newspapers here, which are a very important and vibrant part of the Scottish publishing scene, we are no strangers to crowd sourcing; crowd sourcing is an American jargon expression for parish pump - for parish correspondents, for the letter of concern, for comment, and so forth. One of the great strengths of the internet, which I think you are highlighting, is that the internet allows even more participation and even more interactivity, and I see no harm in that. With regards to crowd sourcing, as you call it, or parish pump, as being the only thing you do and the basis of your newspapers, no, I think journalism will always be pre-eminent but, as Tim says, there is no harm in encouraging people to interact with your products. In fact, it has always been the measure of a successful weekly, or even daily, newspaper as to how many letters from local people there are and how strong the letters section is. With regard to your comment about recycled press releases in The Scotsman, I would very much like to hear from my editor about that because we do not recycle press releases in that term. Obviously, press releases are part of the news information scene, but The Scotsman has never, during my ten years, to my knowledge, published a recycled press release.

Mr McLellan: Rather than hearing from me, I would like to hear from you exactly which press release this was you are referring to.

Q179 Mr Davidson: I will take you downstairs immediately afterwards.

Mr McLellan: You do not have it to hand?

Q180 Mr Davidson: I do not have a copy The Scotsman with me but perhaps someone could run down and fetch a copy of The Scotsman.

Mr McLellan: Do you have a copy of the press release as well?

Q181 Mr Davidson: They do not send them to me. I can understand a press release when I read it.

Mr McLellan: So you did not see the press release?

Q182 Mr Davidson: Let us see if we can get a copy of The Scotsman.

Mr McLellan: And the press release as well, because you are making a very serious allegation about my journalists. So you have not seen the press release.

Q183 Mr Davidson: That is absolutely correct.

Mr McLellan: So you are making an unfounded allegation then.

Q184 Mr Davidson: Let us read them and we will see whether or not our audience thinks it is a press release or not.

Mr McLellan: Without seeing the press release?

Mr Davidson: Let us have a look at it and we will see. Could we move on to the question of democratic function?

Q185 Lindsay Roy: Previous witnesses have said to us that newspapers, obviously, play a key role in providing news coverage and critique of local government decisions and policy. Are you satisfied that that is adequately covered in the Scottish press - that there is a breadth of coverage - particularly, looking at things like local government?

Mr McLellan: We employ a large number of journalists who spend most of their time scrutinising what goes on in local government. We have an Evening News city council reporter, we have a transport correspondent, we have an environment correspondent and we have a health correspondent, and - to pick up some of the issues that we were talking about earlier - The Scotsman has the same. Then you take that down a level to weekly newspapers where there are journalists attending council meetings up and down the country on a daily basis.

Mr Blott: My answer would be, as a former reporter on local government, I would like to have more journalists covering and scrutinising affairs within local government. Albeit, I think, like John, we employ a number of people to do it, I would like to employ more, but it is, again, a question of what I can afford to employ.

Mr Johnston: Again, Mr Roy, as you know, we have five journalists in your constituency at the Glenrothes Gazette.

Q186 Lindsay Roy: I was coming to that.

Mr Johnston: A large part of what they do is to scrutinise what is happening within the local authorities, the council and all other bodies within the Glenrothes areas. Again, it does go back, even at the weekly level, to what Tim says with regards to what is affordable, but we are absolutely committed to the level of journalism and the number of journalists that we have.

Q187 Lindsay Roy: I was just going to come to that, because it seems to me, trying to look at this as objectively as I can, that the Glenrothes Gazette is actually an example of good practice; it seems to have stabilised its circulation - in fact, maybe increased it - and there is a greater market penetration. I wondered to what extent (I know it is a competitive business) there is that sharing of practice across the business. If there are examples of magazines or weekly newspapers that are increasing their circulation, what kind of analysis is there about why that is - assuming that goes on?

Mr Johnston: To use the example of the Glenrothes Gazette, a title which I know, obviously, very well, the current editor of the Glenrothes Gazette, cut her teeth at Edinburgh under John's tutorage, and her predecessor had been previously at the Bradford Telegraph and Argus, which is a title that Tim Blott knows very well; the previous editor moved on to work at our Dalkeith centre on the Midlothian Advertiser. We encourage our editors to meet on a quarterly basis to exchange good practice but it is much more often than that, if possible, and we have mentoring systems. I think the opportunity to learn and to cross-fertilise ideas with colleagues is very good and we, also, obviously, have a robust training programme, both for young trainee journalists but on up through to people looking to become editors or aspiring to news desk positions - positions on daily newspapers. Having journalists exposed to each other, I think, is incredibly important.

Mr Blott: Just on that analogy about how many journalists you employ, if we take it back to the competitive environment, as I have already said, the people around this table employ more people in Scotland; the Scottish editions of the UK national do not employ in proportion to their circulation. I do not know how many journalists work on the Scottish Sun, but I doubt that it would be anywhere near the numbers employed on the Daily Record.

Q188 Lindsay Roy: You spoke about creativity in terms of business and understanding, innovation and the way that you are looking at structural change. There is also a need to see what is happening in terms of innovation elsewhere to enhance that market penetration and to stabilise and enhance circulation.

Mr Hollinshead: I think we have all covered the theme today that unit content and great journalism is at the heart of our business, but we have to adapt and we have to innovate and, as Mr Wishart has pointed out, merge newspapers. I think there are some misconceptions in the marketplace about what that actually means, and I would like to, if I can, ask a question back, in terms of your definition of a merged newspaper as you understand it currently and then, perhaps, we can explain what that means. That is adapting your business model to make sure that you do have a healthy future moving forward.

Q189 Pete Wishart: It is not a mystery at all; it is exactly what you guys are doing, which is merging newspapers. The first example was The Herald titles where The Herald was merged with the Evening Times, which was merged with the Sunday Herald, and the same thing is happening in your titles, too. That is what we are referring to.

Mr Johnston: We are not actually merging titles.

Q190 Pete Wishart: It is all coming under one headquarters.

Mr Johnston: The Sunday Mail is not going to become the Sunday Record.

Q191 Pete Wishart: I totally understand and appreciate that, but it is the same journalists that are going to be providing the content for both the titles.

Mr Hollinshead: There are journalists who are uniquely attached to the (let us call it) DNA of the titles they work for. We have several great sports writer who work for the Sunday Mail, and they are unique to that paper; Gordon Waddell's column is in the Sunday Mail and is not going to be in the Daily Record; Billy Sloan is a great entertainments writer - he is the editor of that section - and he is identified with the Sunday Mail; he is not going to be in the Daily Record. When we talk about merger, we talk about the technology-led integration of the editorial production process; we do not talk about the unique aspects of the journalism which generates, in the instance of the Daily Record, 1.1 million readers every day and, for the Sunday Mail, 1.4 million readers in a typical week. We are not in the business of deteriorating the quality of our newspapers, but we have to exploit the technology change.

Q192 Pete Wishart: I am grateful for that, and that is reassuring, but I was not suggesting for a minute that the Sunday Mail was going to become the Sunday version of the Daily Record. I think what we are trying to explore here is whether this coming together of titles is going to impact on the quality of the journalism. I do not think I have had an answer to that, and questions have been put by the Chair and by myself about what impact this is going to have on quality journalism. You give the example of three journalists chasing the same story. Our concern is not about three journalists chasing the same story - I think the Chair said this - but if nobody turns up. What is the overall impact on the quality of these titles with the coming together (if you do not want to call it "merger") of those existing titles? Have you got any evidence about how this has worked before where titles have come together? Has it had an impact on the standard of the titles? What are your models? What is your understanding and what would your view be about bringing all these titles together?

Mr Hollinshead: Our business model is based on our ability to improve and make more efficient the editorial production process, which, over time, as economic conditions improve, will enable us to reinvest in frontline journalism. We employ over 200 journalists in Scotland. We cannot be everywhere at once; therefore (back to crowd sourcing), we have come round and round to the original business model: "stringers" in villages gave birth to the first newspapers that appeared on this planet. That is how it all started, but the new technology highway is facilitating that in a different manner. That is where we are at.

Q193 Pete Wishart: Could I ask a further question on the democratic side? I think all of us round here do appreciate the work that is done by local newspapers, and being professional advertisers has already been mentioned in this, but that newspaper sells loads and loads of copies and I am in it lots of times, so I am very, very happy about that. I want to congratulate you on something that you have done in the course of the last ten years, given this week we are celebrating ten years of the Scottish Parliament, and that is when you put together the Scottish press pack in Holyrood, I think you quickly identified that the centre of political attention was going to be in Edinburgh and not so much down here. I know that might have issues for some other colleagues round this table, but I recognise that you saw that very quickly and adapted very quickly to the coverage of the Scottish Parliament. I am not particularly happy with some of the coverage that we have seen of the Scottish Parliament, and I am particularly happy that the party of government in Scotland still has not one title that supports it. I cannot think of any other nation in the world where the party of government does not have a title that, at least, gives half support. I wonder if any of you have any issues with that, which is something sorely lacking in the heart of Scottish democracy.

Mr Johnston: I am struggling a bit on that because I am not quite sure what you define as a paper that supports ----

Q194 Pete Wishart: The Daily Record, for a start.

Mr Johnston: In my own papers, The Scotsman and the Scotland on Sunday both ran editorials ahead of the elections that you are referring to that did come to a statement about the party in government, but that does not mean we are not there to scrutinise and to challenge. At that point, I have to say, the Scotland on Sunday and The Scotsman both said, on balance, it probably was time in Scotland for the SNP to have a chance in the Scottish government. However, that being said, we have still remained true to our position as newspapers speaking up for Scotland in challenging what goes on in Westminster, referring to Scotland, and in the Scottish Parliament regarding Scotland.

Mr Hollinshead: We have to be alert to the changing political landscape. I will confirm the exact figure, if you so wish, but in the last election over 45 per cent of Daily Record readers voted for the SNP. So all is not as it seems, when you look purely at the historical positioning of the paper. Yes, you clearly understand the positioning of the Daily Record, but we have to have our finger on the pulse of the nation, and we adapt our position as times change. Of course we do.

Q195 Mr Davidson: Could I just follow up the point that Lindsay started about democracy and the extent to which you cover stuff? It is not just about local court cases, is it? It is not just about the council; it is also about the culture of the society, and particularly the Scottish titles. I have always thought, to some extent, The Scotsman existed to validate the lives of the Edinburgh bourgeoisie, in a sense, which reflects back to them. It was something that ought to be supported and defended, in my view. If you are losing out as a result of competition from English-based dailies, then, clearly, that element is being squeezed out because the lifestyle columns of the English-based dailies do not reflect the Scottish perspective, in the way that they would in The Herald or The Scotsman, to some extent, and The Record as well. We have concentrated pretty much here on news, as such, but there is also the cultural aspects of life, and I am not quite clear how you are likely to be affected in the new economic circumstances and the pressures on staffing, in that regard; whether or not some of these Scottish aspects of life will be seen as a luxury that cannot be afforded - in which case there will be no avenue for the nation to speak as a nation in cultural terms. Is this something that you are conscious of, aware of and are positively doing something about? Or is there a danger (as, probably, we would see it) that this is something that will be squeezed out, in a sense, and that it would be too easy to take stuff from other sources that are perhaps easier rather than being more original?

Mr Blott: Mark's point earlier, which I would echo, is that it is the uniqueness and distinctiveness of our titles that will make them successful, and the fact that they are Scottish titles, the fact that they should reflect Scottish culture, is absolutely vital for our success going forward, even more so in a very competitive environment where we do have the Scottish editions of UK nationals. It is absolutely crucial that we reflect Scottish culture.

Mr McLellan: I would echo that. It would be crazy of us to ignore what are our unique properties, and we have no intention of doing that, but I think the other side of it is that you cannot underestimate the power of this place - London - as a capital city and as a centre of British culture. The success of the Sun and the Daily Mail, in particular, shows that people in Scotland are, perhaps, not as insulated to wider cultural issues as might otherwise be the case. We hear constantly about The Irish Times and The Irish Independent; I think the distance between Scotland and London is far less than it is between Dublin and London, and the fact that the Scottish people are prepared to buy London titles, with all the faults and the lack of Scottishness that they have, shows that Scottish people are prepared to swallow that, and that is a challenge we have to face. The only way we can face it is by honing the things that only we can do well, and it would be madness for us to ignore that.

Q196 Mr Wallace: Following up on the "Scottishness" of it, before devolution your titles were the reliable daily source of more Scottish-focused news, because broadcast was predominantly British. It had a flavour but it did not have the local drive or influences as, perhaps, it does now. Post-devolution, where you have a Scottish BBC press corps in Holyrood, you have got a much more political path, much more sensitive to how broadcast is covering local issues in Scotland and debate around the Scottish Six, and all that sort of thing. However, some of your readership who just think: "If I want something Scottish I will buy the newspaper, Scottish title, because the broadcast will not give me enough" have now had that answered, because you have got Scottish Newsnight and independent radio as well filling out more Scottish colour in a different media.

Mr McLellan: Devolution, I think, is a bit of a red herring, because the media inroads were made by the Mail and the Sun long before devolution was on the cards. The Daily Mail, in particular, started their campaign in Scotland pre-1992.

Q197 Mr Wallace: Is that losing readers not to papers but to broadcasters?

Mr McLellan: Devolution will just send you up a blind alley; it is not about devolution, it is about newspapers identifying a market that they were not in. The one name no one has talked about this afternoon is the Scottish Daily Express which, at its peak in the 1960s, was selling over 600,000 copies. From the early-1970s until the Daily Mail came in, it left Scotland pretty much alone to indigenous titles, and it was only as the London papers woke up - not to any kind of changing political landscape but, simply, to the fact there was a market that they were not touching - that things began to change. The Mail was 20p for the best part of two years; it had an editorial budget of £7-8 million, I think (do not quote me on that, but it was certainly above £6 million) just to add on to what they were producing in London. That is a huge economic power to throw at the Scottish market, which paid dividends, but they had the power of the English advertising markets to fund that.

Q198 Mr Devine: Could somebody do that today?

Mr McLellan: I doubt very much whether anybody would put that level of investment into this marketplace now.

Mr Hollinshead: The barriers to entry are dramatically reduced. You do not have to buy a press plant any more, you can contract out; the technology enables you to operate a newspaper from anywhere in the world. So, yes, it could happen, but unlikely, but the barriers to entry have decreased significantly.

Mr Davidson: I wonder if we could move on to the section dealing with government action.

Mr McGovern: Despite my colleague Mr Wishart celebrating the tenth anniversary of the Scottish Parliament, I would prefer to celebrate the fourth anniversary of my election to this place, which was yesterday!

Mr Wallace: Do not hold your breath!

Q199 Mr McGovern: On the subject of the difference between the national press and the local press, obviously you are aware that we heard the evidence previously from the NUJ, and as a former shop steward (although you guys might be more familiar with the terminology "Father of the chapel") I hold the trade union evidence in great store, but they have said that the Scottish national newspapers are in a worse situation than that of the local newspapers. Do you feel that the UK Government is looking at this problem closely enough, and do you think you are getting a fair deal? Or is the Government focusing largely on local newspapers?

Mr Hollinshead: I think we need to raise the topic of the regulatory regime, in that currently major newspaper companies cannot merge because of the issues of intensity of competition at a local level, and issues related to plurality. That is an anachronism on the current media landscape. In a specific locale now you have the absurd position - I was down in Berkshire last year - where you could not have two newspapers reside side-by-side in contiguous geographies because the regulations indicated that that would decrease the levels of competition. Today, as we have clearly, hopefully, articulated, in a specific locale there are electronic directories on line, there are local directories, there is local radio, there is regionalised television, there are free newspapers, there are paid-for weeklies, Scottish editions of English newspapers all adding to media choice, and giving the advertiser, in particular, a broader opportunity. Currently, we believe, strongly, that those laws should be relaxed to enable us to look at the opportunities the broader landscape presents ourselves.

Q200 Mr Davidson: Could you clarify "to look at the opportunities that the broader landscape offers"? What do you mean by that? Presumably, you mean allowing you to buy something. What would that mean, say, in Scotland, in realistic terms? You have got a Sunday paper, and a daily paper. What else would you want to buy?

Mr Hollinshead: Hypothetically, put the issue of two local newspapers sitting in contiguous geographies. Currently, with the current regulatory regime, they cannot come together. We believe, with the internet, with local directories, competition has broadened since then. If those two newspapers could come together they could share backroom opportunities, in terms of information technology, HR, administration, credit control and finance, which would enable them to invest ----

Q201 Mr Davidson: I understand that, but you are assuming "contiguous" means that there is, as it were, an impervious barrier between the two and that there is no overlapping, and that they are entirely separate. I can understand the point about sharing resources where there is no, as it were, competition in those circumstances. However, presumably, the arguments about competition would be where there actually is an overlap, where there would be, in particular, two newspapers which, under your proposal, would become one, and that clearly would be a lack of competition.

Mr Hollinshead: In newspaper terms, but you need to overlay the other media opportunities which now present themselves to the commercial community. So a local motor dealer in a specific geography is probably already advertising in those two newspapers, but he has a multitude of further commercial opportunities from which to choose.

Q202 Mr Devine: Livingstone had the Livingstone Post and the Livingstone Herald and they merged, and we have now got the Herald and Post.

Mr Hollinshead: I do not know the exact history of that.

Q203 Mr Devine: You are saying, basically, they could not have ----

Mr Hollinshead: This is under two different owners. You do have some markets where you have one owner in one postcode and another in another postcode who, at this moment in time, with the current regulatory regime, cannot come together under the same common ownership.

Mr McLellan: I find it all rather ironic, really, given the experience that I had some six years ago, to find myself here today where we are talking about the Scottish press and talking about the competition, unfair or not, from the London nationals and how the London nationals are encroaching on the Scottish market. Six years ago there was an opportunity to create a strong Scottish publisher which was blocked, not for competition reasons but for political reasons. Despite assurances being given that the independence of two major, daily newspapers would be maintained, that was prevented. We could have had a strong Scottish publisher able to withstand the encroachment of, certainly, the likes of The Times, but it was deemed not to be acceptable at that time, and it did not go through.

Q204 Mr Davidson: Do you feel that this is being now looked at by the review that Andy Burnham is having on these things satisfactorily, and that the Scottish dimension is being taken into account, or do you think we have not moved forward at all? What is there that he should be picking up and considering making his recommendations in this regard?

Mr Blott: From my perspective, we welcome the opportunity to come here and to discuss the challenges that we face within the Scottish press industry. From the Andy Burnham inquiry, similarly, we welcome the interest from the UK Government and the recognition of the fact that both local and daily newspapers are facing significant challenges. We do not know until, really, the publication of the Digital Britain report as to what the outcomes from that process will be, albeit that when the guidelines were published for the Digital Britain report there was only a very small reference to the actual press industry as opposed to online, broadband or broadcasting. I think what we would want, as Mark has suggested, is a relaxation in the cross-media ownership rules. As John has suggested, there have been restrictions in the past on the press owning other media which are far more restrictive than, say, broadcast media owning the press, and we would want a level playing field. Also, as has been intimated, changing the rules on statutory notices will have a big impact on our revenue streams. Similarly, where government is spending on advertising - and we believe that it is proper value that they should spend that advertising revenue in our newspapers - those are three areas where we would urge this particular Committee to support the Scottish press industry.

Mr Hollinshead: We strongly believe that there should be relaxation in the regulatory regime, before there is nothing left to regulate.

Mr Raeburn: I think it is fair to say that Andy Burnham appears to be somewhat more sympathetic to the position of the press than is the case with the Scottish Government. The Scottish Government say they would like to see a strong, sustainable press, covering in depth national and local politics, but at the same time is in the process of denying our industry a substantial stream of revenue that is strongly supporting the Convention of Scottish Local Authorities (COSLA) in moving local authority recruitment advertising to an electronic portal. According to the Scottish Government's own figures for the 2005-06 financial year, local authority recruitment advertising was worth £13.5 million and across the whole of the public sector was worth £37 million. The trend is clear, I think, that the Scottish Government has intentions to encourage all public sector recruitment advertising to move in that direction. With public notices the First Minister made very clear when we met him what he intends for public notices, which are worth, across the public sector, another £10 million. You cannot take £13 million of local authority recruitment and another £10 of public advertising and, potentially, £47 million at 2006 prices, without damaging our newspaper titles. So any encouragement that you can direct in the way of the Scottish Government to give a fairness of treatment with what the Culture, Media & Sports Department are doing here, would be helpful.

Q205 Mr Wallace: I want to follow up on the regulatory regime. I recognise, John, you are probably referring to the Barclays Herald/Scotsman idea of a merger. I recognise the strength of that option and I remember being up in Scotland at the time it was all tied up: "Nasty Tory Barclays buying The Herald" and the journalists of The Herald did not want to be owned by right-wingers, and all that rubbish. The question was, instead of being blunt about taking apart the regulatory regime, whether it should be more sophisticated. You are perfectly able to have backroom functions merged, and put in Chinese rules. Chinese rules appear in all sorts of other industries, so you could maintain editorial, even employment, conditions and journalistic departments totally separate within a regulation but allow you to merge your backroom function. When colleagues get concerned about the merger of titles, it is where backroom is not clear from journalistic editorial; there is no clear blue water. Should we not be seeking a more sophisticated regulatory regime rather than a looser regulatory regime?

Mr Johnston: I think we would have to be very careful that what may, at first sight, be a move to a sophisticated regulatory regime does not turn out to be an over-complex and unenforceable or nonsensical blueprint for a regulatory regime. That is across the piece. The press companies are united in their view that the current regime is completely outdated and reflects a different time and does need overhaul, but I think it is important that the regime that comes out of it is one that leads to a stronger press and one that is capable of being managed and run in a coherent way.

Q206 Mr Wallace: There is an attitude that, with all due respect - I am a Lancashire MP - penalises Scotland because Scotland is a country as well as, in a sense, a region, when it comes to competition policy. On the one hand, Scotland gets penalised, whereas in Lancashire, you own Coast to Coast, the Johnston Press, in my parts, and you own the Blackpool Gazette, Yorkshire Post, Lancashire Evening Post - who was an editor for the Evening News, and an excellent editor - but because it is a region of England the competition regulations are not as tough, because they look at it as England and you are not really cornering the market in the same way. If you take it into Scotland, you get into Scotland being viewed as a country and, therefore, you are effectively blocking out the middle part. In one sense, the Johnston Press - not exploits it - gets away with it in England in a way that it probably would not do if it proposed the same thing in Scotland.

Mr McLellan: It depends if you are talking about a regional or a quasi-national title. That is where we fall into the national category, but we are, effectively, regional titles. If it was a question of whether or not either Newsquest or Johnston Press owned the Evening Times and the Evening News, I think you would find yourself in the same situation as with the Blackpool Gazette and the Lancashire Evening Post. However, when you talk about The Scotsman and The Herald it becomes much more complex.

Mr Hollinshead: We need an up-to-date definition of the market that is relevant to the 21st Century. That is the critical point here.

Q207 Mr Davidson: Given that this is being reviewed, at the moment, we are a bit hesitant about intervening directly in something that somebody else is already doing. Have you any reason to believe that your views are not being taken fully account of in the reviews that are under way into all of this?

Mr Johnston: With regards to the regulatory regime?

Q208 Mr Davidson: Yes.

Mr Johnston: One would hope that they are being listened to.

Q209 Mr Davidson: We would be a bit hesitant, as a Committee, about intervening in a review that somebody else is taking, unless we were strongly of the view that it was not, perhaps, being done properly. If, on the other hand, we feel that they are doing it properly we will maybe draw some things to their attention, but we would not kick up in the way that we might otherwise do. That is why I wanted to be clear about whether or not you felt you were getting, at the moment, a fair hearing, without prejudging the result, of course, because, presumably, you will not be happy unless you get the result you want.

Mr Johnston: I think we are coming on to other areas, because I am very aware that I jumped the gun a bit earlier on, where we have great concerns in Scotland; other areas that have been highlighted to do with public subsidy, and all those areas. With the regulatory regime, the indications, from what I have heard (and my colleagues may have different views), are that it is being looked at fairly robustly and there is a view - I do not know what is going to come out of it - that the current regime is not correct, not sustainable and reflects a world that has moved on.

Q210 Mr Davidson: You have submitted to that? You have expressed views on that and that is being dealt with, and you are not unhappy about that mechanism at the moment?

Mr Hollinshead: We have submitted our views.

Q211 Mr Davidson: Could I move on to this question of what you describe as the public subsidy, and just put it to Mr Raeburn: effectively, what you are saying is that it would be the job of local government and the Scottish Government to subsidise the press by using channels that are more expensive than those that they could otherwise use. As a council taxpayer, I can understand why, say, Glasgow City Council would want to advertise its jobs in the cheapest possible fashion - by its own website, or what-have-you. You, quite understandably, would rather they placed adverts in papers, which would subsidise yourselves. I am not quite clear about the justification for Glasgow ratepayers subsidising newspapers.

Mr Raeburn: I do not like the word "subsidising" because as an industry we have never asked for public subsidy, nor are we doing that just now. What we believe we are offering is the most cost-effective solution for recruitment advertising, and public notices. In addition to a printed newspaper, as Michael has indicated, we have a very substantial readership of the online edition of our newspapers - I think, across the Scottish titles, something like 5.2 million unique users per month - and the range of newspapers that we have from local newspapers to the regional and Scottish national titles is providing a cost-effective method of attracting the best quality and range of applicants than what you would get in having the narrowness of a local authority website, especially if you are wanting to attract high-calibre outside people. The argument on the public notices is even stronger because public information notices should be maximising the opportunities to reach the public. The argument about putting it on a website, the democratic argument is extremely weak. If we take Ofcom's Nations and Regions report from last year, it showed the take-up of broadband in parts of Scotland is quite low. In Glasgow, Scotland's biggest city, the take-up of broadband is 32 per cent. Compare that against the household penetration of newspapers. It is that kind of situation that demonstrates the cost-effectiveness. If you want a cheaper solution, yes, put it on the website, but is the cheapest solution the right one? The measure should be the cost-effectiveness, and I believe through the newspapers we offer that.

Mr Johnston: The other issue that we have with the portal that we are discussing - the Scottish jobs portal - is, first of all, it has been set up with significant public investment, but the second thing is, is it achieving, what it was supposed to achieve? I think the issue is we believe we offer good solutions, cost-effective solutions that allow local authorities to advertise for staff across the marketplace. They have been cajoled into using this site, and the result is that they are just churning and people are moving internally within the public sector. That was not the intention that was sold for this project in the first place, which was to bring fresh talent into the Scottish public sector and to raise the profile of the public sector as an employer of choice.

Q212 Mr Davidson: Can I just clarify that? When you said "cajoled" - by whom are they being cajoled?

Mr Johnston: John Sweeney told them in a written answer that he would say that if they were looking to make savings this is one of the first places they should look.

Q213 Mr Davidson: Separating the question of jobs from public notices, for a moment, I think, Mr Blott, you were discussing earlier on how the profitability of your own internet sites was based, partly, on jobs. Presumably, if the public sector can do the same thing more cheaply, then to do anything other than that, effectively, is then a subsidy to yourself. I understand your unhappiness about the use of the term "subsidy" - farmers always hate it, even though it is exactly what they get, and nobody likes to accept that they are actually in receipt of a subsidy - but the special pleading that you are putting forward for the job seems to me to be much weaker than the argument about public notices.

Mr Blott: Perhaps I could explain. Actually, it was the Labour administration which set up the jobs portal project, and what they did, which made an awful lot of sense, was to provide software which provided a back-office HR function across all of the public sector. It was not an advertising medium, it was never set up to be an advertising medium, and, indeed, even the people who eventually won the tender would not say that that was an advertising product; it was specifically set up as an HR product. It has subsequently been used as a means to try to reduce public spending on recruitment, but specialised recruitment sites, particularly within the public sector, do not necessarily generate response. So if you advertise a job on the internet you may get hundreds of thousands of applications; what you then need to do is to try and sift those applications down to what you need. On this particular site, unless you were looking for a public sector job, then you actually limit the field of applicants. What newspapers do and what our websites do is provide a causal and general population who will look at that sort of opportunity; so they are not people who work within, necessarily, the public sector. It limits the choice.

Q214 Mr Davidson: I do understand that, being involved in a local economic development company which provides a whole number of services to jobseekers who would assist them to access a variety of specialist sites. I am not sure that this is something that is not best left to the organisations themselves and that we should not necessarily recommend the subsidy on. Where I think you are on much stronger ground is the question of public notices where, certainly in a constituency like mine, the take-up and access to the internet is much, much lower than elsewhere, and it is part of a democratic society. I think that is something that we would want to reflect on in our report.

Mr Blott: Where you quoted, perhaps, Glasgow as an example, the Glasgow local authority do not want to use the local portal site and they are being told that they should. They believe that they would be better off getting a good quality response by advertising with local newspapers.

Q215 Mr Davidson: So they are being bullied by the Scottish Government into taking this course of action?

Mr Blott: Yes. As are a number of other public sector organisations who are being told, as Michael suggested: "You need to save money; one way of saving money is to put all your jobs on this public sector recruitment portal and not in local newspapers".

Mr Davidson: I think we are clear about the nature of the issue there, and we will reflect upon that for your report.

Q216 Mr Wallace: I just think there is a difference between the public notices; it is not the same as the job portal. There is an irony here, I have to say. A number of your titles campaigned for years against wealth creators and capitalists and everything else, and now you are entirely dependent on public sector job advertising. If you had actually embraced wealth-creation in Scotland there would be many more private jobs. The Herald and The Record banged on for years about the evils (I did not bring in The Scotsman on that one, I have to tell you) and now you are dependent on the public sector and you are coming crying to mother. I am sorry, on the jobs front, if we can open Scottish newspapers and there are lots of private jobs being advertised there, in the private sector, maybe we would not be in such a position, but we are not. You have to bear some of that responsibility.

Mr Blott: Our volume of public versus private sector has changed according to the recession, but we were more private-sector dominated in terms of our recruitment volumes than public sector. It is merely the recession that has changed it.

Mr Wallace: The proportion of jobs advertised in the public sector in Scotland is far higher than the rest of the United Kingdom.

Q217 Mr Davidson: That was just to confirm that Thatcherism is alive and well! Could I just pick up on a point that Jim was going to ask before he had to leave? Recent reports have indicated that the Government is disinclined to give direct subsidy of any sort to the press. However, it might favour the BBC offering support in the form of shared resources. Is that something with which you would have any truck or which would seem to you to have any potential? Or is this just somebody flying a kite?

Mr Johnston: I think it fails to grasp the problem, to be perfectly honest, because what we are saying, it seems to me, is that the BBC gets the money and then we would get some content from them. The issue here is the BBC employs very few journalists in the field and we employ lots, so surely the other way round would be some sort of agreement the other way, I would have suggested. That has not been floated, but my organisation has something approaching 50 journalists in Fife (I do not know how many the BBC has, but I suspect it is perhaps two or three).

Q218 Mr Devine: In Scotland?

Mr Johnston: In Fife.

Mr McLellan: I think there is a danger it is a Trojan Horse and that the BBC establishes more local services and then continues to justify its presence and its expansion on the basis that it is serving local newspapers, and all that happens is you have the BBC getting bigger and bigger and bigger. So, whilst the principle of partnership is not something that should be dismissed at all, and we will have to look at partnerships in lots of different ways as we move on, anything that involves the BBC justifying getting more public money, I think, has to be treated with a great deal of caution.

Mr Raeburn: On that issue of subsidy, there are clear signals that Ofcom want to subsidise regional television news including Scottish television, and it does concern us that there is one part of the media getting the prospect of favourable treatment and assisting it, possibly, with its own website recruitment and providing unfair competition against the press.

Mr Davidson: Two things: I did get somebody to go and get me a copy of The Scotsman, and in the first six pages I have identified three articles that I think are press releases. I am quite happy to debate that with you afterwards. I particularly like the one: "Woolwich in mortgage move", which gives a full list of their latest offerings with no byline. That will come down to you. The final point we would want to ask you is whether or not there are any final comments that you want to make or, upon reflection, whether or not there is anything you would want to give us in writing before we draw up our report. Lindsay, you have another point?

Q219 Lindsay Roy: Rightly and understandably, you have indicated that part of your core function is to make a profit. Also, though, you have spoken about quality, and I think these two are, obviously, interlinked. Quality can mean you are meeting customer needs for people buying the papers or the services that you provide, but quality can also mean the standard. Have you got any indications of where we are in terms of standards of journalism? Are you happy that there has been consistency? Do you feel there has been an improvement? Or do you feel there has a decline?

Mr Hollinshead: As we said right at the start, quality and unique content is at the heart of our business, and we employ many, many industrious, creative journalists who are recognised as the best in the business. British journalism abroad - there are more Scottish and English editors working in foreign newspapers than you probably thought. We are not in the business of deteriorating the quality; we are in the business of looking forward and adapting our business to make sure that we can retain that quality and develop that quality.

Q220 Lindsay Roy: I accept that entirely. The thrust of my question, really, was: what kind of indications are you getting back that give you a notion of where you are in relation to a quality kitemark? Are people saying that the quality of journalism is improving? Is it consistent? It may be consistent at a very high standard or not. What is the feel that you have, as editors and as journalists?

Mr Hollinshead: The readers vote every day. That is the measurement of quality: the readers vote every day. Mr Devine talked about the Susan Boyle story, which came out of the West Lothian Courier. That is picked up because we had a local journalist on the patch who found that video, put it on to the internet and it was a worldwide phenomenon. That was a Daily Record quality scoop. We had the first interview with the honeymooners back from Mexico. That is quality journalism; that is investigative journalism - finding out where they are, who they are and where they live. However, every day, the key measurement of quality is what the reader thinks and how they pay for the newspaper.

Mr McLellan: I think Mark is absolutely right. Quality is a very difficult thing to define. It depends which bit of the marketplace you are talking about. If I put my Press Complaints Commission hat on, as far as I can see, the quality of journalism is as high now as it has ever been, if not higher, and the way in which we regulate our industry has never been more rigorous.

Lindsay Roy: That is one good indicator.

Q221 Mr Walker: The people who had flu from Mexico. How much did you pay them? Did you pay them anything to get the story?

Mr Hollinshead: There would have been a payment, yes.

Q222 Mr Walker: How is that quality journalism? That is not research. It is like the guys with the biggest chequebooks getting the story.

Mr Hollinshead: The original story, in terms of identifying who they were, where they were and where they lived was not paid for, no.

Q223 Mr Walker: So you identified them. They did not have a publicist calling you up?

Mr Hollinshead: They had a publicist after the event, yes.

Q224 Mr Walker: I think it is so sad, to be honest, what you now regard as quality journalism. I think it is so sad that you genuinely think that is quality journalism. Do you have any higher aspiration than that? It is terrible. I think you have summed up what is wrong with the media, if that is what you cite to this Committee as quality journalism. It is really bad news.

Mr McLellan: This issue of payment has just been debated at great length by the Press Complaints Commission. By denigrating the payment to individuals for stories in newspapers you are not actually attacking the newspapers, you are attacking the people that sell their stories. So your comment is more directed against everybody out there who has a ----

Q225 Mr Walker: You have created the market.

Mr McLellan: The market is there because people have things to sell. Markets have two sides: sellers and buyers.

Q226 Mr Walker: If a dime of taxpayers' money went to support you lot, it would be 10p too much.

Mr McLellan: We do not pay a penny for stories; we operate in a different marketplace, but there is competition for stories. People want to make money and people want to read their stories. If they did not the papers would not get sold.

Mr Johnston: Could I just say one final thing, because this is pretty pertinent. We have obviously focused in on one issue here, but please, for God's sake, do not forget the weekly press and the other daily titles. The Scottish newspaper industry is much bigger than just the Daily Record and one particular story. I hear from Mr Walker a view on the entire Scottish media based on ----

Q227 Mr Walker: It is a general view about media; you just happen to be here. Like you say: we get everything we deserve; perhaps you get everything you deserve.

Mr Johnston: Does the Glenrothes Gazette really deserve to be talked about on that basis ---

Q228 Mr Walker: I am not talking about the Glenrothes Gazette. You are.

Mr Johnston: It is one we talked about earlier.

Q229 Lindsay Roy: I would be happy to talk about it and acknowledge the success it has achieved.

Mr Johnston: The Glenrothes Gazette faces exactly the same problems as everybody else; the same problems from government intervention; the same problems regarding structural change in the market; the same problems with the economy; the same problem with jobs, public notices and what is going to happen about whether ITV3 and STV will be subsidised to produce the news. All these things will impact on the Glenrothes Gazette equally as the Daily Record.

Q230 Mr Davidson: Are there any final points? I know, Mr Johnston, you had an agenda of items. I think we have pretty well covered all of them.

Mr Johnston: You have, thank you very much.

Q231 Mr Davidson: Thank you. We try our best. Are there any other points that anyone wants to raise or are there any points on which you would wish to submit additional information to us in writing?

Mr Raeburn: I may well put in a written submission after we have had our council meeting next week.

Q232 Mr Davidson: We will not be producing - I think I can safely say - our report before then! Did somebody have a final point?

Mr McLellan: Yes. I want to respond to the points that you made, because I do not think it would be fair for it to go unanswered. In a spread about general improving conditions out in the broad, economic situation, we have carried some information about good deals coming from a large mortgage lender. The story is not a press release that has been shoved straight into the paper; it is part of a general package of good news about things happening out there in the housing market. For you to say that that is a press release just shoved in the newspaper is arrant nonsense, and I think you owe The Scotsman an apology.

Q233 Mr Davidson: Maybe you could just clarify for me exactly in the context of everything else on that page whether or not it has got anything at all to do with it; the fact that it is not bylined; the fact that it is quite clearly a "puff" for the Woolwich ----

Mr McLellan: It is a story.

Q234 Mr Davidson: ---- and on the page before that and the page before that, as well, there are also two, what appear very much to be, press releases of events that have been happening in the Scottish Parliament - neither of which has got any editorial comment whatsoever - which vindicate my view that The Scotsman, regrettably, is tending to just regurgitate other people's press releases.

Mr McLellan: So we put in some information of interest to people to broaden the coverage of the paper, and because it is not a Sunday Times insight investigation it has no place in the paper? I cannot begin to argue that point because it is ridiculous.

Q235 Mr Davidson: Indeed. That is my view as well: I do not think that could be argued.

Mr Hollinshead: Minor issues apart, in terms of press releases or not, I think we just need to conclude on the broad strategic background. We are experiencing unprecedented economic conditions which are affecting the Scottish press and the media community as a whole. In parallel, we have seen major structural change in consumer behaviour, driven by technology and the internet, and to make one major point: let us modernise our thinking on the regulatory regime and identify the new marketplace and really, really understand competition at a local level is more than two weekly newspapers sitting next to each other.

Mr Davidson: We are having this hearing because we recognise the important role that the press plays in the life of Scotland, not only politically, culturally and economically; we recognise you are in difficult times and we are looking for ways in which we believe government can be helpful without simply shovelling money at the problem. Hopefully, our report will reflect that. Thank you very much for coming.

Mr Wallace: You referred to a press release in there - one of the other ones. I have just checked the Scottish Government website, the Scottish military chief's story is not the same as the press release issued by the Scottish Government.

Mr Davidson: How is it different?

Mr Wallace: It is constructed differently and it does not carry the quotes of the First Minister. The only words in common are the names of the Admirals attending and the word "unprecedented".

Mr Davidson: Indeed. Thank you. So it is not like the press release at all you are saying? Thank you very much.

(Neither witnesses nor committee members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.)

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