The Scotsman

Likewise, its rival, the Herald, had a weekday circulation of 121,297 in the six months between January and June 1992, whereas in ABC figures for the Herald (July 2001 to December 2001) that circulation is down to 92,615. Ten years ago the Daily Record was selling 753,689 copies a day; now it is selling 567,270 copies, including bulks. Strip out non-Scottish sales and bulks and that figure falls to 504, 817.

These figures show that circulation decline is endemic in Scotland, as it is throughout the whole UK, and not purely a problem being faced by the management at Barclay House. And whilst screeds of text could be written comparing which group is faring the worst at this time of economic decline, the point is that decline appears to be the only constant in Scotland’s indigenous national newspapers.

Of the comments made in the last issue, Walker, managing director at the Scotsman Publications, refutes claims that the Barclays have failed to invest adequately in the company and products, that they have lost interest and, with rumours of a sale constantly doing the rounds, have little enthusiasm left for Scotsman Publications.

So, let’s look at all the facts.

At a presentation shortly after the relaunch in 2000 Neil admitted that, should the Scotsman’s circulation have continued to decline at such a rate, it would not have been a commercially viable product in a few short years’ time. Therefore, the investment of £5m on the redesign, relaunch and price-cutting strategy for the 178-year-old broadsheet was a bid by the Barclays, Neil and Walker to save the newspaper from foundering. Circulation did rise sharply after the relaunch, sitting at more than 100,000 for around six months, but just over two years later the Scotsman’s circulation has fallen back to 73,831. Likewise, the circulation of Scotland on Sunday has fallen from an average weekly sale in excess of 116,000 in 2000 to just 72,135.

After such investment, why has this circulation decline happened; is the level of media attention given to the Scotsman out of proportion compared to losses in both circulation and staff at other newspaper groups and who or what is to blame for the falling sales?

“The £5m was invested wisely at the time,” says Walker. “We felt that the Scotsman was a newspaper that hadn’t changed for years. So, we did our research and made our best decision with the full backing of the editors at that time. The price cut was the most debated decision in the organisation. We were split because the traditionalists wouldn’t like it, but we had to get it into people’s hands and let them try it. The strategy had to be long-term. After eight weeks selling at 20p the figures were incredible. Advertising was still coming in at that time and we liked the numbers.

“But economic reality bit less than12 months later and we had to admit we couldn’t sustain the cut price if we wanted to keep all those people employed and still be able to produce a good product. We couldn’t keep giving money away. So we had to start eaking the price back up.

“The price of the Scotsman has now doubled in 18 months. Show me a product that such a price rise would not affect. There are so many factors that affect the sale of a newspaper; it is just too simplistic for people to claim that the political stance has changed, which I believe it has not; we have just become more analytically critical, which some people do not like. It is also too simplistic to claim that it’s got too many ads, it’s got too few ads, the price is right, the price is wrong, it’s Andrew Neil or it’s Steve Walker.”

Likewise with Scotland on Sunday. The price has, over the last year, been increased by 60 per cent, from 50p to 80p. The reason, Walker says, is to ensure that the company can continue to invest in new equipment and sustain its 860-strong workforce.

“Things have changed a lot in the last few years. People ask why Scotland on Sunday has fallen from 130,000 to 72,000. Well, for starters SoS only ever sold 130,000 twice. Its average sale a couple of years ago was about 116,000. At that time it was operating in a less crowded market with no real competition. Since then the Sunday Herald has launched and they have got a lot of advertising on TV, way more than anyone would suggest is appropriate for that title. We have had to deal with that.

“When the Sunday Times gives away the latest U2 CD on the back of its national sales we suffer from that. People have got to get their heads away from the impression that Scotsman Publications is some big multinational; we are not, we are a small independent Scottish publisher and we don’t have the money to spend putting CDs on our magazines.

“Another factor is that three years ago you could buy Scotland on Sunday, The Sunday Times and Sunday Herald for £1.50. Now that lot would cost you £2.70. There has been a big fall-off in dual purchase. There was big dual purchase between the Sunday Times and Scotland on Sunday. Now that has fallen off and that has affected us.”

Since acquiring the Scotsman Publications Ltd in 1995, the Barclays, according to Walker, have never been found wanting when it comes to investing to improve the titles and the company. Obviously, the biggest single investment by the Barclay brothers is the £21m building at Holyrood. Other investments over the last five years have seen more than £11.5m invested to introduce two new colour towers, heatset printers and inserting equipment to deliver full colour heatset capability to all publications. Investment in the products includes the launch of Scotland on Sunday’s Spectrum, Homes, Seven, Recruitment, Into Sport (which has since ceased being printed) and a Review section. Product development at the Scotsman has seen the paper increased by an average of 12 broadsheet pages daily since 1997, vast improvements to the Saturday magazine as well as the launch of S2, the Motors section, a separate Sports section on Mondays and Saturdays and the reintroduction of the separate business section.

Walker says: “I totally refute claims that we have not invested in this company. We have invested in people and we have paid out more money, not only to individuals, but to groups of individuals. Wage costs have gone up at the Scotsman by 37 per cent in the last three years and 33 per cent at Scotland on Sunday. Do we have as many people as we did last year? No, but who has? All newspapers are cutting their cloth accordingly. With the advertising market of 1999 and 2000 there is no question that I would rather sell 100,000 copies of the Scotsman at 20p than 72,000 at 40p. We would have stuck at 20p had the economics not changed so drastically. We took a big hit. That £5m came off our bottom line. When it began to eat even further into what we thought was a secure profit it was my job to say, hold it. It was my decision to bite the bullet and raise the price to avoid making massive staff cutbacks. We are now only 2p off what we were and in today’s climate we need every penny of that revenue. There is a price we pay for that rise and that is that fewer people are going to buy it.”

It has long been alleged that the Scotsman’s major Scottish rivals, the Herald and Sunday Herald, have benefited from increased TV advertising through its sister television stations, Scottish TV and Grampian TV. SMG bosses have long disputed this, but Walker maintains that it does give SMG’s titles an advantage when it comes to raising awareness and brand building. Walker is also big enough to contend that, were he in Des Hudson’s shoes, he too would draw from the all too obvious advantages of having a TV station as a sister company.

He says: “Our marketing spend in 1996 was £900,000. Marketing spend in 2001, the last full year, was more than £3m. Compared to our competitors, the Herald, the Guardian and The Times, the Scotsman hasn’t been marketed nearly as much as those products. Why? Because we simply can’t afford it at the moment. This year we will have spent around £700,000 tops. We can’t hit a plateau and simply put out two million 20p-off vouchers like the Daily Mail does. It is not economically viable at the moment.”

But, while not only The Drum has laid the blame at the door of Andrew Neil, is it justified to heap the blame for the Scotsman’s declining circulation solely upon the shoulders of Mr Neil? According to Walker, that too would be unjust and simplistic. I accept his point.

But since Neil’s arrival at the Scotsman Publications it has been roundly reported that he plays a big part in the running of the company from his offices in London and as publisher is ultimately answerable for the company’s fortunes. Therefore, the failure of the strategy to return the Scotsman to its former glories after an investment of £5m must rest on his shoulders.

Walker refutes this: “Unless you come and work with me for a month there is no way I can prove that this company is not controlled by Andrew Neil from London. All I can do is tell you. Ultimately, he has a say in what goes on here, but to say that Andrew micro-manages this company and makes every nit-picking decision is frankly not true. If it were, why would he be paying the management team up here?

“Andrew and the Barclays are more than capable of defending themselves, but their actions in the things they have done for the Scotsman Publications in Scotland speak louder than any words, but you have to step back and look for them. Andrew is a personality and people will always want to have a go at him. The perfect example was Newsnight. I didn’t see Andrew Flanagan on Newsnight, or Mark Hollinshead. Rupert Murdoch wasn’t dragged in to explain himself. Andrew is good news and people will watch him. It was an over-reaction. I completely accept that people get upset when they lose their jobs or when there is talk of it. It is tragic that we have had to let nine people go, but we are so behind the tack on this in editorial terms compared to other companies it is unreal.”

Last week’s nine editorial redundancies, and the subsequent merging of the Scotsman’s and Scotland on Sunday’s pictures, magazines and business departments, come after job cuts made last year when Scotsman.com was integrated with the newspaper products. At that time the new media team was cut significantly to three.

Job cuts have been rife elsewhere in newspapers. SMG made 95 redundancies, many related to its newspapers, and by 2003 Trinity Mirror will have cut up to 1,100 jobs across all its newspaper, regional newspaper and online interests. The Guardian Newspapers was forced to make 35 cuts by March 2002 across its Guardian, Observer and online divisions and in November 2001 News International announced it was to cut 130 jobs across all of its newspapers. Business a.m. too made 12 redundancies in November 2001 as the advertising downturn began to bite.

Walker says: “I am the managing director and I have to make difficult decisions. I’ll take the punches when they come and try and dodge as many as I can.”

So, in light of speaking with Walker, I concede that the Barclays have invested a sum upwards of £35m in the Scotsman Publications in the last five years and that their recent actions do not smack of a company stripping out its assets in readiness for a sale.

In conclusion, it seems that Andrew Neil will always be seen as a “hate figure” by many in the publishing industry and attention will inevitably focus upon him at times of great success or spectacular failure. Walker too believes this. He also believes the good times will never return to the level they were at in 1996 when a significant market increase was 10 per cent as opposed to the 2 or 3 per cent the industry is currently holding his breath for in 2004. Whatever happens, Walker says that the strategy instigated during those “revenue-rich” days is not over yet. “Not by a long way.”