1 Thursday, 6 October 2011
2 (9.30 am)
3 (Proceedings delayed)
4 (9.36 am)
5 THE COMPETITIVE PRESSURES ON THE PRESS
6 AND THE IMPACT ON JOURNALISM
7 INTRODUCTION
8 LORD JUSTICE LEVERSON: Good morning. On 28 July, when
9 I first spoke publicly about this Inquiry, I explained
10 that I intended to hold a series of seminars so that
11 there could be a very early focus on the perspective of
12 all those involved.
13 I said that the seminars would include the practice
14 and pressures of journalism both from the broad sheet,
15 mid-market and tabloid perspectives, the ethics of
16 journalism and the issues of regulation.
17 I also made it clear that all these issues had to be
18 considered in the context of supporting the integrity,
19 freedom and independence of the press, while at the same
20 time ensuring the highest ethical and professional
21 standards. Plus the seminar this morning is entitled
22 "The competitive pressures on the press and the impact
23 on journalism", and the seminar this afternoon "The
24 rights and responsibilities of the press". For each,
25 there are speakers who will open up the issues from
1
1 different perspectives but then leave plenty of
2 opportunity for others to take part and I hope that
3 those in the audience will take part.
4 The purpose of the seminars is two-fold. First,
5 I am keen to ensure that, from the outset, the Inquiry
6 concentrates on the principal issues, and I hope that
7 this process will begin the process of distilling those
8 issues.
9 Those who have been called to provide evidence need
10 not be concerned about speaking today. I will not be
11 using the words used in this seminar or, indeed, in any
12 of the seminars, to examine their considered evidence at
13 any hearing of the Inquiry.
14 Second, and just as important, the seminars are
15 intended to start a debate, which I hope will not only
16 include those who have attended today, but extend to all
17 who are interested in the subject and who are prepared
18 to offer their views. This seminar and the further
19 seminar next week will be placed on the website for the
20 Inquiry, and we will also publish a summary. I invite
21 anyone, journalist, academic, member of the public, who
22 wishes to write to the Inquiry with evidence or opinion
23 as to the possible ways forward to do so. If I consider
24 it appropriate, I may then invite one or more to give
25 evidence.
2
1 I add only this: the seminars will form part of the
2 record of the Inquiry and formal evidence will be taken
3 on oath when we to move that stage. Because today is
4 only intended to set the scene, I shall not take part,
5 although I will listen with interest throughout.
6 It only remains for me to thank those who have
7 agreed to speak and also all of you who have attended
8 and will take part for agreeing to ventilate your views
9 in this public forum and so spark off the debate.
10 I hope everybody finds today of interest.
11 Thank you very much.
12 DAVID BELL: Thank you very much, Lord Justice Leveson, and
13 thank you very much to everybody. I don't think
14 a gathering like this has ever happened before and it's
15 very great to see such a broad range of people here and
16 we are very, very pleased.
17 I want to introduce myself very briefly. My name is
18 David Bell. I have an unusual background. I was
19 trained as a journalist on the Oxford Mail and worked
20 for quite a long time as a journalist on the FT, before
21 going to the commercial side of the paper eventually
22 ending up as Chief Executive and then Chairman.
23 Our details are all in the pieces of paper which
24 I think everybody has and with me are two of our other
25 assessors, Elinor Goodman and George Jones. I don't
3
1 think any of them need introduction to anybody and the
2 details are all on your pack, so I think that's really
3 great. They're going to take part with me in chairing
4 the discussion that we really want to have when the
5 three presentations are finished.
6 A little bit of housekeeping. As the judge said,
7 this whole event is being recorded and will be up on the
8 website as quickly as we can get it on to the website.
9 The broadcast networks will also have full access to
10 what is happening today and there will be a transcript
11 afterwards. We have coffee at 11 o'clock and we'll
12 finish this session of the seminar at 1 o'clock for
13 lunch.
14 As the judge said, what we really want to do is to
15 have a wide array of contributions to the topics that
16 we're going to be discussing. The more debate, the more
17 intervention the better because we want this to be as
18 broad and as representative as it possibly can be.
19 So this morning's session is on the competitive
20 pressures on the press and their impact on journalists.
21 We have three short presentations which are going to go
22 one after the other and then we're going to have time
23 then to pick up each of the issues that have been raised
24 separately thereafter.
25 So we are going to start with Claire Enders who, as
4
1 you will see from your pack, has a very wide experience
2 right across the whole media industry. Following her,
3 Phil Hall, who has a long and distinguished record as
4 editor in a variety of different places, then
5 Richard Peppiatt, who will be talking from the point of
6 view of a journalist at the sharp end, if you like.
7 Then, when they have finished, we are going to come
8 back to each of the subjects.
9 Before the coffee we will focus on the economic
10 pressures affecting all of us, then after the coffee the
11 perspective of editors and of individual journalists.
12 Just to repeat what the judge said, we are very,
13 very keen that anybody who feels they haven't had
14 a chance to contribute today or would like to say more
15 will write to us, there is a special part of the website
16 waiting for these submissions so that we get the fullest
17 possible contribution to the Inquiry.
18 Without any further ado, I would like to introduce
19 Claire to make the first presentation. Thank you.
20 Presentation by CLAIRE ENDERS
21 CLAIRE ENDERS: Good morning. I'm going to talk you today
22 about the competitive pressures of the press in relation
23 to the economics of the press. How are we doing? Okay.
24 I hope that's okay.
25 So first, my name is Claire Enders. I started
5
1 Enders Analysis in 1997 and this gives you some idea of
2 the subjects that we cover, essentially disruptive
3 effects of technology, and the entire media ecosystem in
4 the UK, including Internet models, print, radio, TV, pay
5 TV and search and a number of different network models,
6 particularly fix line and mobile.
7 Our work is supported by over 150 organisations
8 drawn from the financial sector, the Government, film
9 and television and, indeed, we have listed on the left
10 the companies in the press that support our work and
11 which is a pretty comprehensive list. Now, I'm going to
12 start with a view of the press in relation to other
13 sectors.
14 Sorry, what's going on? (Pause)
15 So you can see that both TV and the Internet have
16 grown well coming out of recession, that's not the case
17 for the press. As you can see, the turnover of the
18 press in 2010 was 8.2 billion, of which around 6 billion
19 was the regional and national press and all forms of the
20 press and the balance is magazines. To give you an idea
21 of the extraordinary profusion of the press experience,
22 around six and a half billion copies were sold or given
23 away last year -- this is free newspapers and paid for
24 newspapers -- and around a billion magazines, and so it
25 is actually extraordinary that this mass profusion of
6
1 products, which is read by so many people in this
2 country, is actually something that gives pleasure to so
3 many and is such a significant industry.
4 That is also true of the fact that, actually, there
5 is, in this country, a level of mediatisation, British
6 people, on average, consume more media than any other
7 people on the planet earth and, as a result, they are
8 served by a very wide diversity of opinions and sources
9 of news.
10 The fate of the newspapers in the digital age has
11 been a varied one. On this slide, what I've shown is,
12 really, the change in income from the hey-day of
13 newspapers, which is roughly 2005, we're not absolutely
14 the hey day, in terms of circulation, but certainly in
15 terms of financial performance, that was a very good
16 year and you can see that certain organisations have
17 really suffered much more than others as a result of the
18 digital transition, which I will cover in a following
19 slide.
20 You can see that, in particular, the regional
21 newspapers, Johnston Press, Trinity Mirror, Regional
22 Division and North Click and ^ News Quest (?), have
23 suffered from very, very significant falls in income,
24 essentially £1 billion of classified was removed from
25 the press industry from 2008 to the present and much of
7
1 that loss has been felt by the regional press.
2 In contrast, a number of the national newspapers
3 have done very well, despite circulation falls. There
4 has been a systematic increase in cover price, which
5 consumers have weathered very well, and when you see the
6 size of some of the newspapers, you can see that they
7 give a lot of value for money for their price.
8 In particular, I would point you to the FT group,
9 which is the great success story. Although, of course,
10 it is a global brand, FT group also comprises
11 50 per cent of the Economist group which has grown its
12 circulation very well, and the FT group operates
13 a payroll strategy so it is not, as it were, subject to
14 the fortunes of display advertising on-line, which is
15 an extraordinary phenomenon but one which the newspapers
16 have unfortunately not been able to take advantage of to
17 any considerable degree.
18 So the composition of revenue is actually different
19 according to whether the product is a quality national,
20 a regional or a popular national. So you can see that
21 copy sales revenue is extremely important in sustaining
22 the quality nationals and the popular nationals, but
23 display advertising and classified are the key areas for
24 regionals and this is why the reduction in classified
25 income has been such a factor of decline in the regional
8
1 press.
2 So the competition elements are much more acute
3 since the take-up of the Internet by British people, and
4 here on this slide you can see that I have actually set
5 out the decline of circulation in four main periods,
6 before Internet dial-up started, when the decline was
7 very gentle, to the period after dial-up launched and
8 before, actually "all you can eat" dial-up and then,
9 subsequently, broadband was introduced. You can see
10 that by 2005 the rate had accelerated a little bit but
11 since 2005 the rate of decline has accelerated markedly
12 and we are now in a further acceleration of decline,
13 because smart phones have taken off to such
14 a considerable degree that they are feeding a whole new
15 appetite for on-line media.
16 This slide will actually give you and the Panel more
17 details about the actual factors that have affected this
18 but we've already covered them in the slide. So the
19 (inaudible) compete for buyers through a high level of
20 (inaudible) differentiation, really.
21 What we did here is we just picked a Monday and
22 actually looked at each of the products within these
23 different silos, in order to assess, really, how the
24 content works. You can see that everybody is hitting
25 all of the main points and you could say, well, actually
9
1 sports news and entertainment and lifestyle is news and
2 that's actually true. I mean, the composition of the
3 news agenda, what we call hard news and soft news, is
4 something that everyone of the titles prosecutes
5 differently and it does so in competition with enormous
6 number of media.
7 This slide will actually show you that, on the left,
8 all UK adults spent about 7 per cent of their leisure
9 time reading print media, which includes magazines; and
10 they are also very systematic TV viewers, which is the
11 top medium; they also communicate with voice and SMS;
12 the Internet takes about 22 per cent of the average
13 leisure time of the Brit; radio 14 per cent; other
14 audio, music about 5 per cent.
15 When you come to young people, of course, you see
16 a very different picture. There, the TV is much less
17 significant but voice and SMS and the Internet, above
18 all, and the conversational elements of the Internet are
19 about around 30 per cent of leisure time.
20 So you can see that, actually, the picture of the
21 newspaper reader is a person aged 40 plus, who is
22 actually politically active and very engaged with other
23 media. The radio segment of all UK adults, that is
24 comprised of things like Radio 4, and so on, so there is
25 mass consumption of all kinds of different media in this
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1 country, which I hope will convince you that this
2 country is, in fact, the most mediatised nation.
3 But there are substantial shifts in the young and
4 that is fed by a very, very large consumption of news
5 and entertainment and other specialised sites on line.
6 As you can see here, we're looking at a situation
7 where the amount of time spent and the number of unique
8 users is simply just huge numbers, so I picked out the
9 blue circle, that is 39 million UK unique users visited
10 news and information sites in August and spent
11 an average of 2 minutes 20 seconds per day. In
12 contrast, someone who reads a newspaper will actually
13 read that newspaper for around 40 minutes a day.
14 So the absorption rate and the differential, in
15 terms of experiences, is very, very significant. People
16 who are reading newspapers are reading words, they are
17 not skimming, they're taking things in, and they also
18 use a plethora of other sites and everybody in this
19 country, pretty much, is actually engaged, at some
20 level, in one or other on-line phenomenon, whether its
21 search, or it's recruitment, or it's health, or -- the
22 XXX is pornography -- conversational, which is the
23 biggest segment, we've sized these two, the actual
24 experience of people on a daily basis, conversational
25 includes Facebook and all the other social networks.
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1 Search and entertainment are also very, very big of the
2 activity on-line.
3 So you can see that there is just a mass of highly
4 differentiated offers on-line which are competing with
5 traditional newspapers.
6 Now, the way that all media industries have
7 confronted the digital age is with an effort to
8 digitalise their offerings and to develop new business
9 models and here we are showing a version of the adage
10 coined in America, that analogue dollars become digital
11 pennies. Actually, this is not an example of pennies,
12 this is an example of relatively successful transitions
13 on-line for very high quality papers that people will
14 wish to subscribe to, because they are essential.
15 This is, in particular, the Wall Street Journal and
16 the FT, are key business publications worldwide, and
17 people subscribe to them on a global basis but, even so,
18 you look at the quality daily, the amount of revenue
19 that can be gained from copy sales and from advertising
20 revenue, from the Times of £462 per reader, compared to
21 the rather smaller £134 per reader of the Times on-line.
22 The FT on-line, which has a much higher revenue,
23 does so because it is a very selective and highly priced
24 audience and it is essentially rather small.
25 So what we see is that the paid for models have
12
1 really not been enough to save the industry from the
2 decline in its circulation.
3 The other websites, from newspapers and others,
4 compete for display advertising on-line which is the
5 blue line, which, as you can see, was around £1 billion
6 last year and which has grown at a steady rate and we
7 are forecasting to continue at a steady rate.
8 Now, Internet time is growing at an unbelievable
9 speed. To give you an example, in the last year the
10 amount of data on smart phones doubled, essentially, so
11 this is a massive increase in activity and also the
12 (inaudible) time on line is continuing to grow at
13 a very, very fast rate as the older population goes on
14 line.
15 What you see here is a situation in which the amount
16 of income that is available is actually dwarfed by the
17 number of mouths to feed. This is Facebook, this is all
18 the sites that you can think of, and, as a result, you
19 don't see newspapers, even the most successful ones,
20 like the Guardian on-line and the Mail on line, you
21 don't see that these phenomena are actually able to
22 survive on the basis of digital revenues alone. This
23 is -- the mass of time spent on line is actually not
24 monetising well.
25 So, in relation to the regionals, you have really
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1 quite a different picture there. You have a picture of
2 very substantial decline in advertising revenue and they
3 have been the ones that have been worst affected by the
4 pressures of the digital age and, actually, the popular
5 nationals have held up pretty well. So, actually, in
6 some, the economic pressures of the industry of the last
7 five years have really, primarily been felt by the
8 originals who have actually lost around 40 per cent of
9 their work forces in this time, compared to the
10 nationals that have actually lost only around
11 10 per cent.
12 So the final slide here is one in which I showed