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Paper profits and prophets

Douglas Fraser | 19:54 UK time, Wednesday, 13 May 2009

In the interests of balance, let's note that Glasgow's Weir Group had its annual general meeting today, and it's looking good.

First Group, based in Aberdeen, produced a healthier set of figures this morning than others in the transport sector.

But on the other side of the Scottish corporate balance sheet, the recession's toll on newspapers has pushed Johnston Press - Edinburgh-based owners of The Scotsman and Scotland on Sunday along with hundreds of local papers - back down into danger territory, with a 38% today, following a trading statement.

It reported that the company's intended sale of Irish titles has fallen through, with offer prices deemed inadequate.

That means Johnston Press can't meet its banking covenants, and is in "constructive" discussions about relaxing the bank conditions.The debt has fallen slightly, due to currency movements, but at £448m, that's a big covenant to be breaking.

Advertising revenue is down more than a third since the start of the year when compared with the same period last year. That may weigh heavily on the minds of bankers deciding whether to pull the plug on Johnston.

Circulation is also grim. As circulation drops, it requires the cover price to go up, and so the circulation drops some more.

With UK daily newspaper sales down 4% in a year, The Herald was down nearly 10% and is just above 60,000.

The Scotsman was down 8% and below 50,000. Scotland on Sunday was down 10% and below 62,000, with the Sunday Herald beaten only by the Independent titles in the pace of its decline - down 14% and just above 42,000 (the figures only cover 'national' titles. The Courier and Press & Journal have to wait for six-monthly publication).

All that provides the context for The Scotsman and Scotland on Sunday going down the same road as the Daily Record/Sunday Mail and The Herald/Sunday Herald, with editorial staff being merged and staffing cut - in the most recent, Edinburgh case, by around 25 posts.

And while the news about newsprint is particularly bad for Scotland, of course it takes place in the wider context of newspaper decline internationally.

Great American titles are closing or moving out of print. In Colorado, the Rocky Mountain News has gone, after 150 years.

The Chicago Tribune and The Los Angeles Times have sought protection from creditors by filing for Chapter 11 bankruptcy.

The Boston Globe came close to closure, until its labour unions agreed to big compromises. The Seattle Post-Intelligencer is now only available online.

With some arguing newspapers have special status as watchdogs of democracy (and that's before the Daily Telegraph's expenses revelations about Westminster), one suggestion from US Senator Ben Cardin is that newspapers should be supported with special non-profit status and charity tax breaks.

Some managements seem resigned to their fate. That doesn't include Rupert Murdoch, whose British stable - including The Times, The Sun, The Sunday Times, the News of the World - is part of an empire that extends to the Wall Street Journal, the New York Post and The Australian, quite apart from his extensive Sky and Star broadcasting interests.

He has just announced his plan to start making money out of the journalism on his websites, and doing so within a year, reckoning advertising revenue is insufficient to sustain his newspapers' business model.

Aged 78, Mr Murdoch hasn't lost his appetite for innovation, and whatever you think of his papers' journalism, his nous for the future of media is always worth taking seriously.

He's not alone, either. The Guardian and The Independent groups are thinking of taking the same direction. The Financial Times already does. The Scotsman and The Telegraph charge for some content.

But will it work in turning around newspapers' dizzying decline? It requires persuading people that content they've had for free in recent years will now meet a paywall. And in order to make that a sufficiently low hurdle, the prices will have to start low.

One key is getting the right software for micro-payments, charging tiny amounts per article or low rates per day, either counted down from an online credit account or simply added, at a click, to a payment card.

It is surprising, given the rate of innovation in online commerce, how slowly such micro-payment technology has developed.

The other factor may be that print remains attractive for some, such as commuters.

Not everyone will be attracted by reading articles on screen, whether mobile-phone sized or products, now coming on the market, that are the size of a rigid tabloid newspaper.

So why is it that printers are so stuck at A4 or its American equivalent? Given their cheapness, couldn't it become the norm to have a tabloid-sized printer at home?

Bundle up a compendium of articles from your favourite newspapers and websites, according to a pre-chosen news/features/sports formula of your choice.

These could slot into a shared template. You print it out and stuff it in your pocket on the way to catch the bus.

Maybe you have better ideas.

Comments

  • Comment number 1.

    Hi Douglas

    I will not pay to read articles online. Ever. ESPECIALLY when that online organ does not allow comments on the articles.

    Newspapers are more than just news. I used to buy the Herald and the Sunday Herald for the comment and opinion as well as the features and magazine supplements in the Saturday and Sunday editions.

    I stopped buying the Herald for the following reasons.

    1. It's stupid broadsheet size. It's just not practical anymore and should be available in compact format.

    2. It's very obvious Pro-Union, Pro-Labour, Anti-SNP political bias. It's just an insult.

    3. The poor and falling standard of journalism.

    No journalist seems willing to even take these issues on board as contributory to the decline of newspapers. I still occasionally buy the Sunday Herald, but it's not in good shape.

  • Comment number 2.

    I used to buy the Scotland on Sunday mainly for its business coverage. Sadly, the quality of the SoS generally has gone downhill and the Scotsman is really no better.

    As #1 says about the Herald both are intensely Pro-Union, Pro-Labour and anti progress.

    As a motorsport fan I also can't be bothered with page upon page about football. Not taking into account different sports demonstrates arrogance and a lack of intelligence....

    Remember Business AM ? Now that was a newspaper.... Wholly irreverant and not a sycophant in sight..

  • Comment number 3.

    I agree with most of what posts 1&2 say. When will the Herald move with the times and change size? When will both papers realise that only a fraction of its readers support the Old Firm and actually want better sports coverage? And whatever happened to inciteful analysis? However, where i disagree with posts 1&2 is the point about how the papers having a particular political leaning is a bad thing. This is a good thing, and most readers tend to be aware of what political slant any given paper takes. It is good to read things that you don't necessarily agree with, as it encourages greater thinking and an ability not to take things at face value.

    With newspapers having to compete with instant online and tv news, it is no longer enough for them to simply report a story that was broken some 20 hours previously: they need to be prepared to look a the 'bigger picture' (as much as i hate that phrase) and give readers a better understanding of the actual impact of a story.

    I am also highly dubious of the merits of charging for online content - unless all papers and news agencies worldwide start doing the same thing, it will be far too easy to find the news (albeit, perhaps, not local news) elsewhere for free.

    Also, what about the success of the free papers? Ok, most people read papers like the Metro simply because they are there, but when you can get the news for free on your commute to work, why pay for another paper?

    One final point. If newspapers do, indeed, die out, what will happen to investigative journalism? The type that can take many months of work and is part-and-parcel of any fully-fledged democracy. Without the sort of checks and balances that journalism can provide on our political class, we are in danger of entering a world where government can get away with what it wants

  • Comment number 4.

    Douglas, rather than googling the demise of newspaper titles in the US, why don't you pop up to Dundee and meet withh D C Thomson. Profits of £60m for the last year with no concerns over excess borrowings or lack of investment in titles. Shows how it should be done. They're the only likely buyer/owner of The Herald and Scotsman, so better get to know them.

  • Comment number 5.

    Why oh why did Freddie J and Tim B buy the Scotsman?
    Their local titles still have strong circulation despite falling revenues, their problem now is the mountain of debt they now find themselves with and no hope of repaying it....Tim jumped ship when he knew sinking was inevitable.

  • Comment number 6.

    Surely this is going to increase the demands for news.bbc.co.uk to be trimmed down or halted entirely - why will anyone pay extra to read cut-n-pasted news agency releases just because theres a "Sun" twist to the writing? I'm only going to pay for something that adds value, or, as I fear, I'm going to end up paying because the license-fee funded ³ÉÈË¿ìÊÖ will be prevented from providing its services as they "harm the free market for other news providers".

    I'm looking with dread at a world where I have to pay to fund a celebrity-gossip and football filled online paper just to read a few snippets of news.

  • Comment number 7.

    On your final point number 3 , there has been little of that in evidence and the decline of the " Scottish " press has much to do with its attitude.
    The Herald was once a balanced newspaper but has not been so from its takeover by SMG.
    It has delined even further with Newsquest .
    The Scotsman has become a rag, two once great newspapers with much to be proud of trodden into the dust.

  • Comment number 8.

    The old dead-tree Herald is a witless, lazily-assembled and craven mess, scarcely fit to line the bottom of a budgie's cage. Its on-line version is piteous, its bizarre denial of a readers'comments facility more suited to the nineteenth century than the twenty-first
    There's literally not a thing in either version worth reading (they used to have TV critic David Belcher who at least tried to be funny and distinctive, but since he left, nada)
    Dear Douglas F must be glad he jumped ship to his comfy berth at the Beeb when he did, even without a Newsquest redundo pay-off

  • Comment number 9.

    The Herald circulation for the month of April was 58,481 actually. However what is not mentioned is that the Daily Mail now outsells both The Herald and The Scotsman put together by over 10,000 and the gap is increasing.

    It is a sign of the times (excuse the pun) that The Sun, Daily Mail and Daily Star have all held up reasonably well in post devolved Scotland whereas The Herald, Daily Record, Scotland on Sunday etc are struggling both financially and circulation very badly.

    Perhaps in devolved Scotland people are casting there eyes wider.

    Ps Sunday Herald for April was 40,220. All official ABC figures.

  • Comment number 10.

    I have stopped buying newspapers.

    I used to buy the Scotsman, before Andrew Neil ensured that the editorial line denigrated everything distinctively Scottish.

    I used to buy the Herald, until it turned into an extended Labour Party pamphlet. I will not contribute money towards propoganda with which I disagree. (Ironically, Douglas Fraser was a prime exponent of this when he was at the Herald).

    I may start buying a paper, but only when there is one that presents a pluralist view of Scotland.

  • Comment number 11.

    The main reasons I no longer buy Scottish newspaper are:

    1. They are totally anti-SNP (with the expection of the Sunday Herald). I don't mind balanced reporting, but being the mouthpiece of the Labour Party is completely unacceptable. I'm not die-hard nationalist, but I take offence at some of the spin the publications put on their coverage of political events.

    2. Why should I bother with a hard copy when I have my Blackberry and laptop with me at all times?

  • Comment number 12.

    it would be quite quite easy to turn around newspaper circulation but only by the newspapers in question embracing the digital age and as other posters have said stop being so biased. What papers should be doing is going fully digital siting the paper online in a country where the lible laws dont apply and allowing full comment and even publishing by readers. That is the only way journalism will survive.

  • Comment number 13.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 14.

    Most posters above make the same point. All newspapers are in decline. But it seems almost wilfully perverse that the establishment of the Scottish parliament and the resulting change of focus in large areas of politics and current affairs from London to Scotland was accompanied by an apparently wilful and determined effort by the Scotsman and the Herald to alienate the readers who would most want to read such coverage - the coverage that surely ought to be the Scottish quality newspaper's USP.

    The Herald never used to be so painfully partisan; I eventually stopped buying it as its Labour-Unionist stance went beyond a joke. The Scotsman became almost unreadable several years before that. The last week is an exception, of course, as even the Herald has noticed there seem to be a few problems with the Labour establishment in London. (Who would have thought it?)

    I think for the Herald and Scotsman to stand any chance of long term survival they have to merge (yes, merge), get rid of the dead editorial wood, and start providing the non-partisan and distinctively Scottish current affairs coverage that the market is asking for (see almost all posts on this subject - these are the people who actually want to buy a Scottish quality newspaper but cannot find one worth buying...)

    Times have changed, and the Scottish press needs to change too. Their King Canute-style stance isn't working in either the political or the business sense.


    Not sure why this post was moderated out the first time but I have deleted an entirely inoffensive joke line that was the only thing I could imagine being the cause...

  • Comment number 15.

    Although the newspaper industry has brought many of its problems on itself with a myopic view of the Web and its impact on readership, it has to be said that I find it deeply ironic that a ³ÉÈË¿ìÊÖ blog should be giving them a kicking. Has it ever occurred to the ³ÉÈË¿ìÊÖ, the Government, or the general public that here in the UK we have a publicly subsidised media organisation which has massive ambitions beyond its conventional markets (i.e. radio and TV) and now offers free coverage of news via its well resourced website, provided by extremely well paid and pensioned journalists?

    We have a State-owned media organisation effectively using public subsidy to undermine an entire industry.

    What market failure does the ³ÉÈË¿ìÊÖ actually address as it seeks to kill the newspaper industry - and the independent radio and TV sector - by its actions?

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