Creative Industries

Lord Black of Brentwood Excerpts

Thursday 3rd November 2011 Lords Chamber

[Lord Black of Brentwood]

My Lords, it is a privilege to be able to follow the noble Viscount, Lord Colville of Culross, and to congratulate him on such an elegant, graceful and moving maiden speech. We have seen in his contribution today a glimpse of the wisdom, expertise and passion that he will bring to our proceedings. It is a particular delight to me that in the noble Viscount we have another colleague, along with many speaking today, with great expertise in the media.

As I am going to speak in a few moments about local newspapers, it was splendid to discover that the noble Viscount was once a reporter in the local press on those great publications the Ludlow Advertiser and the Worcester Evening News. From there he joined the BBC on “Newsnight”—a programme that has no doubt caused many a vexed moment for Members of this House, as he said—at the time of the fall of the Soviet Union. He stayed on that flagship programme for many years before branching out to make his own science and history documentaries for the BBC. One of them was called “The Incredible Journey”, a title that might reverberate with many noble Lords privileged enough to be here. The noble Viscount has an exceptional bank of learning and understanding on which we can draw, particularly in this vital area of the creative industries. We all look forward greatly to his part in our deliberations.

I want to speak about one of the jewels in the crown of the UK’s creative industries—the local and regional press. I declare an interest as director of the Telegraph Media Group, accordingly. The local press, comprising some 1,200 newspapers, employs more than 30,000 people, including 10,000 local journalists—more reporters on the ground than any other medium. It delivers reliable local news to 33 million newspaper readers a week, and 42 million online readers each month who consume local news from 1,600 websites.

Despite the difficult commercial background, local newspapers are doing their utmost to invest in new platforms and converged multimedia newsrooms and to utilise digital technology to find new ways to open up public bodies to the scrutiny that is vital to local democracy. That remains the most vital role of the local press: holding local politicians and public services to account and ensuring that the justice system is transparent. They provide in a fiercely independent fashion a watchdog role no other medium matches.

However, the local press is under serious commercial pressure. New revenue streams are not growing as fast as old ones decline. A punishing, prolonged structural downturn in advertising, with once lucrative classified ads migrating to the web, and significant rises in newsprint prices have produced a perfect storm of commercial challenges that is threatening the viability of many local titles. To survive this storm the local press needs to make significant investments in services and content, product quality, training and digital. For an industry in real difficulty that is a tall order, especially because the local press has such remarkably diverse ownership structures.

There are in fact 87 separate publishing group owners, many of them family businesses that may never be able to make the significant investment in new media that is essential for their future. On their own they are unable to capture economies of scale in management, distribution, printing and sales that would allow them radically to overhaul their businesses. Local publishing businesses must therefore consolidate to survive. If we value the local press, we are going to have to ensure that such consolidation can happen.

However, it is now clear, following what can only be described a dinosaur decision from the Office of Fair Trading last month that torpedoed the sale of Northcliffe Media’s Kent newspapers to the family-run KM Group, that local publishers are not being given such essential commercial freedom. KM Group is the sort of family business that needs to acquire other newspapers to ensure that it can invest in the future. To help it do so, it proposed to acquire just seven titles from Northcliffe. Ignoring the expert advice of Ofcom, which had rightly said that,

“a merger may provide … a sounder commercial base from which to address long-term structural change”,

the OFT decided, in a manner which the Independent rightly said made it,

“hard not to laugh out loud”,

that the deal must go to the Competition Commission. It said that such consolidation risked,

“costlier advertising for businesses and higher cover prices for readers”.

The OFT, which appears to be living in the last century, had failed to appreciate that digital media had fundamentally changed the way local business and advertising works and the way local people consume news. The result of this decision was that the proposal was withdrawn because the costs of a Competition Commission inquiry were too high to bear.

The same thing happened a few years ago when Trinity Mirror proposed to sell eight free weekly newspapers in Northampton and Peterborough to Johnson Press. A ruling from the competition authorities meant the sale had to be abandoned. The shocking fact is that seven of those eight titles have now closed. I very much fear that the same will happen to those seven Northcliffe titles in east Kent. The OFT is preventing the changes in the local newspaper industry that will allow it to survive, undermining local democracy in the process. Enough is enough.

I believe that the Government understand the issues here and are sympathetic. The relaxation of local cross-media controls has been an important step, but it means nothing without a more realistic approach to local media mergers and to the assessment of competition in local markets by the competition authorities. Swift reforms to the merger regime are needed if further deeply damaging decisions are to be avoided. They must ensure the OFT takes account of three factors: first, the changes that have taken place in the highly competitive local advertising markets as the result of the growth of digital media; secondly, the changes that have happened in the way people consume news, which means that it is now impossible to exercise a local news monopoly; and, thirdly, that the creation of publishing organisations with scale and the ability to invest is the only effective way to protect the viability of local titles and maintain plurality of voice.

We all want local papers to survive and flourish, for they are at the very heart of our creative industries at local level, but in order for that to happen it is no good just talking about it; we have to will the means, not just the ends. Change to the merger regime is essential. Let history not damn us with those dread words, “Too late”. Let us act instead to show that we understand the importance of our local press in the creative economy and in local democracy and set publishers free to renew their businesses for a new age.