Close-Up: Live Issue - Associated and Telegraph name new management

Can Beatty and MacLennan turn the tide of competition for readers? As Murdoch MacLennan and Kevin Beatty start their roles as the managing directors of the Telegraph Group and Associated Newspapers respectively, they'll be comforted by the fact their titles have suffered less than others at the hands of an increasingly fickle newspaper-buying public.

But they'll also know that, more than ever before, complacency could be fatal.

Over the past few years, the newspaper industry has been turned upside down. Cursed with ageing readerships, both the tabloids and qualities struggle to hold on to their younger readers in the face of competition from myriad other media.

The internet, 24-hour news channels, radio, interactive TV and the success of the morning freesheet Metro have eaten into the readerships of almost every national daily. According to the latest ABC circulation figures for the year ending July, only the Daily Star and The Independent managed to increase their share.

Trinity Mirror's titles continue to haemorrhage readers, with News International's The Sun and the News of the World faring no better.

The star performer among the broadsheets is undoubtedly The Independent, which launched a tabloid edition last September and has seen its circulation soar. For the year ending July 2003, the paper's readership grew by just under 50,000 copies to 228,396, a rise of more than 27 per cent.

The Times followed suit, but reaped scant reward. Despite an expensive advertising blitz, the paper's circulation has grown a mere 2.46 per cent for the year to July.

The MindShare managing partner, Paul Thomas, has some sympathy for this predicament. "Dual publishing is a very expensive business," he says. "The Independent found it easy because its small circulation gives it a low cost base."

While circulations have undoubtedly suffered at the hands of more disposable media, some feel the publishers have brought the problems on themselves.

Starcom UK Group's chairman, Jim Marshall, feels that celebrity columnists and extra pages aren't enough to reverse the industry's decline. "Compared with other media, newspapers have done very little in terms of genuine innovation," he says.

However, the picture is slightly less bleak in terms of ad revenue. The immediacy of the medium still makes it a useful spanner in a media buyer's tool belt.

According to the Advertising Association, advertising expenditure for national newspapers dropped from £1.93 billion in 2002 to £1.9 bilion in 2003. However, this figure looks set to improve as key advertising markets such as cars and travel show signs of recovery, while the crucial retail display market holds firm.

MURDOCH MACLENNAN: TELEGRAPH GROUP

The calm but deadly executive may be a bit of a business cliche but, in the spittle-flecked world of newspaper publishing, serenity is something of a rare quality.

Murdoch MacLennan may have an unassuming manner but he's not the type to shirk a tough call. Which is just as well because, as he takes the chief executive's hot-seat at the Telegraph Group, MacLennan will face more than his fare share of awkward decisions.

MacLennan's appointment represents something of a coup for the Telegraph Group's reclusive new owners, the Barclay brothers. Having managed the Daily Mail Group since 1994, MacLennan can take a large amount of credit for both the main paper's success and the phenomenal launch of the daily freesheet Metro.

"I don't know anybody who knows more about newspapers than Murdoch," Jim Marshall, Starcom UK Group's chairman, says. "It's a phenomenal catch."

The former Telegraph Group chief executive Jeremy Deedes, who came out of retirement to keep the chief executive's seat warm during the group's sale, is particularly pleased with the appointment. Having praised MacLennan's knowledge and experience, Deedes adds: "He has the type of bedside manner that suits The Telegraph. He is not a ranter and raver."

Speculation persists that one of MacLennan's first tasks will be to shave the group's cost base, a move that is expected to manifest itself in job cuts, particularly at The Sunday Telegraph. According to his colleagues, MacLennan is up to this task. One Associated director comments: "He's incredibly well-respected, quiet, unassuming but he's also deadly. He's like a stonefish, sitting on the bottom looking up - if you tread on him, you go to hospital."

Another urgent task on MacLennan's to-do list will be to sort out the group's archaic printing system. Meanwhile, editorially, the challenges facing The Daily Telegraph and its sister Sunday title are the same today as they were 12 months ago - winning over younger readers without alienating their core, conservative audience.

Both MacLennan and his editors, Martin Newland and Dominic Lawson, may benefit from a change in proprietor. While Conrad Black had a history of intervening to ensure his papers didn't stray from his own right-wing ideology, the Barclay brothers prefer to leave editorial matters firmly in the hands of their senior management.

And will MacLennan find himself overseeing the launch of a tabloid version of The Telegraph? Having seen its rival The Times convert with only minimal reward, Deedes feels the matter is not as urgent as it once was. "I don't think the issue is hanging over us in quite the threatening way that perhaps it was six months ago, when we thought that if we didn't do it tomorrow, then we would be doomed," he says. "Sitting on the fence is not as uncomfortable a position as it might have been."

KEVIN BEATTY: ASSOCIATED NEWSPAPERS

Within days of Murdoch MacLennan's departure leaking out, Associated had replaced its managing director with Kevin Beatty.

In Beatty, the Daily Mail & General Trust has a man who knows its portfolio better than anyone. The managing director of Northcliffe Newspapers since 2001, Beatty has also been the managing director of The Mail on Sunday and the Evening Standard and was also involved in the launch of Metro.

Beatty's main rival for the job was the Daily Mail's long-standing managing director and Associated's newly appointed group commercial director, Guy Zitter. But while, to the outside world, it may have looked like a close-run thing, those within the organisation say there was only ever one man for the job.

"Beatty was MacLennan's protege," one source close to Associated says. "He was always being groomed for the job."

One Associated executive says: "What you need to remember is there is a real competitive culture here. The Mail and Mail on Sunday are never more pleased when they've scooped each other. It's a culture that works." He adds that as a Daily Mail veteran, Zitter would have brought too much baggage to a role that demands a degree of neutrality.

Zitter himself admits to only a slight disappointment at not getting the role. "I'm not sure I wouldn't have made the same decision," he says.

"Kevin is very experienced. He's a straightforward and nice guy. The fact he doesn't drink should mean he's not trustworthy, but I do trust him and I do like him and I think it's a much stronger team with both Kevin and me there."

Beatty and Zitter will now work together on improving the London performance of Associated's titles, which, like the rest of the sector, have been hit by the introduction of Associated's Metro.

Meanwhile, rescuing the struggling Evening Standard will be Beatty's immediate priority. The paper has cut costs by moving from five editions a day to three, but more needs to be done. And the spectre of Express Group's proposed evening London freesheet is always looming over Associated.

"As the new man, Beatty will want to make a success of the Standard as soon as possible," an Associated executive says. "There will be an increased amount of scrutiny on the title and I'm not sure how patient Beatty will be."

The situation could not be more different at the Mail. Thanks to an extremely stable customer base, the paper hasn't been hit quite as hard as its rivals by the sector's decline. And with The Sun struggling, the most optimistic analysts predict that if it continues to be managed well, the Mail could challenge The Sun's position as the most popular paper in Britain in the not-too-distant future.

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