MEDIA PERSPECTIVE: OFT’s ruling on The Times puts paper prices in spotlight

On a day when Jill Dando’s murder and President Clinton’s U-turn on ground troops in Kosovo dominated newspaper front pages, an Office of Fair Trading ruling on something that arguably ceased to be an issue 18 months ago hardly seemed like headline news.

On a day when Jill Dando’s murder and President Clinton’s U-turn on

ground troops in Kosovo dominated newspaper front pages, an Office of

Fair Trading ruling on something that arguably ceased to be an issue 18

months ago hardly seemed like headline news.



But then, this was news about newspapers and there’s nothing like an

opportunity for a bit of self-analysis or back-patting to get editors

clearing the decks to air their views.



So it was that The Independent’s Saturday edition carried the headline

’Defeat for Murdoch, victory for press freedom’ across the top of its

front page.



The issue under OFT investigation was price cutting in the national

newspaper market and News International’s pricing strategy for The Times

in particular.



Remember 1993 when Rupert Murdoch first slashed the price of The

Times?



Doom and gloom were forecast for The Independent, while The Telegraph’s

million-plus sales were also under attack. Rivals leapt in to accuse

Murdoch of predatory pricing, of deliberately making a loss on The Times

in a bid to damage other papers in the market.



While readers enjoyed sampling the low-price edition, critics said that

the Murdoch strategy threatened the very heart of the British press and

risked stripping the nation of one of the world’s most vibrant newspaper

industries.



Of course, this hasn’t actually happened. The Times saw its circulation

double, The Independent grew weaker (though the paper’s unfocused

editorial didn’t help), The Telegraph kept its head above the one

million mark and, after successive price-cutting strategies, the price

of The Times crept up to 30p at the beginning of 1998. It has stayed

there ever since.



Even so, rival papers will be relieved that the OFT has ruled that if

News International wishes to make any future price cuts, it must first

obtain OFT approval. It took four OFT inquiries into Murdoch’s strategy

before action was taken, but this is the first time such a ruling has

been imposed on any newspaper publisher.



Yet the OFT has stopped short of accusing Murdoch of predatory pricing;

it might be anti-competitive, but no rival has been put out of business,

so further sanctions were deemed unnecessary. If we had lost The

Independent, say, in the last six years, News International might have

faced stiffer curbs. It’s facile to point out that the OFT (whose

inquiry took 15 months to complete) was in danger of leaving it too

late, but it did.



Meanwhile, as sighs of relief echo all round, let’s not forget that The

Times now costs 30p. That’s 15p below what it was before price cutting

hit the UK market. News International promises no further cost cutting

’in the current trading conditions’. Those current trading conditions

include a year-on-year decline for The Times every month so far this

year.



claire.beale@haynet.com.



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