REGIONAL PRESS: Regional Press advances on all media

Diversification was a key activity for the regional press last year. Stovin Hayter reports on a show of independent spirit

Diversification was a key activity for the regional press last year.

Stovin Hayter reports on a show of independent spirit



The regional press is celebrating a great victory. It has seen off the

Government’s attempt to restrict regional publishers’ freedom to buy

radio stations.



The original Broadcasting Bill, while relaxing some of the current

cross-media ownership rules, still severely restricted regional

newspapers’ freedom to control broadcast licences in the areas in which

they circulated newspapers. That has now been watered down to the point

where any publisher can own a station in the same area as long as it is

not the only commercial station in the area.



To which there might well be a chorus of ‘so what?’. Quite apart from

the fact that it demonstrates that the regional press does have

influence, even when it is not backed by the nationals, it shows that

the regional newspaper industry is not what it was, and it is probably

not what you think it is.



Not many newspapers currently own radio stations, although one

broadcaster - Scottish Radio Holdings - owns a newspaper group, so the

fight has largely been on a point of principle.



As Dugal Nisbet-Smith, director general of the Newspaper Society, the

body that has led the regional press’s lobbying effort, puts it: ‘The

effect of the bill as it originally stood would have been to hem in

regional newspapers on the eve of media convergence. It is desperately

important that they have the freedom to diversify into other media.’



In particular, the regionals feared the prospect of not being able to

fight back against national newspapers which might buy up radio stations

to go after regional or local advertising on their patches. But that may

well be the least of their worries in the next few years.



The entire industry, at least through its leading players, is being

repositioned and reinvented. The business is getting more diverse - and

not only eyeing up that thorn in their sides called radio. Midland

Independent Newspapers launched Birmingham Live this year as a local

component of the Mirror Group’s Live! TV, and others are likely to

follow suit. Midland Independent and a number of other groups also

publish magazines. Others are developing Internet and various electronic

services and products. Letterbox services, the door-to-door delivery of

unaddressed mail - leaflets, product samples and other material - is

controlled largely by the publishers of free newspapers.



It is a business worth pounds 300 million a year, and in 1994 around 5.5

billion items were delivered.



The Newspaper Society reckons that within four years, 30 per cent of the

turnover of the regional newspaper industry won’t be from newspapers but

from other media or other activities such as contract printing. They are

thinking in terms of controlling access to local markets, in whatever

media are available.



But this repositioning, and the technology to make it possible, is not

cheap. A number of the traditional leading players have decided to

pursue their growth elsewhere and get out of regional newspapers. But

far from being a blow to regional publishing, the departure of Thomson

Corporation and Reed Elsevier has boosted confidence and left those

regional newspaper businesses in the hands of specialists.



The departure of the two multinationals has been the most obvious

evidence in the past year of a consolidation in the regions. Thomson’s

English and Welsh papers were sold to Trinity International, and the

KKR-funded buyout of Reed regional newspapers formed Newsquest Media.

The other Thomson papers were divvied up between Northcliffe, which

bought the Aberdeen titles, and the Barclay brothers, who got the

Scotsman and Scotland on Sunday. The prices paid for Thomson titles

added up to pounds 376 million.



In the past six months Adscene has acquired the Tamworth Herald Group

for pounds 19.54 million, Johnston Press picked up W&J Linney’s

newspapers for pounds 20 million and this month’s planned acquisition of

Emap’s regional newspaper interests for pounds 205 million. Scottish

Radio Holdings bought Morton newspapers in Northern Ireland for pounds

11.2 million and Home Counties Newspapers paid pounds 7 million for

Herald Newspapers. There were others too. In all, the regional newspaper

industry has spent more than pounds 750 million buying and selling

itself in the past year.



Feeding frenzy would be too strong a term to describe what has happened,

but the dealmaking has not ended. Philip Graf, the chief executive of

Trinity International, who doubled the size of his company and took it

from being Britain’s sixth largest regional newspaper publisher to being

the biggest by circulation, says: ‘If you had asked people in the

industry or in the City 12 months ago whether we could have done what we

did, the answer would probably have been ‘no’. It has made a lot of

merchant banks see the opportunities in our industry and a lot of

managers of other regional groups say ‘if Trinity can do it, so can

we’.’



Nisbet-Smith agrees that the takeover activity is by no means over:

‘Regional newspaper chief executives seem to spend as much time with

their merchant bankers these days as in the office.’



According to research which the society commissioned from the Henley

Centre, the big players in regional newspapers will get bigger and the

small will continue to exploit profitable niches. But the middle ground

will disappear.



In pure financial terms, regional newspapers by and large fared a lot

better than the nationals last year. But profitability was in many cases

maintained by a cold wind of cost-cutting. Regional newspapers are a

mature industry, and in a rather dull economy, growth is more likely to

be from acquisition or diversification than organic.



That, together with eroding circulations and unpredictable newsprint

prices, added to the pressure for change. It means the consolidation

that is taking place is likely also to be seen in a growth in strategic

alliances between companies, especially by combining non-competitive

services such as accounts or distribution. There is now not only the

opportunity but also the willingness, and it may even happen in front-

line areas such as telesales. Trinity and Reed have already merged their

letterbox services.



Regional publishers are trying to make the medium easier to understand

and simpler and more cost-effective for agencies to buy. The society has

started by making more data available, free. Agencies no longer pay to

use the Newspaper Society database, and the next logical step will be to

make Jicreg, the industry equivalent of the NRS, free too.



After that will come a shake-up in the organisation of sales, with a

reduction in the number of selling points. That may take a while, but in

the meantime, look out for more standardised packages across regions

that will include the option of sales promotions, in-paper competitions,

sampling, POS at newsagents and letterbox distribution as well as

standard ROP advertising.



Don’t hold your breath for anything approaching ‘one order one bill’.

But remember: your friendly local paper wants to get friendlier and to

reach out and touch its customers - readers and advertisers - in more

ways than they would probably care to contemplate.



Stovin Hayter is the editor of Newspaper Focus



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