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
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
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
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
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