SCOTLAND: A NORDIC INVASION - Scotland's newspapers face a threat from a Scandinavian publisher

Scottish newspapers are used to fighting off invaders. Like a scene from Braveheart, Scotland's press has been battling with barbarians from the south for years. However, perhaps too preoccupied in their struggle against the old enemy, the Scots have been outflanked by an assault from the north.

Scottish newspapers are used to fighting off invaders. Like a scene from Braveheart, Scotland's press has been battling with barbarians from the south for years. However, perhaps too preoccupied in their struggle against the old enemy, the Scots have been outflanked by an assault from the north.

The Swedish publishing group Bonnier's launch of Business AM in September was the first new Scottish paper for 100 years. It is also the UK's first dedicated business tabloid. Actually, tabloid is a bit misleading, as Business AM is larger than a red-top and smaller than a broadsheet. Its 50-odd pages provide, the sales pitch says, an 'essential 20-minute read for all business people'.

Although it seemed like there was no room for another paper, Scotland was an obvious target for the Swedish group, which has successfully launched business papers in nine other European countries. With a dynamic business sector, made confident by devolution, Bonnier decided Scotland was ripe for the picking.

Jim Chisholm, the managing director of Bonnier Media, says: 'Everyone says Scotland is an incredibly competitive newspaper market, but it's not. All told, there are 21 daily papers in Scotland, but, per capita, that's not many. There are 100 in Sweden and 95 in Switzerland. Also, Scotland is the only country in Europe without its own business paper - most nations have two or four.' He adds that the UK newspaper market as a whole has room for expansion through niche titles. 'British publishers are stuck in a mindset that papers have to be big to succeed. It is a market characterised by volume, not by variety.'

Although some observers predict the paper will struggle to fill its pages with scintillating Scots business stories every day, Business AM says there is plenty for it to feed on. Positioning itself as a truly national paper, it says it aims to broaden its view beyond the business centres of Glasgow and Edinburgh. Although The Scotsman and The Herald claim to do this already, Chisholm says that they don't do so in the depth and breadth required by Scotland's diverse business community. 'There is a lot of business in Scotland that demands attention, but doesn't get it, especially in Aberdeen and the Highlands.'

Predictably, the launch of Business AM caused quite a stir, especially at The Scotsman, which lost six of its best journalists to the new title.

Never one to keep a lid on it, The Scotsman's publisher, Andrew Neil, launched a series of broadsides against the paper, vigorously predicting its demise whenever given half a chance. The Herald and other big titles, such as the Aberdeen Press and Journal, have been less vocal.

As Chisholm says: 'They are expending their energies in a professional way - fighting us for stories and advertising.'

Apart from the hurt pride of losing staff, it's hard to see what The Scotsman is so worried about. Business AM says it is a niche publication and claims not to be trying to elbow anyone off their patch. It also has modest ambitions, aiming for a 30,000 circulation in five years. Its target in its first year is to equal the Financial Times' Scottish circulation of 11,500.

Further underlining Business AM's niche status is that it intends to build the bulk of its circulation - and much of its revenue - on subscriptions.

Again, this is a formula that Bonnier has successfully applied in other European markets, aiming to have their papers delivered to people's desks before they start work. It already has a 30-strong call centre working on building its subs base. Chisholm says the paper's circulation stands at 10,000, 30 per cent of which is newsstand sales. The rest is what he calls 'direct distribution' (although he won't say how much of this is paid subscription).

Although Bonnier has made subscriptions work in other markets, its rivals are wondering if it can repeat the feat in Scotland. The vagaries of our postal service may mean that businessmen have read all the news they need by the time that Business AM lands on their desk. There is also doubt about how many people will be willing to commit to a pounds 130 per year subscription.

Graham Milne, the chief executive of CIA Scotland, admits these will be problems for the new paper, but otherwise salutes its initiative. He says it took an outsider like Bonnier to spot the opportunity for a business daily. 'The publishers here either wouldn't have thought of it or considered their business coverage did the job already. But Bonnier has shown there was a gap in the market. I can see why The Scotsman doesn't like it - even though Business AM's numbers sound small, they could very well take one or two thousand of its business-only readers. If that happened, The Scotsman would lose pounds 300,000 every year just on cover price. That's Andrew Neil's expenses, so no wonder he's upset.'

So seriously did The Scotsman take the arrival of Business AM that it launched a daily 12-page business section, printed on pink. This is part of a wide-ranging revamp, which also saw it introduce a Guardian-style feature tabloid, S2, in May. In addition, the paper slashed its price from 45p to 20p in May, before putting it up to 30p again in October. The cuts seem to have worked, with average net circulation for the six months to August reaching 92,436, up 17.14 per cent year on year.

The Scotsman's managing director, Steven Walker, says Business AM will struggle to make an impact: 'To elbow your way into this market, you've got to be better than everything else out there. We expected Business AM to be exceptional, but it's not. Had I seen it prior to launching our business section, I might not have bothered.'

Although Walker admits there are a few defectors to Business AM, he would rather have held on to, he manages to make a virtue out of losing staff to the new paper, blaming journalists for The Scotsman's recently arrested slide in circulation. 'Our sales fell from 80,000 to 60,000 over four years, but all the time the company was investing pounds 1 million per year in marketing. Who's fault is that? We needed new (journalist) blood and Business AM gave us the opportunity to get it faster. I appreciate their help.'

Other competitors are more generous in their assessment of the new rival.

The Financial Times, which Business AM says it aims to match on Scottish circulation in its first year, is unperturbed.

Gordon Willoughby, the FT's marketing director, says: 'Scotland is a very vibrant market and a growing one for us. Our circulation there is rising faster than the UK overall. If anything, Business AM is increasing awareness of business, which is a good thing for us.'

Willoughby's only criticism is to say that Scottish business people want to read more than just domestic business. He says: 'You've got to think beyond the border, because that's what Scots business people are doing.

The Royal Bank buying NatWest has done a lot to create that mood - it exemplifies the expansionist view in Scottish business.'

TOP SCOTS PAPERS (by total average net circulation per issue Jan-June


Sunday Post                                          655,634


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