WEDNESDAY 10 OCTOBER 2007
______
Present
Bonham-Carter of Yarnbury, B Corbett of Castle Vale, L Eccles of Moulton, B Fowler, L (Chairman) Howe of Idlicote, B King of Bridgwater, L Manchester, Bp Maxton, L McIntosh of Hudnall, B Scott of Needham Market, B Thornton, B ______
Witness: Mr Richard Wallace, Editor, The Mirror, examined.
Q450 Chairman: Mr Wallace, thank you very much for coming, particularly today, as you have got the Pride of Britain Awards, have you not?
Mr Wallace: We had it last night and it is televised tonight, so you should all tune in to ITV at 9 o’clock, a very worthwhile programme.
Q451 Chairman: Absolutely, I have seen it before and it is very good. I think you know what we are doing, and that is to inquire into media ownership and the news and what the impact of concentration of media ownership is on the balance of opinion as seen actually in the news itself. We also want to know what is actually happening and how news has changed and how news gathering has changed. It is at this point a fairly wide brief. Obviously therefore one of the points we are looking at is ownership and the effect that that has on editorial content. I imagine you as Editor do not have too much difficulty deciding what party to advise your readers to vote for when it comes to an election?
Mr Wallace: Absolutely not, we are proudly supportive of the Labour Party and have been since 1945 directly so, no, that is a given, as it were. Q452 Chairman: And you have never advised your readers to vote Conservative since the
War?
Mr Wallace: No, the readers have not asked me to advise them to vote Conservative.
Seriously, a very large rump of our core readership is very much supportive of the Labour
Party.
Q453 Chairman: Is there a disadvantage in circulation terms in that you are seen as a party paper?
Mr Wallace: I do not think so. I think the whole nature of party politics has changed in the last ten years or so in the sense that ideology appears to be moving to the back burner, as it were, and politics has become very much about issues. The last Prime Minister carved out a little centre island which everybody is now shoulder-charging each other to get upon, and that has also identified a new type of voter almost, who is about issues rather than party politics, which creates a difficulty for me because I have to obviously play to the hard core Labour
Party-supporting membership which is traditional working class, and at the same time there is a new type of Middle England which again is formerly working class and lower middle class which is not about politics and about ideologies per se but which is about issues, and so the whole issue of which party they are going to support does not really concern them other than which particular individual and their policies do they support. This is a sea change that we are undergoing now, so it makes it difficult for us to navigate our way through because our core base - the traditional, industrial working class - is dying out. It is a fact of life that the country has changed very rapidly, certainly in the last 20 or so years. I would guess there might be an effect on our circulation as a result of that. We are navigating through those waters right now so it is difficult for me to predict otherwise.
2 Q454 Chairman: Obviously I understand what you are saying about elections, but how do other issues get decided? Is that a matter strictly and only for you as the Editor? If you wanted it to become a Euro sceptic paper, or something of that kind, would you be able to take that decision or would you have to consult with the Chief Executive of the whole Group?
Mr Wallace: There is very much a delineation between the business end and the editorial end. Making big decisions like that comes round from what you are hearing from the readers.
One of the things that I have tried to do in the last few years is to stress to my team that we need to reflect in the paper their concerns, their interests, et cetera. Europe is a great example.
Frankly, nobody really cares about Europe, certainly our readers do not, it is not a huge issue on their radar; what is on their radar is crime, health, education, it is all the things that affect them directly. They do not believe in their hearts that they are about to be ruled by Brussels so therefore they do not care about that particular issue and it is not on their radar, so my job is to reflect what their concerns are and what they are thinking and also what they find interesting and what they find amusing. To that end crime is a huge issue and we will bang on to the Government, whoever is in government, until there is a perception that things are changing, so very much I am governed by what the readers are thinking.
Q455 Chairman: And there would be no question of going soft on the Government because you are a Labour-supporting newspaper?
Mr Wallace: Certainly we gave the last Prime Minister more stick than probably most because we felt, and because certainly our readership felt, that the decision to go to war in
Iraq was incorrect, and that was a very strong position that we took and, frankly, the
Government was not amused by that position and did actually say, “Aren’t you meant to be on our side?” and it is like, “Yes, but there are times when friends disagree.”
3 Q456 Chairman: And who took that decision? Was that strictly a decision taken by the
Editor at the time in consultation with his editorial colleagues or was there any wider consideration of it inside the corporate body?
Mr Wallace: I was on the staff at the time but I was based in the US. From what knowledge
I have, it was very much an editorial decision, and the business end of it does not really come into it at all.
Q457 Baroness McIntosh of Hudnall: May I ask one question, Mr Wallace, to follow up on this question of the way that you are led by your readership. Is there any sense in which you regard yourself or your newspaper as a leader of opinion or an opinion former?
Mr Wallace: In a sense, yes, because we provide so many different services. It is a complicated relationship that we have with our audience or with our customer, or whatever you wish to call them; the reader. I remember once I was talking to a group of our readers and one of them said to me, “I bought your paper today,” and I said, “Thank you very much.
Why did you buy it?” and he said, “Because I wanted to know what to think.” I forget what the issue was, it was some burning issue of the day, and part of our remit, certainly when there are people in this very building banging on about something in particular, our job is to explain whether that is a good thing or a bad thing and translate almost. “If the Government says ‘Here’s an extra billion pounds for hospitals,’ does that mean that Aunty Margaret is going to get her knee op sooner or later? Somebody needs to help me here,” and that is part of our role. That is one of the aspects of the service that we provide. In a sense we do lead, when we say, “Do you know what, folks, this is a bit of a bad idea.” One of the advantages of the technological age we live in is that now they can react immediately and email me directly.
We have forums on our website and what have you so we know very quickly.
4 Q458 Baroness McIntosh of Hudnall: Just to put it very simplistically, if you said, “Do you know what, folks, this is a bit of a bad idea and all the blogs and emails came back saying, “Actually we think you are wrong; it is not a bad idea at all,” would you change your view?
Mr Wallace: Yes, absolutely.
Q459 Baroness McIntosh of Hudnall: So it would not be the paper’s view any more that it was a bad idea?
Mr Wallace: To be honest, it would depend on the individual circumstances. I would imagine if we were to ask all our readers if they wanted to bring back hanging then I think we would probably get a majority on that, and I probably would be not inclined to change our view on that.
Q460 Baroness McIntosh of Hudnall: That is exactly the kind of issue I was hoping you might raise.
Mr Wallace: I have every confidence in our core readership that once all the arguments were explained sufficiently, certainly on an issue like that, there is a knee-jerk reaction on those kinds of issues, however, when you go into it in any depth at all it is not quite as simple as that, and you often find if you get into a debate with them about it they are kind of like, “Yes, okay, fair point.”
Q461 Lord King of Bridgwater: I am interested in the first point you made where I think you said to the Chairman inevitably you will be a Labour-supporting paper in the final analysis and that the die-hard Labour voters are your core readership. What we all know in politics is that there are fewer and fewer die-hard voters on all sides of the political spectrum.
It is interesting also that where you previously would have dominated the scene, you have
5 been overtaken by a proprietor who certainly does not just wait for his readers to tell him what he thinks, who changes sides regularly, and who definitely sees that he is in the business of leading. I am talking about what I think you would call a traditional proprietor; Mr Rupert
Murdoch at The Sun.
Mr Wallace: Indeed, he leads.
Q462 Lord King of Bridgwater: Do you not see in this position that you are actually a prize that would be worth playing for where you could have more influence and you could lead both with the political parties and with your readership?
Mr Wallace: I do not know. One of the wider questions about what are the presses for is that, frankly, this country needs a paper like the Daily Mirror. At the moment you have this crazy situation with the Telegraph now going for Labour, you have got The Mail worshipping at Mr Brown’s feet; everything is up for grabs here.
Lord Maxton: I had not noticed!
Baroness Howe of Idlicote: It changed last week.
Q463 Lord Maxton: A week is a long time in politics!
Mr Wallace: This is the thing. Again, this is another illustration of those core traditional readers, whether of the Telegraph or The Sun, et cetera, who are died-in-the-wool Tories, those things are breaking down. If we start joining that particular party, it is not for us really.
That gives us, frankly, clear blue water. It is a very competitive market, as you well know, and that is one of the things that gives us clear blue water. Yes, we might be regarded in some quarters as staid and perhaps even old-fashioned, but I do not think that is necessarily a bad thing.
6 Q464 Lord King of Bridgwater: There is a quote here: “We need to get used to the idea that today’s newspapers are not necessarily about news”.
Mr Wallace: Yes, that is correct.
Q465 Lord King of Bridgwater: That is your quote.
Mr Wallace: Yes.
Q466 Lord King of Bridgwater: And you see yourself moving much more towards issues and interest stories?
Mr Wallace: There is a much broader question. It is very, very difficult now to avoid the news. There is television in shopping malls, there is ticker tape. If something happens, you kind of know about it, and you have to be locked away in a dark room all day not to know about it, certainly with the rolling 24-hour news of “a cat gets stuck up a tree” which we seem to be told about, such is the voracious demand for news. Therefore, if for instance a cabinet minister were to resign right now, by tomorrow morning when most of our papers are being bought, people are going to be sick to death of that fact and, yes, I will have it in our newspaper and, yes, there will be analysis of that resignation, but is it going to be on the front page? Probably not.
Chairman: I would like to bring in Lady Bonham-Carter at this point because we were thinking about the news agenda in the light of some of the quotes that Lord King mentioned.
Q467 Baroness Bonham-Carter of Yarnbury: We have recently been in America and seen a lot of the newspapers there - and I noted that you said you had worked there at one point - and we were interested to discover that there is a very strict separation between editorial and news. Indeed, there are separate editors and they do not appear to talk to each other, they have a separation.
7 Mr Wallace: Exactly.
Q468 Baroness Bonham-Carter of Yarnbury: What is your feeling about that way of running a newspaper?
Mr Wallace: My personal view - and I think the Americans are guilty of this - is that you end up navel-gazing, there is a lot of to-ing and fro-ing about who is responsible and where the lines are drawn, et cetera. Ultimately, one of the reasons we have such a powerful, strong, entertaining and great press in this country is because it is decisive, and they make decisions on the hoof every day and entertain in the way they present that rather than having long, endless debate about (i) whose responsibility it is to decide something and (ii) what they are going to decide. You read the New York Times and it is a great newspaper but you have really got to make an effort to read it. They make it quite difficult for you to enjoy their wares. I believe a lot of that is the way they do have that structure; there is a lot of to-and fro-ing rather than actually getting on with delivering the news.
Q469 Baroness Bonham-Carter of Yarnbury: The Chartered Institute of Journalists has recently asserted that it is more and more impossible to distinguish between news and comment. Is that not a problem for the audience?
Mr Wallace: The bigger problem in America is with American television, and I think television generally is becoming a bit of an issue as far as what is comment and what is news.
People like complaining about the weather in this country and they like complaining about the press, that is just the way it is, but part and parcel of that people also like buying our newspapers, and they understand when they come to the party that there is opinion in-built there and they understand that. One of the reasons why they choose the Daily Mirror over
The Sun or vice versa is because of at one end the slightly raucous opinion and the slightly more thoughtful opinion at the other. That is part of the process of why they buy the paper.
8 When they come to say, for instance, looking at the BBC or the television news, the lines do change, they do expect impartiality, et cetera, there.
Q470 Baroness Bonham-Carter of Yarnbury: Going back to what Lord King was saying you are saying as a newspaper editor that comment is what sells rather than news?
Mr Wallace: We are really navigating in new waters for us because at the same time if there is a major news event, a 07/07 or what have you, people come running to the newspapers. It is interesting in our market that they come running to the Daily Mirror because there is a sense that this is a serious story, something terrible or marvellous has happened, we need to get what this is all about and get it properly, so you often find that we sell a lot of papers as a result of those issues. Again papers still lead the agenda. You turn on the Today programme or Jeremy Vine on Radio Two and nine times out of ten it is a story that was in one of the morning’s papers that will dominate the discussion and the debate. So we are still at the centre of public life, as we always have been, yet when there is not a major story, when there really is not very going on certainly as in the popular end of the market for the last couple of months (bar the McCanns, which is another phenomenon entirely) then we struggle frankly, because a person is going to say, “I’ve got a busy day.” My brother is a civilian, as I call them, and I say to him, “When do you buy a paper?” and he says, “If I have to fill the car with petrol and there is a queue and there is a headline I like, then I’ll buy it.” He has not got the time. The traditional having your paper delivered or picking one up on the way to work has died out because of the nature and way our lives have changed.
Q471 Chairman: You are more a magazine.
Mr Wallace: The word that I use with my staff is to become “useful”. Whether it is explaining issues of the day, and everybody knows, for instance, they need to feed their children more healthily and they want to dress more fashionably, but they want to do it on a
9 budget et cetera, so one of our jobs is to find out how you can do that. Is eating organic food better for us or worse for us, because obviously in our market every pound counts. It is a usefulness so, yes, to some extent there is a magazine element to that. As I said, newspapers have always been all things to all men because we have had to do everything, but now the whole media market-place is fragmenting so there is a niche product. If you want celebrity in living colour then you go to Heat magazine or OK magazine or whatever, if you want sport you go to wherever. At the same time we are trying to corral all these interests under one roof.
Q472 Baroness Bonham-Carter of Yarnbury: On the big news story are you saying that if the citizens want the impartial take on a big news story then go to the BBC?
Mr Wallace: 07/07 is a great example actually. One of the things newspapers are very good at, and what we are excellent at, even though I say so myself, is when a terrible thing happens, it is all over the news, we know how many people have died and how many people have been injured, we know the bare bones and the bare facts, and we know the running order of what happened, but what people want to know is why did this happen, how did this happen, and that is where we come into play, and television in those major news events cannot really begin to provide that analysis until some little time afterwards because they are about moving pictures, and if they have got some great moving pictures they are going to be repeatedly showing those rather than saying, “Why did this happen?” As I said, once people get over the initial shock of these events they very quickly want to know why has this happened and how has this happened, and that is where we come into play. That is why we do so well in those situations because people come back to us.
Chairman: I want to go back to the issue of circulation and all that. Bishop of Manchester?
10 Q473 Bishop of Manchester: Mr Wallace, I gather in the 12 months up to May 2007 The
Mirror lost five per cent of its circulation. I wonder if you could put that in the context of the last ten years and describe what you see to be the trends in circulation as far as they relate to
The Mirror?
Mr Wallace: The last 20 years has been a difficult time. I will give you just as a few for instances. In 1996 I think there were around 110 TV stations and there are now 310. In 1996 there were around 2,500 magazines; there are now around 3,500 magazines. In 1996 four per cent of the population had access to the Internet; in 2006 it was 71 per cent. In 1996 I do not think text messages had even been invented let alone sending news to your phones. The number of platforms, to coin a contemporary phrase, that have become available for the delivery of news and content (which is how we are now meant to describe it) has exploded and as a result of that, touching on the point I was making earlier, news is everywhere, all the time now, and it is very, very difficult not to know what is going on in the world, so therefore the essential aspects of having your daily newspaper have gradually been eroded and at this time continue to erode. I believe that we will plateau at some point because I think there still will be a demand for newspapers. They might even become luxury items in the future, who knows.
Q474 Bishop of Manchester: What is the percentage decrease over that more extended period? I ask this about The Mirror particularly because I gather that your circulation has fallen at a greater rate than the others.
Mr Wallace: Absolutely. There are other factors that come into play. We are premium- priced compared to our direct competitors. At the moment The Sun newspaper is 20p in the south, and we are 40p, so that comes into play. The other big thing, which I have described as the “crack cocaine” of our business, is the giving away of DVDs. My personal view is that as an industry we have shot ourselves many times in the feet because we are telling our audience
11 that our product is so useless we are giving you a film or we are giving you a new album. It is quite extraordinary.
Q475 Bishop of Manchester: Can I just interrupt you, what evidence is there that when you do that it does boost the sales but, more importantly, do you then retain any of the readers?
Mr Wallace: The most recent example - and I think you will be hearing from him later and he will know the exact detail - was the Mail on Sunday which gave away a copy (the first time this has happened) of the American artist Prince’s new album. They spent, I am told, £1.75 million buying and marketing that product and on that particular Sunday they sold an extra
600,000 papers. The following Sunday those 600,000 sales had disappeared, ie people had come in for the free bit of kit and gone away again. Yes, that gave them a very significant lift on their circulation figures that month but in real terms is that a lift? I do not know. Also budgets are different. The Daily Mail and The Sun spend approximately £20 or £25 million a year on marketing and promotion, ie DVDs and what have you; we are just under the £10 million mark, so it is a straightforward slugging match at the moment. “Here’s a car with every paper”. It is madness and it makes no economic sense and we are a public company, we are a business.
Q476 Bishop of Manchester: And of your lost readers have you managed to transfer any of them to your website?
Mr Wallace: Again that is an on-going change. It is not a case of readers disappearing and going off somewhere else. They are just disappearing because they are getting out of the habit. That itch that people now probably over 40 have “Oh, I did not see a paper today, I feel a bit out of sorts” has disappeared, which is obviously bad news, but there is a transformation over into the Internet side. We are getting to grips with that now because I believe that we need to be quite different on the Internet than we are as a newspaper. People previously
12 shovelled their newspaper on-line and said, “Right, there you are”, but that is not what people want from the Internet, I believe, so we have various, very exciting plans to do with the Daily
Mirror brand on-line which we will be unveiling in the new year. That is the key because people who would never even have the Daily Mirror in the house understand loosely what the brand stands for - fair play or whatever it is - and so I believe in the new digital world where people are surfing around and there are all sorts of groovy new brands out there they will think but how many of those can you actually trust. Hopefully if you come across the Daily
Mirror online you will think, “You know what, I would never had have it in the house but if I go here I know I am going to get the truth at near as damn it.” I think that will be important for us in the future.
Q477 Lord Maxton: You are talking about free DVDs, what about free newspapers, I do not know where they are free but when I travel down from Scotland on Virgin first class I get a Times or Scotsman given to me and the same on the West Coast. I am a member of a gym and I get the Daily Mail there free. Do you do that sort of thing?
Mr Wallace: In the business they are called bulk sales where basically they are give-aways which you can declare in your circulation. I do not have the figures to hand but all those newspapers ---
Q478 Lord Maxton: These circulation figures therefore ---
Mr Wallace: Basically you can give away and they line the hotel rooms around the world.
There is no purchase made there and yet at the same time they are allowed to include those within their circulation figures. Basically every paper we sell we sell for 40p. Very quickly on the broader point about free newspapers per se, again that is a huge market. You are sitting on the Tube and there is a blizzard of it. Frankly, if you have got a 15-minute journey, getting a free paper at your underground station or your bus stop is pretty good value. It
13 passes the time, you can flick through the news, and it does not cost you anything, so why would I want to buy my daily newspaper now. Again, it is a big problem for us.
Q479 Baroness McIntosh of Hudnall: This is directly relevant to what you have just been saying because it is a question about income. What proportion of the income that your business as a whole needs is coming from advertising? As between what you can generate with the newspaper and what gets generated through your other outlets like your website, what is the proportion now?
Mr Wallace: In 1996, advertising accounted for 37 per cent of our revenue against 62 per cent of sales and in 2006 it was 33 per cent against 63 per cent, so revenues are tough. We have all read in the last 18 months that suddenly everybody is going on-line. For the first time last year on-line advertising spend passed national newspaper spend - I think it is £2 billion against £1.9 billion - and they expect on-line spend by the end of this year to be £2.75 billion, so that is a lot of money sloshing about out there. That having been said, there is evidence and feedback we are getting back from advertisers that the world loves to go to a great new place “isn’t this a happening place?” but it is about getting feedback and getting reaction and getting eyeballs and the Newspaper Marketing Association has been very bullish about this. If you want to advertise your wares, newspapers are still the best place to do it because people actually read those ads and look at them whereas we have all used the Internet and we all automatically tune out those banners. Nevertheless, the long-term threat is huge.
If you have something like Google where they are refining it at the moment so when you go to a car page, or what have you, suddenly adverts for cars appears. There are drawbacks in that if you read a story about a car crash adverts for cars appear, so to it is not exactly foolproof! Nevertheless it is a huge threat. Very quickly on the much broader aspect of the press in the future, if everything goes on-line and becomes subject to Google-isation who is going to be doing investigations and who is going to be doing that kind of journalism?
14 Q480 Baroness McIntosh of Hudnall: In terms of projecting your business model forward what assumptions are you making about that and about advertising revenue?
Mr Wallace: Ultimately, the bulk of it will probably be on-line. As I said, we have got some very aggressive plans for the new year to use the Daily Mirror. We are not going to be just the Daily Mirror newspaper that happens to be on your computer, because other papers like the Guardian and Telegraph, who have spent a great deal of money getting out into that area and effectively JCB-ing their papers on-line, are suddenly sitting there saying, “The revenue streams are not really appearing yet,” and that is a heck of a commitment.
Q481 Lord Maxton: I am fascinated by on-line and what you are saying. Does that mean that for instance some of your advertising on-line, from the same advertising as in your newspaper, will be a television-type advert rather than a picture one? Are you going to have videos of stories which are in the newspaper and are you going to update so that if a news story breaks at midday it will be on your Daily Mirror website at quarter past 12 rather than waiting for tomorrow morning?
Mr Wallace: This is one of the key questions that we are answering. My belief is that it is pointless us trying to compete with the BBC or with CNN, et cetera, on the breaking news front; we just do not have the resource. If you look at the figures on that, certainly the BBC are way ahead of anybody else in this field, so to my mind us with 300 employees trying to compete with the Leviathan of the BBC is, frankly, not the way forward. However, yes, we will provide a basic news update service à la Press Association, or what have you, but my belief, again coming back to one of the functions of the paper, is that people want more analysis on stuff, so there are certain opinion makers and opinion formers within our newspaper that will certainly have a much bigger role on-line and perhaps in a televisual way.
Certainly on the advertising issue we will cross-pollinate in the sense that we will do necessary deals with Toyota or whoever that we advertise with on-line and in the newspaper.
15 We did a very successful football transfer window quite recently where we had one of our football writers on-line every morning from his breakfast table saying, “In the Daily Mirror today this is going to be happening. The Sun is saying this …” Everybody said to me, “Why are you advertising The Sun?” I said “I am not, I am saying if you want a one-stop shop to get all the football transfer news this morning, then Mirror.co.uk is the place to be.” I must stress we are feeling our way forward. The interesting thing and one of the exciting things about the digital age, as it were, is that it is a green field, nobody has the answers here, nobody knows where it is going because the consumer for once is completely king.
Q482 Lord Maxton: The Guardian had an article this week in its media pages on what it called the “newspapers’ iPodcast moment”, in other words the iPod telephone which is also much more than a telephone, you will be able to read the Daily Mirror or The Mirror on the train on your mobile phone rather than buying it.
Mr Wallace: Yes, and you would probably go cross-eyed in the process at the moment. It is about consuming things pleasantly and I am yet to be convinced that people will be frantically scrolling down through their Blackberries to read the papers. I have several news alert SMS things myself, so Sky, the BBC and CNN updates will get sent to my phone and that is a great bit of kit. I can often be at my own news desk and say, “What’s all this about?” Those kind of things are great but as far as people reading it in that kind of form, I just do not see it.
Q483 Baroness Thornton: How popular is your website and do you know whether the hits on your website are readers or whether they are new people or what?
Mr Wallace: As I said, we have not gone aggressively into this market-place yet because there has been a lot of waiting and seeing rather than let us just pour all the money in and then find that we have got it wrong. Even now we are getting around two point one million unique users a month. An interesting fact on it is that over 70 per cent of our audience is under 45. I
16 have got a couple of figures here which are actually quite useful. Reading a paper, under 45s,
41 per cent; over 65s, 27 per cent. Then you go to co.uk and 72 per cent are under 45 and only four per cent are over 65. It is a huge growth market and again we need to understand it and the consumer needs to understand. For instance, we have quite a degree of older readers and they used to up until 18 months ago send me angry missives by letter. Now they email me: “I am 89-year-old Mrs Biggins from Rotherham and I think blah, blah, blah,” and that is a remarkable sea change in just 18 months.
Q484 Baroness Thornton: Are you going to try and convert that demographic into readers of the newspaper?
Mr Wallace: Again it is a personal view, but I believe that trying to drive one to the other does not necessarily work. One of the reasons I believe that newspapers have perhaps not done so well on-line so far is that there is this mind-set “let’s just do what we do here over there,” and people do not use the Internet in the same way. You have got to think about how people use the Internet. Most people are not sitting at their desks like we are idly browsing and surfing away. They are holding down proper jobs, they are living their lives, and looking after the kids, et cetera. They go to the home computer to buy a holiday or do their supermarket shop or whatever. They go for specific things, they are not there idly passing the time of day, so therefore are they going to turn on their computer and idly flick through the
Daily Mirror on-line? I do not believe they are. However, I do believe that we can provide other services perhaps with a more consumer element that can complement what we do in the newspaper.
Q485 Baroness Thornton: Which is why the brand trust is so important?
Mr Wallace: Absolutely.
17 Q486 Lord King of Bridgwater: The thing we have not covered at all, part of this inquiry is about ownership and of course you are part of the Trinity Mirror Group and you said we are just a very small organisation, we have only got 300 chaps. You have got the Sunday Mirror, you have got the People, you have two Scottish national papers, you have 100 regional and local titles as well; to what extent does that have significance for you in terms of news and a synergy of being able to draw on the resources that all those organisations have? Do you know how many journalists there are in the Trinity Mirror Group?
Mr Wallace: I think it is around 1,500 but I do not know for sure.
Q487 Lord King of Bridgwater: Which makes it quite a big organisation?
Mr Wallace: I think there are different demands at local level that local newspapers need to deliver compared to national newspapers.
Q488 Lord King of Bridgwater: So you have no real input? You do not say, “Look at this story breaking in Birmingham” - although you do not have the Birmingham Mail, is that right, it has been sold?
Mr Wallace: We still have it.
Q489 Lord King of Bridgwater: A story breaks in Birmingham, surely they are the boys on the ground?
Mr Wallace: On that basis, yes, we have Liverpool, which is one of our heartlands, and obviously we have the Echo and Post up there. Yes, we have good relationships.
Q490 Lord King of Bridgwater: And do you use their journalists?
Mr Wallace: Not their journalists but we use their material. We are not swilling around with staff, as it were, we are quite a lean, mean machine, so a lot of those particular organisations are needing their guys to do their work.
18 Q491 Lord King of Bridgwater: You see yourself as very much a completely separate organisation and the fact that you happen to be owned by one group does not affect you?
Mr Wallace: As I said, we use each other’s resource in the sense that if the Liverpool Echo has got a great set of pictures of what have you then we can make that phone call and get those pictures, whereas if I was from the Daily Mail and made that phone call then I would probably have to pay a premium price for those pictures, and they might not even want to make them available to me. On that ad hoc basis, yes, but as far as formal channels or what have you, no.
Q492 Baroness Howe of Idlicote: I am a little bit puzzled, if I may say so, about the reasons which I do not think you have fully gone into as to why your own circulation has dropped as much as it appears to have dropped and whether it worries you particularly or whether you are concentrating now on the future. Coming to my second point and stargazing into the future, say the next ten years, you have given us some ideas and you are playing around with a lot of ideas and how you are going to meet the competition and meet the desires of your readers and so on, but how far ahead are you looking: ten years? What are you predicting for your own paper and for newspapers generally? Are there really going to be no newspapers around at all other than on the Internet?
Mr Wallace: I do not think that. Addressing your first couple of points, the reason that I believe we were declining faster than our competitors was because of these bulk sales I mentioned, either giving away papers free or cut price. I believe The Sun is 15 pence in
Scotland at the moment, which is obviously considerably less than we are, and these DVD give-aways, they do drive sales. The Daily Mail recently did a serious on the World at War and I think it sold something like an extra three million papers, and that is a heck of a lot of papers for giving away a DVD. If I am a Daily Mirror reader and I am going into the shop and I am suddenly seeing a DVD being given away with it, I am kind of inclined to go there.
19 These kinds of things over time, you are being slugged round the back of the head on a fairly regular basis then, yes, it is difficult. I am absolutely optimistic of the survival not only of the
Daily Mirror but of newspapers. As I said, I believe we will get to a plateau. I think there are all sorts of social factors that come into play. Age is a key one. Somebody once said to me that anybody who buys a Daily Telegraph before they are 38 and a half is obviously a little bit odd. I am merely reporting what was said to me!
Q493 Lord Maxton: Not if you are a young Tory, it is not!
Mr Wallace: As far as the digital question, yes, this has been coming down the pipeline for the last five or ten years, but it is here now and it is not going to go away so we have to confront it head on.
Q494 Baroness Howe of Idlicote: And the newspaper industry generally will be all looking in this sort of way?
Mr Wallace: Absolutely. As an industry we have a great habit of navel-gazing and shooting ourselves in the foot a lot and bashing each other up, but I am very bullish about the future. I think there is a great press tradition in this country which we can maintain not only off-line, as they call it in newspapers, but on-line. Yes, I would imagine what the Daily Mirror does in ten years’ time might be very different to what it does today, but I think the essence of it will remain.
Q495 Baroness Eccles of Moulton: Mr Wallace, I was wanting to turn to the question of the journalists who work on the newspaper and over the last ten years, as the circulation has declined, what effect this has had on your ability to continue to employ top-quality journalists and therefore your news-gathering being maintained at the same high standards?
20 Mr Wallace: We actually employ about 25 more journalists now than we did ten years ago because of obviously our digital expansion, et cetera, but we have seen from other newspapers that if you do not have the necessary journalistic resource you go downhill very, very quickly and the consumer is very, very quick to catch on to the fact “Do you know what, this is just rubbish”, so therefore there is an understanding throughout our business that maintaining the levels of staffing and quality of journalism is absolutely essential, because that is one - to use a buzz word - aspect of our brand. There is a certain integrity associated with a newspaper and that comes out of its staff and the way we report the news and other things.
Q496 Baroness Eccles of Moulton: And are you finding it any more difficult or easier to actually maintain the standards? Are the journalists coming on-stream and coming into the industry getting better?
Mr Wallace: It is getting more difficult because again it is another competitive issue, it is a lot more attractive to go into the bright lights of television and the digital world, and therefore there is not the great pool that there previously was. However, there still is a pool and I think it will remain. Being a journalist, certainly a newspaper journalist, is a vocation rather than anything else because you do not go into this business to earn your fortune and people are born with the itch. Thankfully, there still is a pool and we have a very successful graduate trainee scheme which has brought through a lot of very successful young journalists not only who continue to work for us but elsewhere, and I remain optimistic about that.
Q497 Baroness Eccles of Moulton: As far as foreign news gathering is concerned, which presumably is the more expensive end ---?
Mr Wallace: Indeed.
21 Q498 Baroness Eccles of Moulton: Have you had to resort more to agency sources or are you able to maintain your foreign news corps?
Mr Wallace: We cut back on our foreign bureaus ten or 15 years ago purely because the technology enables one to. In New York 25 years ago, we had nine people stationed there, which is mind-boggling now, so the nature of the way technology has been brought on has meant that we can scale down. Nevertheless, we maintain American staff but our only staff link, as it were, is in America. There are good agencies throughout the world now and individuals who have formally been on Fleet Street have moved to Moscow and just set up shop.
Q499 Baroness Scott of Needham Market: My questions are on the same sort of lines really which is based on evidence which we received from the Chartered Institute about how the practice of journalism is changing as a response to budgetary constraints, so journalists do not get out and about because there are fewer of them, they rely more on the telephone and the
Internet and there is a sense that what you get is an iteration of what is already there, not properly checking facts, not really thinking afresh; how do you respond?
Mr Wallace: To be honest, this is where we will be very careful about how much we get our journalists to actually contribute to the on-line thing, because I know of some of the problems in other organisations where journalists have said to me, “They want me to do a blog in the morning, then they want me to do a news story for on-line, then we want me to update my blog, then do a podcast, and then do my story for the paper. When am I actually going to do some reporting here?” There are demands on the journalists’ time but again it is finding that balance. I am a great believer if I am seeing a load of people sitting around the office then we are having a bad day. People need to be out and they need to be meeting people because that is how it happens. The slovenliness for instance of using Wikipedia – and there was an incident quite recently involving Ronnie Hazlehurst the composer, and okay, that was an
22 amusing mistake in the end but it is a great danger. We warn our journalists all the time, just banging in Google and then turning up whatever it is does not make it right. It is a concern but I think it is something that everybody has become conscious of now, that you cannot do it the lazy way just because you can access the worldwide web.
Chairman: Mr Wallace, thank you very much. You have given some very important and interesting evidence. Perhaps if we have got any other questions to follow up we could drop you a note and ask you about that. Thank you very very much indeed. We will all look in to
ITV tonight.
23 Witnesses: Mr Peter Wright, Editor, and Mr John Wellington, Managing Editor, The Mail on Sunday, examined.
Q500 Chairman: Welcome, I think you know what we are about. I know you were listening to the end of our questioning with the Editor of The Mirror. Basically what we are about is we are looking into the question of media ownership and the news, what impact concentration of media ownership has on balance of opinion, but also what we want to know at the same time is what is actually happening in newspapers at this moment. Mr Wright, you have brought with you Mr Wellington. We know who you are, Mr Wright, because you are the Editor and Mr Wellington, you are?
Mr Wright: He is our Managing Editor.
Q501 Chairman: Just let us be absolutely clear what the difference is; what do you both do?
Mr Wright: If you would like me to explain, I am the Editor, I am in charge of the newspaper. John Wellington as Managing Editor is in charge of administration and looking after the staff and he has a head for figures, which probably most journalists do not, but I will be answering the questions unless you particularly want to ask Mr Wellington.
Q502 Chairman: Fine, thank you very much. When did the Mail on Sunday actually start?
Mr Wright: It was May 1982.
Q503 Chairman: And so financially it is probably the most successful new start of a newspaper in recent years, is it not? You started absolutely from scratch, there was not a Mail on Sunday before that?
Mr Wright: That is correct and we have been making a profit for the last 15 years or so, which I do not believe any of the other new starts do.
24 Q504 Chairman: And what is the secret of your success?
Mr Wright: In 1982 there was a gap in the market for a newspaper that appealed strongly to women, that was a careful blend of the serious and the popular, and that was modern in a way that the Sunday Express, which was then the only paper in the middle market, was not.
Q505 Chairman: Is there another factor as well? You had the backing of a committed proprietor and a proprietor with deep pockets. Is it really only that kind of proprietor - because we have got Rupert Murdoch with The Sun or Fox News in the United States - is it only the Murdochs and the Rothermeres that realistically can start these new ventures? No standard PLC is ever going to do this, is it?
Mr Wright: I do not think that is entirely true. The Daily Mail was nearly sold in the early
1970s because it was not making any money. It is true that Lord Rothermere and his son, who is now Chairman of the company, take a long view and they are prepared to invest over long periods of time in something in which they believe, and it is the case that some PLC companies are looking for short-term return, and you do not necessarily get that in the newspaper industry.
Q506 Chairman: Do you regard Lord Rothermere as a proprietor?
Mr Wright: Well, he is the biggest shareholder in the company which owns the Mail on
Sunday and in that respect he is, but the editors in our group all have independence in what they do.
Q507 Chairman: So you have total independence on elections, what your view is on
European policy, the Iraq war, things of that kind?
Mr Wright: Yes, completely.
25 Q508 Chairman: And there is no reason why the Mail on Sunday should not take a different view from the Daily Mail?
Mr Wright: Yes, and sometimes it does. At the last election the Evening Standard, which is also part of our group, supported the Labour Party. We take a different view on all sorts of things but, you know, we are not obliged to take a different view, we are not obliged to take the same view.
Q509 Chairman: And there is no corporate discussion of these points?
Mr Wright: No.
Q510 Lord King of Bridgwater: Just pursuing Lord Fowler’s point, what is the benefit to you of being part of a much larger group? We were just talking about the question as to whether you share journalists, whether you can get a particular story running, whether you are bound to have your own journalists pursuing that quite separately from the Daily Mail or the
Evening Standard or any other paper.
Mr Wright: We run in competition with the other papers in the group journalistically. Clearly we share printing presses, and we have very good printing presses, and that is a great advantage. We have in the past shared promotions. We do less of that now because we found actually that the interests of the Mail on Sunday and Daily Mail are slightly different promotionally but as far as pursuing stories are concerned, we operate completely independently.
Q511 Lord King of Bridgwater: And websites?
Mr Wright: No, the website is a joint operation. I am afraid, much as I would like it to be the case, Sunday newspapers on their own cannot really sustain it.
26 Q512 Lord King of Bridgwater: There must be continuity from stories on the website through to the paper, surely?
Mr Wright: Yes, on a Saturday our content goes onto the website. If you look at the website on a Sunday it will be Mail on Sunday content, but on a Monday it will be Daily Mail content.
Q513 Lord Maxton: But you can still read the Mail on Sunday content?
Mr Wright: I am sorry, I am not quite with you.
Q514 Lord Maxton: Presumably if it is a website it is still there.
Mr Wright: Yes, our content remains there but the home page is devoted to breaking news, and on a Sunday the breaking news will come from our newspaper, topped up by events and news that breaks during the day, and the rest of the week it comes from the Daily Mail.
Q515 Bishop of Manchester: I gather, Mr Wright, that in August this year the Mail on
Sunday circulation was up one per cent year-on-year and I think I may know a reason for that and would like to return to that later. First, I wondered if you could help us by giving an indication of the longer trends of circulation figures, let us say, over the last ten years to the
Mail on Sunday?
Mr Wright: Well, our circulation has remained broadly stable over the last ten years.
Clearly, there have been periods when it has dipped a bit and periods when it has been ahead a bit. Over the last year we are ahead a little bit. That, however, is in a market which has dropped by about five or six per cent, so I am pleased that we are in that position.
Q516 Bishop of Manchester: What are the kind of stories that from your experience over quite a long period are the ones that attract people to the Mail on Sunday? What are the headlines that are going to grab extra readers?
27 Mr Wright: Sunday papers are rather different to daily newspapers in that daily newspapers are affected by running stories. Some papers during August and September saw the
Madeleine McCann story increase their circulation. It has less effect for us but, nevertheless, we had a very good sales last weekend. We had a free Pavarotti CD which will have accounted for quite a large part of that, but there was also a big political story. People tend to turn to us when there is a big story of that nature. And there was also a rather spectacular win in the Rugby World Cup and people, oddly enough, like to buy newspapers to see news that they already know but they want to see it in print.
Q517 Bishop of Manchester: Just adding to the Pavarotti point, I gather that one of the reasons for your increase of one per cent was probably the Prince DVD. What evidence have you got that what must be quite a significant input financially that you have to spend on that increases readership in any kind of long-term way? Are you drawing in people attracted by those offers who are then still with the Mail on Sunday the following week and the week after?
Mr Wright: The answer is yes and no. They clearly attract a lot of people who come for the disc and are not there the next week. At the same time, we pioneered the use of CDs and
DVDs as a promotional tool. We have tried very hard to maintain quality and to come up with new ideas and new approaches and our circulation over the last year is up a little bit.
Other people are down five or six per cent. The Sunday Times, which has done very little promotion of that nature over the last 18 months or so, has been looking at falls of ten per cent year-on-year. So there are people staying and I am afraid it is in the nature of the newspaper industry at the moment that a lot of them are compensating for people who are leaving, but there is a residue who stay with us, and more so in recent months than there have been over the last two or three years, so we think it has paid off.
28 Q518 Chairman: When you say paid off, financially it sounds a very expensive thing to do.
Does it pay off at the bottom line?
Mr Wright: Well, it is an expensive thing to do but the paper is profitable overall. We have a budget to do this sort of thing and you do put on readers. Advertising is sold on the circulation figure, and in the case of the Prince CD we took quite a lot of extra advertising because advertisers wanted to be associated with what they thought was an exciting venture.
Q519 Baroness Bonham-Carter of Yarnbury: We have just heard from the Editor of the
Daily Mirror that he has taken his newspaper down a more magazine-orientated style, which I think it would be true to say was pioneered really by The Mail, and you said earlier on that one of your agendas was appealing to women. Is there a problem in this meaning that news is squeezed out, and it is more diets than investigation?
Mr Wright: No, I do not think so. We happen to produce an extremely good magazine which is aimed at women and which is where most of that sort of content goes, but we do more news as well. When I became Editor, the maximum pagination of the newspaper, as opposed to the supplements, was 104 pages; it is now 160. There is room for an awful lot of material in there. The other thing is, as I said earlier, Sunday papers are different to daily papers.
Generally speaking, very little happens on a Saturday that is breaking news - last Saturday was a rather glorious exception - so inevitably on a Sunday newspaper even your news stories are slightly more magaziney than was traditional in daily newspapers.
Q520 Lord Maxton: Except for sport?
Mr Wright: Yes, sport is where we score on news on a Saturday.
Q521 Baroness Bonham-Carter of Yarnbury: In a more general sense what do you think is the purpose of newspaper journalism?
29 Mr Wright: First of all to inform and to tell people what is going on in the world, but we increasingly see our newspaper as a much wider thing than that. I think it is a cultural package and so some of it is entertainment, you carry book serialisations, interviews, you deal with fashion. We now have a magazine that is aimed primarily at men and it deals with gadgets and adventure sports. We try to provide readers with a window on anything and everything that they will find interesting.
Q522 Baroness Bonham-Carter of Yarnbury: But what about the fact that in the actual body, in the actual newspaper, there is an increasing overlap of news and comment? How do you respond to the Chartered Institute of Journalists’ assertion that it is now virtually impossible to distinguish between news and comment?
Mr Wright: Well, they must have been reading The Independent which prides itself on being a “viewspaper”, whatever that means. We try to make it clear which is news and which is comment. We carry some comment on our news pages because we think it is convenient for readers, but we label it, “analysis” is the term we use, and I hope readers are able to distinguish between the two.
Q523 Baroness McIntosh of Hudnall: Mr Wright, going back to the point you made earlier about the generation of advertising revenue, you said that when you had the issue that carried the Prince CD that the advertising revenue went up. What is your reliance within your business model on advertising as against other income streams, and how do you see that changing in relation for instance to the amount that is carried in the newspaper itself and the amount that is carried on the website?
Mr Wright: Our income comes pretty much 50/50 from advertising and circulation revenue.
I do not have the figures with me but at the moment the amount of advertising we take in the paper dwarfs website revenue by a very, very big degree.
30 Q524 Baroness McIntosh of Hudnall: Can I just stop you for a moment there. I was quite surprised when you said a few moments ago that the total pagination of the paper was now at
160.
Mr Wright: That is the maximum.
Q525 Baroness McIntosh of Hudnall: Of that total, what physical proportion of those pages will be advertising?
Mr Wright: 50 per cent.
Q526 Baroness McIntosh of Hudnall: So it is 50 per cent of the physical content.
Mr Wright: It is a 50 per cent maximum. It is not always 50 per cent because the advertising does not always fall where you want it to, but I limit it at 50 per cent because I think that is as much as is sensible in the paper.
Q527 Baroness McIntosh of Hudnall: Sorry to interrupt you.
Mr Wright: No, that is fine. We were talking about advertising in the newspaper and on the
Internet. At the moment, I would imagine - and I can find these figures and supply them to you - 97/98 per cent of our advertising revenue comes in print form.
Q528 Baroness McIntosh of Hudnall: But do you see a trend that tells you in five or ten years’ time that will not be the case?
Mr Wright: The advertising revenue on the Internet is growing very quickly from a base of nil. Whether advertising actually migrates directly from print to Internet I think is very open to question.
Baroness McIntosh of Hudnall: I could hear my colleague on my left muttering that
Sunday newspapers are different; is that the case as far as advertising is concerned?
31 Q529 Baroness Thornton: I was just wondering, are Sunday papers different?
Mr Wright: Yes, daily newspapers rely very heavily on retailers for advertising. We carry more of what you might regard as brand advertising, car manufacturers for instance. The markets are different and different categories behave in different ways. If I can give you an illustrative example. We traditionally carry a lot of travel advertising. The classified area of this over the years was predominantly discount flights. That has reduced in volume over the last four or five years because of the rise of airlines like easyJet and Ryanair who sell their tickets over the Internet. However, they advertise heavily but they advertise in the front of the paper as display advertisers, so the advertising has not actually gone, it has gone in a circle and come back again, but things change and we have to adapt.
Q530 Chairman: When you lose advertising to the Internet, even if it goes to the Mail website, you are not going to get the same rate for advertising on the Mail website as you are in the paper? Even if you manage to keep the advertising volume you are not going to keep the revenue?
Mr Wright: This is why the revenue on the website is small at the moment because if you are an advertiser and you want to really make an impact, at the moment you have to advertise on television, you have to advertise in print, and you will probably experiment with the Internet as well, and we have research which shows that advertisers who use television and print will get a much better result than advertisers who spend their money purely on television. I do not think the Internet has grown to the point where we have done that research there, but I think the same thing would apply. Internet audiences are still very small, they are fickle, they do not spend a very long time looking at things, and I think it is quite hard to reach people through the Internet. We have used Internet advertising ourselves a bit. It is very hard to quantify whether you get any result from it.
32 Q531 Baroness McIntosh of Hudnall: Could I ask a question that has just occurred to me maybe for Mr Wellington, as between what you spend on staff, how much you spend on generating that advertising as compared to what you spend on journalism?
Mr Wright: You are asking ---
Q532 Baroness McIntosh of Hudnall: Very crudely, I am saying how many people have you got generating advertising and how many people have you got out there gathering news or processing news?
Mr Wright: I can tell you how many people we have got gathering news. I do not run the advertising department and nor does Mr Wellington. We could probably find the answer and supply it to you.1
Chairman: Perhaps you will do that. Lord Maxton?
Q533 Lord Maxton: Could I briefly ask you firstly about volume sales. When I go to my gym on a Sunday the only newspaper I can read when I am having a cup of coffee is a free copy of the Mail on Sunday, which presumably the organisation buys from you in bulk. The
Mirror says that they do not do any of that. How much of your sales are bulk sales of that nature?
Mr Wright: I think at the moment it is about 130,000. I do not have the figures with me but again I can supply them to you. Last weekend we sold 2.5 million. We think some bulk sales are useful to us. Most of our bulk sales go on airlines where you have a good market for advertisers and people are very likely to read the newspaper. If you see one in a gym I think that is a fairly small contract.
1 The Mail on Sunday subsequently confirmed that “at the end of October 2007 The Mail on Sunday employed 197 editorial staff (including magazine staff) and the advertising department employed 74”. 33 Q534 Lord Maxton: They are quite a big chain of gyms. Can I now move to the Internet which you are combining with the Daily Mail, so it is not your own?
Mr Wright: Yes.
Lord Maxton: How innovative is that? Is all you are doing reproducing the newspaper?
Baroness Thornton: Downloading it?
Q535 Lord Maxton: Are you doing updates all the time, are you using video, both in terms of stories and in terms of advertising, or is it just a matter of a straight replication of the newspaper, with easy access to the stories that people want to read of course? That is why I use the Internet - to read a newspaper - because I do not have to flick through ten pages, there is a list of stories and I just click on the one or two I want to read.
Mr Wright: It is a bit of both. We do update during the day. We are very active in trying to find video. We had a rather wonderful video of a South American footballer at the weekend who scores goals by balancing the ball on his head, which is very popular with readers, so it is a bit of both. It is not the same as the newspaper, it is complementary. The other thing you can do with the Internet, which is sometimes very useful indeed, is if you have a big tabulated set of information which you simply cannot fit on a newspaper page but readers may be interested in, you can do a news story in the newspaper and then you can refer to the website where you can see the full list of school A level results, or whatever it is, so one complements the other.
Q536 Lord Maxton: Would you consider doing arrangements with, say, Sky Sports or BBC
Sport to show next Sunday’s highlights of England beating France in the World Cup semi final?
Mr Wright: We would; whether they would I do not know.
34 Q537 Baroness Thornton: When we were in America, and certainly other people have spoken to us about this, they are much more concerned about the Internet and its use, particularly because of the demographic implications, which is that this is how a lot of young people get their news. They do not read your newspaper, they do not read any newspapers, and you seem, I would not say complacent, but are you not concerned that this is something that you should be thinking about?
Mr Wright: Yes, that is why we have a big and very active Internet site. That is absolutely the case and we want to maintain it. Should it be the case that 20 years from now nobody wants their news in a print format and they all want it in digital format, we are doing everything we possibly can to ensure that we are the people who supply it to the groups of people who enjoy our newspaper at the moment.
Q538 Baroness Thornton: Are you getting new people on it? Do you know who uses your
Internet site? Is it your readers, is it new people, is there a transfer between the two? Do you know that at all?
Mr Wright: Not as scientifically as we would like to. All Internet sites have a lot of foreign traffic which is really not of much use to us as a business, and that is true of all newspaper
Internet sites. Just returning to your point about young audiences, it has always been the case that the newspaper habit tends to form when people set up a home. People who are students or young people who live a more peripatetic existence have never read newspapers as heavily as people who live together as a couple and have a home. And that is a process which is happening later in life. I do not think, and particularly for a Sunday newspaper - and we offer two magazines, a newspaper, two supplements - you are going to get all of that material together in a convenient form at the moment digitally. In the future you may do and we will have to make sure we are there.
35 Q539 Baroness Howie of Idlicote: Just thinking into the future, you are a Sunday newspaper, and you have said you set up your magazine as appealing to women. Presumably there is a Sunday element to all this - more time to do all these things on a Sunday, but thinking into the future ten years on and your projection of whether things will have changed and how, both for the Sunday papers and for the newspaper industry generally, let me just give you one or two thoughts. You were talking about advertising revenue on the Internet being pretty low. There may be a huge change in all of that over that period of years. If one looks at the younger generation, they again may be much more clued into the Internet if you provided what they want. If you look at the working week, maybe it will have spread over seven days with flexible working and much more done at home and there is no particular extra time on a Sunday. Do any of these things come into your thinking when the newspaper is looking ten years ahead?
Mr Wright: They absolutely do. You are completely right, when I entered journalism in the late 1970s London on a Sunday was dead; there were virtually no shops open; there was nothing to do; and people would buy two or three Sunday newspapers. Now the traffic is appalling, people go shopping, pubs and restaurants are open, and they have much less time to read newspapers, and I am afraid they buy fewer Sunday newspapers. We have to make sure that we offer things which make us still worth buying. It is a very, very, very competitive market and it is not just other newspapers you are competing with, you are competing with all the other things that are there for people to do. People lead very, very busy lives and we offer them an awful lot to read (450/500 pages) this time of the year.
Q540 Baroness Howie of Idlicote: But you still think there will be newspapers around in ten years and not just everything in a completely different form?
Mr Wright: I think there will. If the Mail on Sunday had existed in the early 1960s I probably would have been coming to committees like this and being asked whether television
36 was going to destroy newspapers, and it has not. However, I cannot be sure because the digital revolution has happened at an incredible pace. There are some fascinating things in the pipeline including screens which will fold like a piece of paper, and it is possible that people will not want a printed newspaper, but it has not happened yet.
Q541 Baroness Eccles of Moulton: Mr Wright, I want to turn to the question of journalism and the journalists that you employ on the newspaper and to ask you the extent to which this has changed over the last ten years, and also ask you a question about the investigative side of journalism and also foreign news coverage.
Mr Wright: We employ roughly the same number of journalists, more of them on full-time staff contracts, than we did ten years ago. We have pretty much the same sort of foreign coverage that we did then. I do not think there has been any very big change there. Some specialisms have died. We no longer have an industrial correspondent, although postal workers may cause us to re-think that, but we have a security correspondent, so things change, but the overall journalistic resource available to me is very similar to the resource available to me when I became Editor in 1998.
Q542 Baroness Eccles of Moulton: So you do not see very much change in the quality of applicants entering employment in your newspaper?
Mr Wright: Not in the quality. Their background has changed. Traditionally a lot of journalists were people who went to grammar schools, when they existed, did not go to university, got jobs on local papers, and they would arrive in Fleet Street in their mid-20s having seven, eight, nine years of experience of covering magistrates’ courts and council meetings. That sort of journalist still exists but there are fewer of them. What we now tend to get is people who have been to university and then done a year’s course at somewhere like the
City University and then, if we are lucky, they have done a couple of years on a provincial
37 newspaper, but you do tend to find that journalists coming into Fleet Street have less practical experience than they used to. I do not think that means they are worse journalists; they are just different journalists.
Q543 Baroness Eccles of Moulton: And would you say that the extent of the investigative journalism that you do has either changed in content or in amount?
Mr Wright: I do not think so really. On a Sunday paper a lot of what you do would be regarded by a daily paper as investigative because there is not much breaking news for us to report. If the definition of investigative is “it is not handed to you on a plate and you have to go and look for it and it takes several days or several weeks” a lot of what we do is of that nature, and it always has been.
Q544 Baroness Scott of Needham Market: I think my question was more or less covered because I was interested in the way in which journalists operate differently now using the
Internet and using the telephone rather than being in the office and whether that affects standards, but I guess being a Sunday paper you operate differently in any event.
Mr Wright: Yes, we do. It is a valid question because there are some newspapers that have slashed costs to the point where their journalists do not leave the office. I can assure you ours do. I do believe that you cannot report on something properly unless you send someone there in person to go and see what is happening. We had a big feature at the weekend by Peter
Hitchens who managed to get into North Korea and wrote about what he saw there. A lot of our rivals would not be able to do that because they do not have an editorial budget that would cover the cost of sending someone to North Korea for a week, which I think is very sad.
38 Q545 Chairman: Just one last question, if a reader is concerned about the content of one of your stories, he perhaps feels he has been unfairly treated, what are the internal mechanisms whereby a complaint of that kind would be dealt with?
Mr Wright: My friend Mr Wellington is the first port of call.
Q546 Chairman: Because a complaint would go to the management, would it?
Mr Wright: Yes, the term “managing” does not mean he is a businessman; he is a journalist, and he would look into it independently and if we have made a straightforward error we will put it right, whether it is a matter of publishing a correction or offering him a letter. Often people who take issue with a story are taking issue with interpretation rather than the facts. If they are not happy, we direct them to the Press Complaints Commission who I believe are very effective, they work quickly, and very often the Press Complaints Commission will say to us, “We think you should carry a correction on this,” and we do.
Q547 Chairman: Do you get many complaints?
Mr Wright: I do not know how you define “many”. I think we get fewer than we used to and my aim is to keep it as low as possible, but you are always going to get some complaints, not least because you rely on people to give you an account of events, you cannot always reach everybody who was involved and sometimes there will be somebody who has got a different version of the events.
Q548 Chairman: In the United States we came across a newspaper - it was either the
Washington Post or New York Times - which has a public editor where what happens is I think what your managing editor is doing: the complaint is dealt with independently by him and he looks at it totally independently of the editor. Would that be how you would run yours?
39 Mr Wright: I am not familiar with the American public editor system, but I am familiar with
The Guardian’s reader editor system which I think is similar, which I am not fantastically impressed with because, in my view, they bury the complaints. We endeavour to carry ours in the place where the original story was carried, which is more prominent.
Q549 Baroness Thornton: My observation, reading your paper, is that you do do a lot of personal stories about people, and sometimes in my view intrusive stories. What is your view about the issue around privacy and whether or not the Press Complaints Commission should be strengthened?
Mr Wright: This is a difficult area because one person’s freedom of expression is another person’s intrusion into privacy.
Q550 Baroness Thornton: You have a newspaper; most people do not!
Mr Wright: Yes I know, but some of the stories which you are probably referring to involve people who want to give interviews about things that have happened to them but which other people who are party to the same events, whether it is a show business marriage or something, will regard as intrusion. I think this is something that we all have to look at very carefully. I have been giving a lot of thought over the last year to the situation with Prince William and
Kate Middleton and I think that there is a strong case that photographers following somebody all day every day whatever they are doing is not right. We do not commission photographers to do that and we do not use pictures taken in that way. However, if you are second in line to the Throne and you go to a nightclub with your girlfriend where it is well-known there are photographers and you come out and you are drunk and your picture is taken, I think that might be a different matter. These are always going to be difficult questions. I do think that in some areas - and the PCC have been very important in this - privacy is more respected than it used to be. For instance health matters, I do not think any newspaper these days publishes a
40 story about somebody’s health without them expressly approving it. That would not have been the case 25 or 30 years ago.
Q551 Chairman: I think we will leave it there. We could obviously go on all morning in these areas, but we have got one further Editor to see. We are enormously grateful, Mr
Wright, both to you and to Mr Wellington for coming and for answering our questions so frankly, and perhaps if we have got other issues we could come back to you and follow up these oral questions.
Mr Wright: You are very welcome.
Chairman: Thank you very much indeed.
41
Witness: Mr Lionel Barber, Editor, The Financial Times, examined.
Q552 Chairman: Mr Barber, thank you very much indeed for coming. I think you know roughly what we are doing, that is to basically enquire into media ownership and the news, what the impact of concentration of media ownership is on the balance of diverse opinions seen in the news but, also, at the same time, obviously, to get a good idea about what is happening and how news has changed, how news gathering is changing itself, so it is a wide brief. Therefore, can I begin by asking you this. Tell us about the present ownership of the
Financial Times
Mr Barber: It is owned by Pearson plc, a diversified group which is specialist in businesses and education. It also owns the Penguin Group.
Q553 Chairman: You are a subsidiary of Pearson?
Mr Barber: Yes.
Q554 Chairman: Does that mean that the Chief Executive of Pearson has influence on your editorial position?
Mr Barber: No, it does not. Pearson owns the Financial Times and it sets financial budgets in co-operation with the senior FT management, of which I am a member, I sit on the board of the FT, but in terms of editorial independence. I am in a very lucky position, we are independent.
Q555 Chairman: How is that independence preserved? Is it written down that you are independent or is it just a matter of practice?
Mr Barber: It is a matter of practice and tradition.
42 Q556 Chairman: How would you take your own decisions because, as the editor, this seems to give you a vast amount of power? How do you take your decisions on who to back in an election, what view to take on the Iraq War and what your view is on the European Union?
Mr Barber: My Lord Chairman, as I am sure you are well aware, the best decisions are often taken in concert with informed colleagues and that is the way I run the FT. I have an excellent deputy who I appointed when I was selected as editor nearly two years ago. I happened to work for him when I joined the FT 22 years ago. It might interest you to know that I have spent 22 years at the Financial Times. I have worked for other newspapers, but 16 of those years have been overseas, ten years in America, six years in Brussels. I bring a certain experience, not just from Britain but also the outside world, but I take decisions in conjunction with the senior team. That would be the deputy editor, the managing editor, who is responsible for budgets and personnel, and the news editor, so I am not an autocrat.
Q557 Chairman: How were you appointed?
Mr Barber: I was appointed by Marjorie Scardino, the Chief Executive of Pearson, after consultation with members of the Pearson board, as I understand it, and the then CEO of the
Financial Times.
Q558 Chairman: Was there a great shortlist or was this an internal appointment? What was the process?
Mr Barber: I am not aware of a shortlist. It was an internal process. They knew who I was and they considered me qualified to do this job.
Q559 Chairman: We have seen today the Daily Mirror and The Mail on Sunday, you are in a particular area, I was going to say specialist, but you are in a very particular area, who do you regard as your competition?
43 Mr Barber: I think you have hit on a very important point, my Lord Chairman, we are indeed a niche publication. You must look at us in a slightly different light compared with the tabloids certainly, but also with the other main papers. We are a business newspaper and that brings certain responsibilities. People who read the Financial Times read it because they either want to make money or they want to avoid losing money. There is another very important difference between the Financial Times and any other publication in the UK and that is we are a global newspaper. We do not rely just on the circulation in the UK, while the
UK is important, 70 per cent of the circulation of the Financial Times comes from overseas and that has been a distinct strategy pursued over many years, but particularly over the last ten years where we have launched a separate edition in the US and where we have also a Asian edition. To wrap up, 70 per cent of our circulation comes from overseas and 50 per cent of advertising by value comes from overseas too, so our competition is global.
Chairman: I will bring in the Bishop of Manchester on circulation, if I may.
Q560 Bishop of Manchester: I wonder if you could go back a bit over the last 15 years and talk a little bit about the circulation figures, both in terms of the United Kingdom and overseas. I think it would help us to begin to see a picture of when you began to increase your circulation overseas and what the pattern of decline or otherwise was in that 15 years. I am aware that in August you had a boost in sales, which maybe we can come to in a moment, but if we can go backwards.
Mr Barber: We had a boost in sales not just in August, but we can come back to that, my
Lord. Since 1992, over the last 15 years, the Financial Times has lost circulation in the UK by around 15 per cent. That reflects a general trend in the industry and we can talk about the reasons if you wish.
44 Q561 Bishop of Manchester: I think it would be helpful if you could briefly say a little on that.
Mr Barber: Reading habits have changed. Clearly many more people are now accessing the
Internet to consume information, news and views, but also you need to look at the distribution channels. The paper boy is not as ubiquitous in either the village or in the suburb as he or she once was. I think also the rise of electronic media, Bloomberg has been a very effective competitor in the market, and that is really why we have had a few more difficulties in the
UK. I do not think it is also particularly easy to read the Financial Times or any broadsheet on the Tube in London. I think the free sheets have eaten away just a little bit at the margin, and I also think for those of you who know the City of London, you go into the trading floors now and you will not see so many Financial Times; that was not the case 20 years ago.
People are expected to be at their desks and get their information from a screen. All these factors have affected the UK’s circulation of the Financial Times but, at the same time, and I was fortunate enough to be part of this, we have increased circulation dramatically, particularly in the United States where we have increased our circulation around four-fold to about 140,000. It is slightly more than in the UK. Four years ago we launched an Asian edition, that is selling around 50,000. That is also well up on before. In Europe it has gone up slightly, it is around 140,000. Overall, the circulation of the Financial Times currently is around 425,000 to 426,000, it fluctuates a little bit.
Q562 Bishop of Manchester: The particular boost which has happened, as I understand it - to give you the figure, in August the year-on-year circulation was 2.51 per cent - does that refer overall, overseas and UK?
Mr Barber: It does. Clearly, unlike Northern Rock, we benefited somewhat from the credit squeeze.
45 Q563 Bishop of Manchester: To pursue that line for a moment, when you look at the circulation ups and downs of your particular newspaper, what are the things which you feel help to boost the sales? Are there particular stories? Is there anything which is particularly unique to the Financial Times in terms of your marketing strategy?
Mr Barber: It is very simple. We have a competitive advantage in that we are a really global newspaper. In an age of globalisation we offer something quite different from anybody else.
We offer relevant, concise, authoritative, accurate information with plenty of context. We encourage reporters across the world to collaborate, so if we have a contested takeover for a
Chinese brewery, you are likely to have a date line or a byline based in London, New York and Beijing. We have a global network of journalists and they are very experienced. Many of them have been working for the Financial Times ten, 15, 20 years and they are very good.
We have been particularly successful in America. For those of you who are familiar with the
US market, America, you will know there have been some rather troubling instances of inaccuracy even amongst the best papers.
Q564 Chairman: We have just come back from the United States, so we had been there for a week and, in fact, we went to The New York Times, to whom you are referring.
Mr Barber: They have had some troubles and their stock is in the basement. They lost their editor and managing editor as a result of a journalistic scandal involving accuracy. I think there are many people, readers in the United States, who do not want to plough through thousands of words before they get to the news story. These are also very fine newspapers, but we have found that by selling ourselves as a global newspaper which is concise, offering, if you like, a window on the modern world, we have been able to do very well and attract not just readers but advertisers.
46 Q565 Lord King of Bridgwater: Can I clarify this point about being a global newspaper.
Are you the editor of the Financial Times worldwide?
Mr Barber: I am.
Q566 Lord King of Bridgwater: The US edition carries a lot of common material, obviously the reporting of the Dow and Stock Exchange and that sort of thing, but then with a
US section particularly, it is not the identical paper, obviously?
Mr Barber: I hope the Committee forgives me if I could offer a metaphor to describe the way the Financial Times works in terms of the edition structure. We do have a common content.
The most important stories, including, by the way, the decision by the Government to postpone the election, that would have appeared prominently in all editions; the credit squeeze would have appeared prominently in all editions because it is one of those 20 to 30 stories that really matter and are important. That is the common core, but then we obviously have to tailor our content slightly to the local market, the regional markets. The way I describe it is it is a little bit of lipstick and eyeshadow for the front page, so you may have two stories which are different. For example, today obviously we wrote a lot about the Pre-Budget Report in the
UK edition, but in the European edition we wrote about the controversy over the EADS share dealing and in America we wrote about the Coors, SAB Miller brewery merger. These are light changes which, by the way, are quite complicated to arrange in terms of production but they are important.
Q567 Lord King of Bridgwater: You are around the clock, are you not?
Mr Barber: We have not talked about on-line, of course, but we are a 24-hour news operation.
47 Q568 Lord King of Bridgwater: I was not on that point, I am on the management point.
Can I clarify one point, who do you answer to? Who is the Chairman of the Financial Times?
Mr Barber: There is someone who holds the office of Chairman at the Financial Times, Sir
David Bell, but I do not answer to the Chairman of the Financial Times, I answer directly to
Marjorie Scardino, the CEO of Pearson, and I work closely with the CEO of the Financial
Times, John Ridding.
Q569 Lord King of Bridgwater: Is Sir David Bell on the board of Pearson?
Mr Barber: Yes, he is, he is an Executive Director.
Q570 Baroness McIntosh of Hudnall: Can I ask you, this may be trespassing a bit into the on-line area, but because your readership is probably quite specialised - I am surmising - are they, as you perceive them, more or less likely to want to gather their news from a multiplicity of sources, including on-line? You talked about people being expected to sit at their desks and get their information from a screen. Is your readership particularly more likely to do that than perhaps the more general readership of other newspapers?
Mr Barber: I can only really speak for the Financial Times. There is no question that an increasing number of our consumers, the people who read Financial Times material, are gaining their information by looking at FT.com. For example, this year monthly unique users have grown by more than 70 per cent to 6.5 million, page views of FT.com have risen by 50 per cent, the revenues have also grown by 40 per cent, so you can see that while the print operation is very important, and it is a mainstay of the business and is very important for our revenues and audience, the proportion of on-line is increasing, relatively speaking.
48 Q571 Baroness McIntosh of Hudnall: I am trying to tie it a little bit to the question about the loss of circulation in the UK on your print version. Do you flex the on-line content significantly away from the news print content?
Mr Barber: If I may say, that is a very relevant question. We took a decision in 1999 shortly after we launched FT.com that we would build what I called at the time “an integrated newsroom”. By that I mean we would ask our journalists to contribute material both to the newspaper and to the website. That has not been the case. I was just talking to someone the other night who works at The Washington Post, they have a separate operation. It took quite a lot because we are asking our journalists to be much more flexible, we are asking our journalists not, for example, to stay on the phone for several hours and then write intensely between 4 o’clock and 7 o’clock, we are asking them to produce stories or analysis or commentary at any time of day. It took some time for that to bed down. Last year I took the next step, which was not just to ask the writing reporting journalists to contribute content on- line but also to work seamlessly in terms of production. The key point to understand here is that we have something called “FT content, news and views” and we offer it seamlessly throughout all the different media, so that could be on a Blackberry, on FT.com or in the newspaper. How you package that, when you decide what to put out on FT.com, first is something we wrestle with every day, but the principle is it is the same content, the same journalists co-operating together on-line and in print.
Chairman: As we are on on-line, we might stay on on-line for a bit. Lord Maxton?
Q572 Lord Maxton: To some extent you have been answering the question. I would have thought your newspaper perhaps more than any other was going to be affected by the digital revolution in terms of the Internet in that you are a business newspaper. Presumably people in the past bought it for advice on what shares they were going to buy that morning and that
49 afternoon, now, of course, they no longer are going to your written edition necessarily for that, you hope they are going to go to your FT.com, would that be correct?
Mr Barber: Not entirely, Lord Maxton, I think you will find that everybody has been affected by it.
Q573 Lord Maxton: I accept that.
Mr Barber: If you look at the performance in terms of the circulation of local newspapers, they are a lot worse off than the Financial Times. We have found that we can sell, as a proposition, both the on-line content and print edition together, they are complementary. I do not think you can make a simple calculation that you drop the newspaper and you only look at
FT.com. In some instances it is the case, but it is not every case.
Q574 Lord Maxton: In terms of share prices, presumably with FT.com you are updating that on a---
Mr Barber: A regular basis, yes.
Q575 Lord Maxton: Minute by minute or hour by hour or?
Mr Barber: On a regular basis.
Q576 Lord Maxton: If there is a breaking news story for your journalists, are you just simply putting that as a printed version on-line or are you using video and other means as well?
Mr Barber: Absolutely, we are using every single tool. I think there has been a change if you are talking about what we like to call in the business “scoops”. These used to be guarded under perhaps lock and key, sometimes hidden and not produced until after first edition. That is not the case now, we tend to put it out on the Internet, brand it, if you like, get it picked up by one of these aggregators, either on Google or Drudge, and before you know where you are
50 you have this FT story which is going around the world. In that sense, we have become less sensitive to time.
Q577 Lord Maxton: I use Yahoo! as my front page. You are there, are you not?
Mr Barber: Yes.
Q578 Lord Maxton: You make an effort to be there?
Mr Barber: We want to be there.
Q579 Baroness Thornton: When you first went on-line did you charge a subscription?
Mr Barber: I was not in the country at the time.
Q580 Baroness Thornton: Do you have two different sorts of ---
Mr Barber: We have always charged for our content.
Q581 Baroness Thornton: I am interested in this because The Guardian is free, so I am interested in seeing how you make that work.
Mr Barber: We are making it work. In fact, we have just announced a change in the business model whereby we will be making a certain amount of content free every month and then we will have a registration kick in. Each user is allowed to view up to five articles per month without a financial commitment, registered users are allowed a further 30 articles per month without charge, then you have to subscribe and then you will get as many articles as you wish for a monthly fee. I should say we have just over 100,000 paid subscribers who pay for our content, but we have recognised the need to open up the site a bit more so people can taste the content.
Q582 Chairman: Would The Wall Street Journal also charge?
51 Mr Barber: They do charge. They have charged for more than a decade.
Q583 Chairman: When we were in New York, The New York Times had just changed their policy on this and I think have gone entirely free.
Mr Barber: They wanted to charge for columnists and they reversed that.
Chairman: Am I right?
Baroness Scott of Needham Market: Yes.
Q584 Chairman: I think I am right, I think they are now free for everything.
Mr Barber: They are but I am just saying they did want to.
Q585 Baroness Thornton: That is because they cannot make money on it, presumably.
Mr Barber: That is your conclusion.
Q586 Baroness Thornton: My comment, yes, and that you can and that is very interesting.
Do you make money on it?
Mr Barber: Yes, we do.
Q587 Baroness Bonham-Carter of Yarnbury: Picking up on one thing you said in answer to a previous question. Did you say you had one set of people working on both your website and your newspaper?
Mr Barber: We have 500 journalists - by the way, that is an increase of ten per cent in our staff over the last ten years - and they all work seamlessly for FT.com and the newspaper.
Q588 Baroness Bonham-Carter of Yarnbury: You have never been concerned that affects the quality of the journalism because they are having to, what we call in the television world, multi-skill?
52 Mr Barber: We like flexibility at the Financial Times. We have not noticed any deterioration in quality. In fact, as I said, the page views have gone up, the circulation of the newspaper has gone up, that does not suggest to me a fall in quality, far from it. Actually, what we offer is something different and people want it.
Q589 Baroness Bonham-Carter of Yarnbury: We have been hearing from other newspapers that there is increasing pressure to make their papers less news driven, more magazine style, is this something the FT has come to in any way or feels any pressure on?
Mr Barber: I will let the competition speak for itself but that is not a view which I share in any way. I think it is more important than ever that informed, experienced journalists judge what is newsworthy and explain facts and explain the news. Our job, if you like, is to be the
“Filtering Times” as well as the Financial Times to filter out what is important and relevant to an audience of sophisticated wealthy readers around the world, people who make decisions. I am very happy to say I am a news man and the FT believes in news and news is not dead.
Q590 Baroness Bonham-Carter of Yarnbury: One of the other things we discovered in
America was this strict demarcation between the news editor and the editorial editor. Does the FT have a similar system?
Mr Barber: No, we do not. We have never adopted the American system whereby the managing editor controls the news pages and the editorial page editor controls opinion pages,
I am responsible for both.
Q591 Baroness Bonham-Carter of Yarnbury: What is your reasoning behind that?
Mr Barber: It is not my reasoning, I am just following tradition. That has always been what the FT editor has been responsible for and I did not see any reason to change it when I took up my appointment. I chair the lead of conferences where we decide the editorial line on issues
53 like Europe, the election or Northern Rock, the Bank of England governance performance, et cetera, as well as judging the front page.
Q592 Baroness Bonham-Carter of Yarnbury: You have no concerns that comment can pervade news in a way which is maybe not the best for the reader?
Mr Barber: I read the postbag three days a week and I have not had any letters to that effect over the last two years and it is not a charge which is levelled against the Financial Times. I think the question of trust in our judgment on what is important is sacrosanct, so we do not allow comment to intrude in the news, or if I do see it or hear about it, it is removed.
Q593 Baroness Bonham-Carter of Yarnbury: You believe absolutely in impartiality in the news?
Mr Barber: We do our best every day.
Q594 Chairman: It is fair to say, is it not, that because you are in this specialist, I think you said niche, area, but very broad specialist area, you live or die by the accuracy of your information and you are special as far as that is concerned compared with perhaps more general newspapers?
Mr Barber: Yes, that does set us apart from the rest of the field, particularly in this country.
Accuracy is absolutely paramount. I also think it is the selection of news and the presentation of news. You could have a very accurate story about a totally trivial matter and put it on the front page and that would not necessarily do the readers a service. These are questions of judgment which we wrestle with every day throughout the day, particularly between 5 and 7 o’ clock in the evening.
Q595 Baroness McIntosh of Hudnall: Mr Barber, you touched on the question of advertising revenue earlier. You said that it had gone up, that there was a sort of buoyancy in
54 the whole picture that you were giving us about the way the newspaper is growing. What, in fact, is your dependency on advertising revenue as against other income streams? Where does it come from and where does it go to? Is it mostly still in the newspaper? Is it going to the website more than it did and do you predict that it will in the future?
Mr Barber: I would not wish to give the Committee the wrong impression. I am well aware of the competition out there in terms of print media and on-line, so there is no room for complacency, but I am suggesting that right now - and the economic conditions have been very favourable, of course - the Financial Times is performing quite well. To answer your question more directly, we get 70 per cent of our revenue from advertising, 25 per cent from circulation and five per cent from other sources. I think, and my colleagues tell me, we would still like to be looking at that kind of figure for advertising revenue in the future. What we are looking to do is strengthen the other services that we offer to our niche audience. Clearly FT content is valuable, what could you do to package it to resell it these ways, but also massive areas such as conferences, which are increasingly important, where you can bring top class journalists like Martin Wolf to bear and bring people who would pay a lot of money to go to those conferences, are a useful revenue stream.
Q596 Lord King of Bridgwater: A quick question on your advertising. As you may have heard, The Mail on Sunday editor said 50 per cent of his paper was advertising. I imagine the rates in the FT are considerably higher. I think 60 per cent also of their income came from advertising, so yours is much higher at 70 per cent. Is it because your rates are much higher or what percentage of advertising do you have in the FT in paper, on page?
Mr Barber: It depends on whether it is a good day like today. I would suggest that our advertising rates are considerably higher than others.
55 Q597 Lord King of Bridgwater: As editor, he made it quite clear he sets certain standards as to what he is prepared to accept as the amount of advertising in his newspaper without altering the character of the newspaper. Do you set a standard?
Mr Barber: I have an idea of what would be a less than acceptable proportion, but I have never been in that position where I would have to question or turn away advertising. You have to remember that our ads tend to be rather substantial full page ads and only fairly serious people can afford those ads.
Q598 Chairman: Is your editorial policy ever influenced by those who advertise with you?
Mr Barber: Never.
Q599 Baroness Howe of Idlicote: Mr Barber, thank you very much for a very interesting presentation so far. You described yourself as niche, global, a huge percentage of revenue coming from advertising, not much going on in the UK, perhaps, compared with the rest of the world, maybe you will want to do rather more in the UK over time. Thinking ahead to newspapers generally, and you are one of them, who do you really regard as your competitors? Is it this very specialist market or is it the whole of the print industry and the way they are shaping up from the use of the Internet and so on? Where do you expect it to be in ten years’ time? Can I make one general point because listening to you, we have the BBC and public service broadcasters and they get a certain amount of revenue in order to be public service broadcasters, it seems to me that what you are saying is you are doing this sort of independent, trustworthy, all totally reliable and you are doing it all on the market, am I drawing the right conclusion?
Mr Barber: Not entirely, Lady Howe, but perhaps I can explain. Can I correct you on one matter. We are not neglecting the UK in terms of our advertising base, it accounts for more than 50 per cent by value, it is really important.
56 Q600 Baroness Howe of Idlicote: But the numbers have dropped?
Mr Barber: The numbers have dropped in terms of sales. As a proportion of our overall circulation the UK has become less important, but it is still very important in terms of our advertising base and, indeed, our readership still. In ten years’ time I believe the Financial
Times will still exist as a newspaper. The Financial Times content may change or the vehicles in which the Financial Times material is delivered may change. We may have a
Financial Times which will spew out of a computer, all these things may be different,
Blackberry content may become more important. In terms of our market and compared with the BBC, I would say the Financial Times offers more than just financial news. We have a very substantial network of correspondents in places like, I have just been in China, in
Beijing, Shanghai, we have six people in Tokyo, 11 people in Washington and four in
Brussels. These are people not just writing about pure finance or even business, they are writing about policy, they are writing about politics as it affects business. We will never be a general newspaper. It would be a big mistake if we tried to compete with some of the other general newspapers in this country, a big mistake. We are a business newspaper but we appeal to people around the world in business, finance and public affairs who make decisions, that is our market.
Q601 Chairman: Your number one newspaper competitor, would that be The Wall Street
Journal?
Mr Barber: That would be The Wall Street Journal, my Lord Chairman.
Q602 Chairman: What is your view upon Rupert Murdoch taking over The Wall Street
Journal? Do you expect the result of that is going to be increased competition with the
Financial Times?
Mr Barber: Most likely.
57 Q603 Chairman: Nevertheless, you view this with equanimity, do you?
Mr Barber: Not with equanimity. The Financial Times believes in competition, we believe in markets, but we have competed with The Wall Street Journal for many years. When we launched the US edition of the Financial Times in 1997 many people predicted that we would be ground into the dust by various competitors, not least The Wall Street Journal. In fact, by being very clear in our message, by being very focused in our coverage, we have carved out a very influential audience and, crucially, we have increased our price. We have raised the retail price of the Financial Times in the US from $1 to $2 in two steps. That is more than
The Wall Street Journal. The Wall Street Journal has not been able to increase its price by that amount. By the way, we have also increased our price in the UK this year from £1 to
£1.30 with no significant drop in circulation. I would say that is a good proposition.
Q604 Baroness Eccles of Moulton: Mr Barber, I would like to ask you a very quick question about the coverage of the FT and then get on to my main question which is about journalists. You have talked about the UK edition, a US edition and a European edition and the fact that they alter a little bit with lipstick and eyeshadow on the front and maybe some of the content, do you have other editions as well?
Mr Barber: The Asian edition which was launched in 2003.
Q605 Baroness McIntosh of Hudnall: You have four editions?
Mr Barber: Yes.
Q606 Baroness Eccles of Moulton: Of course, they are all obviously consumed globally by people who speak English inevitably?
Mr Barber: Yes. I would say that perhaps in Europe many of the readers do not have English as their first language.
58 Q607 Lord King of Bridgwater: You do not print any foreign languages, do you?
Mr Barber: No, we own 50 per cent of FT Deutschland, which is a German language newspaper that takes around four to five FT articles per day.
Baroness Eccles of Moulton: From what you have been telling us, and very impressive it has been, the reputation of the FT, and therefore its global reputation et cetera, depends very much on its probity, reliability, accuracy, et cetera, and in order to maintain that I imagine you have to be dependent on the quality of the journalists you employ. Have you noticed any change in the market of journalists available who you can then take on to the newspaper so that this can effect adversely or favourably in maintaining those very important high standards?
Q608 Baroness Scott of Needham Market: My Lord Chairman, my questions could be answered at the same time. Where do you find your journalists? Are they journalists who become specialists or do you find specialists who you then train up to be more journalistic, because it seems to me that some of this is so specialised and the fact that you are global and you are integrating on-line and the printed paper, that you are requiring enormously high levels of skills from the people you employ?
Mr Barber: Lady Eccles, the market has changed, at least for the Financial Times, in one very important respect. When we advertise for graduate trainees to come to work for us we get applications from around the world. We get applications particularly from America now and, indeed, we have hired some Americans. We have hired some Americans in our US operation anyway separately from The Washington Post. We have hired people from Korea.
We have hired people, crucially, who speak several languages, so I think we have found that the talent pool for us has become bigger. If you ask me whether the quality of business journalism in this country is as high as it was, I would say perhaps in one respect it has improved in that there is more interest in business journalism, but not necessarily in standards.
59 That is a general impression, it is not forensic, because when we are looking to hire we would be looking, perhaps, at somebody overseas as much as somebody in the UK. To answer your questions, Lady Scott, if you want to work for the Financial Times you have to be interested in business. You do not need a degree in economics. I do not have an economics degree and
I managed to become editor, perhaps that was a mistake! We do have some very extraordinary gifted people. We get people from think-tanks who we will put on the commentary team to write leaders rather than throwing them into reporting because reporting does require certain basic skills, not least shorthand, being able to ask questions, interview people, whereas commentary requires a specialist knowledge and a degree of fluency in writing and having a point of view that it is different from reporting. We may put them in the commentary team and then train them as reporters. It would be invidious to single out certain people but I will in one respect. Probably the lady who has just performed superbly this year in covering what is a very, very complicated subject in the credit squeeze and credit derivatives market is Gillian Tett . She has a PhD in anthropology, spending a year in
Tajikisthan. She is a very talented lady. She was the Bureau Chief in Tokyo. We have people who are prepared to work across disciplines and also who are prepared to travel. As I said earlier, 16 of the 22 years I have spent on the FT have been out of this country.
Q609 Baroness Eccles of Moulton: Can I ask you one question which we have not addressed at all, that is the weekend FT which, after all, is a rather different publication from the Monday to Friday edition?
Mr Barber: Yes. The weekend FT is the exotic element in the FT’s offering. It comprises arts, reviews and also a magazine which is very profitable called, How to spend it which specialises in luxury goods, luxury items and luxury holidays. It is a kind of magalogue, if you like. Then you have the news sections and the personal finance section. More than 50 per cent of the people who read the FT at the weekend do not read the FT during the week.
60 We would really like to have people reading the FT for six days a week. I should add that part of the change in the readership is that we are encouraging people more in the UK now to subscribe and have the paper delivered, particularly in the M25 area. We have found that is much better than having a rather promiscuous readership who may or may not buy the
Financial Times at the railway station in the morning. I think the FT weekend is a newspaper which people really rather like, they feel it is a warm place and a bit warmer perhaps sometimes than the weekday paper.
Q610 Baroness Eccles of Moulton: It is as successful overseas?
Mr Barber: Yes.
Q611 Chairman: Sometimes you make mistakes, every newspaper makes mistakes, how do you put those right?
Mr Barber: We correct them in the paper immediately.
Q612 Chairman: Do you have a corrections column?
Mr Barber: We do, we have a corrections column on the letters page and we have corrections and clarifications. Either the editor, myself, or the deputy editor or the night editor, the executive editor, Hugh Carnegy, will be responsible for looking at all corrections and we have a file on all corrections or complaints that we have easily accessible. We try to resolve any problems which readers have with FT articles immediately. It is very important.
Q613 Chairman: You do not have a separate independent ---
Mr Barber: No.
Q614 Chairman: You deal with it in the system, so to speak?
Mr Barber: It is in the system and I believe the editor should be ultimately responsible.
61 Q615 Chairman: Then obviously they can go to the Press Complaints Commission?
Mr Barber: They can.
Q616 Chairman: Do many people do that?
Mr Barber: We have had a handful of instances and I think if you look at the PCC record in the last two years we have a pretty good one.
Baroness Bonham-Carter of Yarnbury: You said earlier that you did think standards among journalists had slightly dropped.
Q617 Baroness Eccles of Moulton: Business journalists.
Mr Barber: I did not quite say that, I said that my general impression was while there were more business journalists, I did not believe necessarily that the quality, at least when it came to us, was quite the same.
Q618 Baroness Bonham-Carter of Yarnbury: I was just wondering in what way you thought the quality was not the same.
Mr Barber: I think writing ability and a real understanding of the way business works and an ability to analyse at length in clear prose and in a balanced, authoritative, informed way.
Q619 Baroness Bonham-Carter of Yarnbury: Could that be something to do with too much news gathering via the Internet?
Mr Barber: No.
Baroness Bonham-Carter of Yarnbury: It is a separate point.
Q620 Baroness Eccles of Moulton: Can I ask, because what you say is very interesting, do you have any system within the newspaper - which sounds, from the way you describe it, as
62 though it has very great pride in its own standards - of training or mentoring when you take journalists in, no matter where they come from?
Mr Barber: Absolutely.
Q621 Baroness Eccles of Moulton: There is a sort of critical friendly eye on what they do?
Mr Barber: We have the normal editors who are looking at prose and copy and if it is not up to standard we deal with these problems, but we have a system where we are monitoring the performance of our journalists and we have regular training sessions, which are in very specific detail about how to read a company’s balance sheet and how to report on business.
These are conducted by specialists, but very experienced people from within the paper.
Q622 Baroness Eccles of Moulton: What about how to write a sentence?
Mr Barber: We hope the schools contribute a little bit.
Q623 Baroness Eccles of Moulton: Quite. My point, Mr Barber, is you seem to be implying that it is at that level that there may be a compromise with quality because what you are getting actually is not quite of the high standard you would hope for. I am asking you, do you attempt to correct that?
Mr Barber: Absolutely, all the time, every day. You should read my emails!
Q624 Chairman: Mr Barber, thank you very, very much indeed. A very interesting portrait of the FT. Perhaps if we have got some other questions which arise from this we could write to you?
Mr Barber: My Lord Chairman, thank you. It has been a pleasure. I hope I have been helpful
Chairman: Very much. Thank you.
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