The finances of the British newspaper industry are in a mess. Not one of our major broadsheets operates at a profit. An industry with total sales of 700m manages to turn in net losses of some 50m. Competition, such as it is, seems to be based on who can bleed the most and the longest.
In any other sector enough alarm bells would be sounding to have the regulators crawling all over the shop. Yet when Peers voiced concerns at the Committee Stage in the Lords over the new Competition Bill the Government’s response was to play a very straight, dead bat on all proposals to give the new measure extra teeth.
Lord Haskel, for the Government, said that since the Bill introduces stronger legislation on abuse of dominance and covers predatory pricing there was no further need for action. This was, no doubt, the same message the Prime Minister gave to Rupert Murdoch when the latter called at Number 10 for a quiet chat, last week.
I beg to differ. The former Director of Fair Trading, Lord Borrie, told the Lords last Thursday “the pricing policy of The Times newspaper has repeatedly threatened the continued existence of The Independent, distorts competition with The Daily Telegraph and other broadsheet newspapers and, I have no doubt, has a serious exclusionary effect because it is likely to deter those who might otherwise be thinking of entering the market”.
Lord Borrie succinctly reaches the nub of all concerns. The behaviour of News International is based not just on its strengths in a particular sector. Its ability to cross-subsidise and to tolerate losses – estimated at 30m a year on The Times alone – as part of a wider grand design could cost us the existence of one of our major broadsheets. And, as Lord
Borrie points out, virtually excludes new entrants into the market.
As students of his tactics in the broadcast media will know, Murdoch is a past master at not blinking first. He told NI shareholders: “No way will I call a truce. No one else wants to call a truce. They insult me every day, so they can go to hell.”
Unfortunately it is the British newspaper industry which is fast going to hell. However, there are many stages of the Bill yet to go. The Lords will have another go at the issue next month and this time I intend to test the opinion of the House in a vote on an amendment which will strengthen the Bill to allow regulators to take a specific look at newspaper finances.
Before the general election Nigel Griffiths MP said: “I want an inquiry now before the only choice the British public has to read is The Sun or The Times.” Griffiths is now the Minister at the Department of Trade & Industry responsible for the Competition Bill when it reaches the House of Commons. My concerns are not so Murdoch-specific. I have met no one who believes that the present state of newspaper financing is either sane or satisfactory.
A free and diverse press is one of the bulwarks of a healthy democracy. The Competition Bill offers Parliament an opportunity to put in place a framework for more healthy and open competition, while reining in the predatory ambitions of those with the deepest pockets.