Welsh press crisis 2: Ensuring the survival of our national newspaper

There could be no greater threat to the emerging civic culture of Wales in the wake of devolution than what is currently happening to our national press. Of course, it is arguable that Wales does not have a national press, certainly in comparison with Scotland.

We have the Daily Post whose circulation is confined to northern Wales and which is really an evening paper that comes out early in the day. This month it made its Parliamentary Correspondent redundant. Meanwhile the Western Mail – which has below its masthead a claim to be ‘The National Newspaper of Wales’ – rarely reaches beyond Aberystwyth. More poignantly, relatively few people read either of them. The large majority of people in Wales buy morning newspapers published in London that carry very little Welsh-related content, except sport in the football and rugby season.

At most, 14 per cent of the available Welsh readership buy a morning newspaper published in Wales. The Western Mail, in common with many other regional newspapers, has seen its circulation fall catastrophically in the past decade, from 55,000 in 2000, to 27,000 in the first half of this year.

Nonetheless, the Western Mail in particular, remains crucially important to Welsh civic life and in the context of the National Assembly, to the health of Welsh democracy. The paradox is often cited that at the very time that Welsh political institutions are gaining greater power and credibility, the Welsh print and broadcast media, crucial mechanisms for holding them to account, are both in decline.

The Western Mail is particularly important in this respect. It remains a ‘must read’ for anyone concerned with the debates within the National Assembly and the decisions made by the Welsh Government. BBC Wales has far greater resources and a more truly national reach, breaks stories in the way the Western Mail does less often, and when it does is rarely able to pursue them with the persistence of a newspaper. The recent chain of investigations by BBC Wales into shortcomings at the University of Wales were a rare exception.

It was highly revealing, for example, that Lord Patten, Chairman of the BBC Trust, said that recent important investigations carried out by the press in London – for instance the Daily Telegraph’s pursuit of MPs’ expenses – were not for the BBC to undertake. As he put it in a letter to The Guardian, “…long-term editorialised campaigns that are common in newspapers would not be appropriate for the BBC, which is required to be impartial…”

This is the background against which the National Assembly’s Task and Finish Group on the future outlook for the media in Wales is carrying out its work. Last week it heard compelling evidence from the National Union of Journalists about the decline of the Welsh press, some of which we published here yesterday.

There is no doubt that the chairman of the Group, Labour’s Clwyd South AM Ken Skates, himself a former journalist, and his colleagues are fully aware of the seriousness of the problems. Their challenge will be coming up with practical ideas to ameliorate them.

As a starting point they could do a lot worse than look back at the National Assembly’s report into The Welsh Newspaper Industry that a sub-group of the Communities and Culture Committee published in June 2009. This inquired specifically into the Welsh newspaper industry, whereas the current Task and Finish group is looking at all media.

The 2009 report argued that Trinity Mirror was bleeding Media Wales, which runs the Western Mail, by extracting excessive profits from the company. It noted that in the 1980s regional newspaper groups aspired to make a return on turnover of around 10 per cent. However, in the five years between the start of 2003 and the end of 2007 Media Wales’ profit margins averaged 34.13 per cent. This money grabbing was seen as the source of the crippling decline of the only Welsh newspaper that, as Martin Shipton expressed it here yesterday, “seeks to take a national view of the country”.

By now those high operating margins are much reduced. In the interim report up to the end of July this year, Trinity Mirror’s regional newspapers – it has more than 150 paid for and free newspapers – had an operating margin of 11.1 per cent, down from 17.8 per cent for the corresponding period in the previous year. Significantly, operating profit on its print activities was still 14.8 per cent, much higher than the 3.6 per cent figure for digital activities that, even after years of investment, still account for only 11 per cent of regional revenues. And yet, the company has only recently increased its target for ‘structural cost savings’ for the year from £15 million to £25 million, all with an eye to maintaining the share price.

It is no wonder that so many people long for an ownership model that would allow for greater investment of these returns into key newspapers that are such an important part of our public realm.  For an alternative model one only has to look at the Tindle Group which owns a raft of paid-for local papers, many in Wales – including the Tenby Observer, Brecon and Radnor Express, the Monmouthshire Beacon, the Pembroke and Pembroke Dock Observer launched in July this year, and the Chepstow Review launched only a few weeks ago.

As a private company, still owned by Sir Ray Tindle, the Group is not beholden to the City or shareholders. As its Managing Director Brian Doel says, that makes a huge difference which has enabled it to come through six recessions:

“When we get into times of recession the big groups that have shareholders have to look to dividends and profits. If the revenues aren’t there they have to cut costs, which could change the nature of their newspapers. Whereas Sir Ray, as the only shareholder of the company, is able to say he has seen it before and firmly believes we will come out of it.”

However, whatever the attractions of this model, it is not easy to see how one can move all or part of a public limited company from one model to another if the current owners do not wish to take that journey. In the case of Trinity Mirror, it is hard to see them wanting to sell off the Media Wales division, which must still generate cash for the company.

Those who hanker after a not-for-profit model, on the lines of Glas Cymru’s ownership of Welsh Water, need to take into account the small matter of Trinity Mirror’s net debt of more than £240 million, and a pension fund deficit of around £100 million and, more importantly, that the newspaper industry is one that is decline. Much as we believe that the Western Mail is important for the health of our democracy, it is not, like water, fundamental to our physical health and existence. It is also worth remembering that the Glas Cymru structure came about as the result of the financially distressed state of Hyder plc and its forced sale. Were a similar fate to befall Trinity Mirror, or for the operation of its satellite company Media Wales, that would be the moment when the opportunity for a new solution could emerge.

Herein lies the problem for the National Assembly’s Task and Finish Group. It has no power to bring about a change in the ownership model, and the barriers to new entrants in the print field are, currently, almost insurmountable. Neither can it force Trinity Mirror to buck the constraints of its existing model, even if it could make a case for a more imaginative approach to investment in its Welsh newspapers. The best that the National Assembly and Welsh Government can do is to ensure that nothing done in Wales – either by the Welsh Government or local government – worsens the position or, worst of all, pushes the Western Mail into weekly publication.

In the next week the IWA intends too come back to this issue in its own evidence to the Task and Finish Group.