The newspaper industry

Fleet Street is a jungle”. That is not the most original and penetrating comment ever made by Cecil Harmsworth King, chairman of the International Publishing Corporation, from the safety of whose mighty ramparts he could boast “I shall survive”. Which is more than can be said of the one national daily paper, one London evening, four national Sundays and over one hundred local papers which have perished in the jungle since the war.

Perhaps the most famous of these were the News Chronicle and The Star, which collapsed overnight in October 1960. There was a great deal of fuss over this, but the fate of the two papers was inescapable. Although they both had a circulation of over a million, during the last nine months of their lives they showed a combined loss of £300,000. In typical style, the Daily Mirror composed the most pointed of their many epitaphs: “A commercial failure is a commercial failure. However sad. However regretful.”

There have been no comparable deaths in Fleet Street since then but this is not to say that all the papers are bursting with health. A recent report by the Economist Intelligence Unit (EIU) fore, cast that four national newspapers will close by 1970; five dailies and two Sundays are making losses amounting to several million pounds a year. What the Manchester Guardian said ten years ago is still true:

“Between the upper and the nether millstones of limited revenue and rising costs some units of the industry are being ground into oblivion.”

Today, one of these units is The Guardian itself, which is losing around £1 million a year and which last December warned the printing unions that production costs had to be cut by a quarter by the end of the year.

Just as in other industries, production costs are a persistent worry to the newspaper managements. In evidence to the 1961 Royal Commission on the Press, the Daily Mirror said that its total variable costs had increased 4.2 times between 1937 and 1960, and fixed costs 2.2 times.

In this situation, wages are bound to be under the microscope; in Fleet Street they have always tended to be above average, although none of the printing workers is yet able to employ quite as many servants as some of the shareholders:

Table 1: Average Weekly Earnings For Men of 21 Years and Over

1938 1956 1962 1963 1964 1965 1966
Paper, Printing and Publishing £4.11.8 £15.4.10 £18.13.0 £19.10.0 £21.4.0 £22.17.0 £23.17.0
All Industries Covered £3.9.0 £11.17.11 £15.17.0 £16.15.0 £18.2.0 £19.12.0 £20.6.0

(Ministry of Labour Gazette)

When the EIU reported last January, it pointed a disapproving finger at Fleet Street’s wages and commented that the industry “. . . is almost unique in the degree to which control of labour is in the hands of the unions.” The printing unions might well take this as a back-handed compliment to the efficiency with which they have done their job—which was, after all, what the EIU was supposed to be looking for.

Apart from their efforts to hold down production costs and wages, the newspapers are locked in a battle with each other, for circulation and advertisements. The losers of the battle find themselves in a descending spiral; a low circulation, or a high circulation in the wrong places, does not attract revenue from advertisements. This usually means cuts in quality (one of the troubles of the News Chronicle was that it could not afford to run as many pages as its rivals), which mean lower circulation and therefore less advertisements . . .

For the winners the spiral works in the opposite direction; with the exception of The Times, the cost of advertising in a national newspaper is tied to its circulation:

Table 2

Price Circulation June 1966 Advertising Rate per Single col. in.
Daily Mirror 4d 5,078,000 £34.07.5d

Daily Express 4d 3,954,000 £30.00.0d
Daily Mail 4d 2,381,000 £22.00.0d
Daily Telegraph 4d 1,354,000 £20,00,0d
The Sun 4d 1,248,000 £11.00.0d
Daily Sketch 4d 849,000 £9.00.0d
The Guardian 5d 283,000 £8.00.0d
The Times 6d 273,000 £12.00.0d
Morning Star 4d 63,000 £1.10.0d

(Circulation figures from the 1966 Report of the Press Council-avertising rates from the Newspaper Press Directory 1967)

Advertising revenue is, and has been for some time, vital to a newspaper’s survival; without it it simply could not make ends meet. The Daily Express told a PEP enquiry in 1955 (Balance Sheet of the Press) that 39 per cent of its revenue came from advertisements; the EIU found some “quality” daillies getting 70 or 80 per cent of their incomes from the same source and the “populars” about 40 per cent.

To attract the advertisements, the papers must themselves advertise, in campaigns aimed at industry’s sales directors. The Daily Telegraph says that on Fridays, when its colour supplement comes out, circulation goes up to 1,450,858—“. . . at just the right time for the peak weekend spending period.” (The whole idea, in fact, behind the colour supplements was to attract advertisers—as is obvious from the most casual glance through them.) Then there is “. . . the advertising medium that sells best” (News of the World, circulation 6,184,000) and “The Religious Weekly With National Appeal” (Methodist Recorder, circulation 69,568.)

The accepted formula for survival in Fleet Street’s jungle is size and diversification. Two giants out-top the rest—the International Publishing Corporation (IPC) and the Thomson Organisation. Both have big investments in newspapers and publishing overseas and in commercial television. Both received EIU’s admiration for being “operated as a commercial business” (Daily Mirror) and “profit orientated” (Sunday Times).

Thomsons own the Sunday Times, the Scotsman, the Western Mail and now, after the Monopolies Commission had given the necessary approval under the Monopolies and Mergers Act, The Times—a takeover which in itself showed up the plight of the newspaper industry. Thomsons also own exhibition companies, a package tour firm and an airline.

IPC, in the words of the Press Council (Report 1966), is the “. . . largest and most comprehensive publishing and communications empire in the world.” It owns the Daily Mirror, Sunday Mirror, The People, The Sun, and something like ninety weekly magazines and 123 which come out less frequently, among them Autocar, Country Life, Everywoman. The weekly total was recently reduced by one when IPC put The Statist, after a long and painfully unprofitable iillness, to sleep.

A long way behind these two groups are Associated Newspapers (Daily Mail, Daily Sketch, Evening News, National Opinion Polls, a stake in Southern Television and in the North Sea explorations) and Beaverbrook Newspapers (Daily Express, Sunday Express, Evening Standard, a share in ATV.) Then there are the smaller, sometimes private, companies like the Daily Telegraph Ltd. and the Manchester Guardian and Evening News Ltd. This was how the three biggest groups made out in 1965:

Table 3

Profits Before Tax
IPC £12,728,000
Thomsons £6,996,000
Associated £4,454,000

For the future, Fleet Street’s barometer is not set fair. The competition from television will not grow any weaker; the decline in advertising revenue will probably continue; production costs will not fall. The big groups have the resources to ride the storm and to put in labour saving equipment; in 1965 Thomsons invested £2.7 million in equipment and a new paper of their’s — the Evening Post in Reading—is composed with a computer. The small groups will be hard pressed to compete with this; their papers are especially vulnerable.

The suggested remedies are not original. The EIU advised an all-out war on costs, saying that in London alone the industry could sack enough workers to save nearly £5 million a year. Lord Thomson wants the unions to cooperate: “We have to learn to use these new tools of our trade, and I hope the efforts to do so will not be hamstrung by restrictive practices . . .” (Fleet Street, the Inside Story of Journalism — Macdonald 1966.)

And of course someone had to suggest the State stepping in like a fairy godmother to save it all. Richard Brightshaw, joint general secretary of SOGAT (one of the printing unions) has “. . . called for a National Printing Corporation, backed with large Government resources, which would . . . take over ’commercial projects and ailing publications’. . .” Lena Jeger, Labour M.P., “. . . is a strong supporter of outright nationalisation.” (Sunday Times, 8/1/67).

Like most of the lamentations about the state of Fleet Street, these are based on the assumption that newspapers are sacred. In fact, they are commodities, like the rest of capitalism’s wealth. When it is applied to other industries, the newspapers always support the principle that if something is unprofitable it should not be produced. If Fleet Street is a jungle, it is capitalism’s profit motive which has made it so.

IVAN

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