Attended by over 200 people, a debate in Glasgow, on November 16, about the Scottish Digital Network – a proposed digital TV channel (with supporting online presence) dedicated to Scottish content – attracted a glittering array of speakers, including former director general of the BBC, Greg Dyke. Here, one of the speakers – Jim Raeburn, director of the Scottish Newspaper Society – airs his thoughts. The SDN is the main recommendation of the Scottish Broadcasting Commission, set up three years ago, led by former BBC Scotland head of news and current affairs, Blair Jenkins. Other speeches to follow….
THE Scottish Newspaper Society was formed in January this year following a merger between the Scottish Daily Newspaper Society and the Scottish Newspaper Publishers Association, the latter representing publishers of local newspapers. We therefore have one organisation representing local newspapers from Shetland to Stranraer and from Stornoway to Berwick-upon-Tweed in addition to Scottish regional and national dailies and Sundays and the Scottish editions of selected UK national titles.
Ours is an industry which still sees over 10 million newspapers actively purchased in Scotland each and every week. In addition, our indigenous titles deliver in excess of five million online unique users per month. We therefore provide comprehensive, in-depth services at local and regional level unmatched by any other part of the media.
In the context of today’s discussions, I have to underline that the newspaper industry relies upon advertising revenue to fund its commitment to journalism, which in turn relies upon readership and audience.
The Scottish Broadcasting Commission’s 2008 report, Platform for Success, was a well-constructed document presenting a persuasive case for a Scottish digital network. So persuasive, in fact, that it received unanimous support in the Scottish Parliament.
It is therefore a serious aspiration, but in reality is it affordable?
Also, the report essentially was all about broadcasting with limited account being taken of the potential impact on other Scottish media. I was therefore pleased to see that Blair and his panel of experts would be addressing the key question of how the proposed network should be funded. The previous indication was that the running costs of the network could be up to an estimated £75 million per annum.
How that not inconsiderable sum might be raised is of interest to, and must concern, commercial providers faced with the prospect of competition from the proposed network. Certainly it does concern the newspaper industry.
It is no secret our industry is going through hard times at the moment, primarily because of the severe downturn in advertising revenues. Only last week, two of my member companies, Trinity Mirror and Johnston Press, reported advertising revenues falling a further 5.4 per cent in the second half of this year, a pattern which I believe is generally representative of the industry as a whole.
While my members are scrapping hard for every pound, they are not sitting on their hands waiting for sunnier days to return when the economic cycle comes good again. They have invested massively in the provision of online services. Returns are steadily improving but they have still a long way to go.
It is against this background that I have to say that the possibility of having two publicly-funded public service broadcasters – I am not counting Channel 4 – in Scotland competing head-to-head with newspapers in the provision of certain services is concerning.
While I am a great admirer of the BBC, it does enjoy the hugely privileged position of public funding through the television licence fee and sometimes gives the impression of knowing no boundaries.
As an example, two years ago, BBC management came forward with plans for a substantial expansion of its web based content. In Scotland, this would have seen the staffing for each of six regional websites increased from one to six journalists, giving a level of resource for which we could see no commercial justification. There was a very real danger that with the heavy promotion of its websites the BBC’s actions could have seriously damaged the all important audience reach of newspaper websites. Fortunately, the combination of industry lobbying and Ofcom’s market impact assessment persuaded the BBC Trust to reach a sensible decision.
That was by no means an isolated example of the BBC’s ambitions for territorial gains into areas fully served by commercial media subject to the financial disciplines of the market place. We have no wish for turf wars with another publicly funded network conducting itself in similar fashion – especially with regard to websites – and distorting the market.
We as an industry neither seek public subsidy nor do we believe it should be given to our competitors in the public, or private, sector without a full market impact assessment being conducted by Ofcom.
So, if we are unimpressed by arguments for public funding, where do we stand on the proposed network competing for advertising? While we might not be exactly overjoyed about it, the industry accepts competition, provided it is fair competition.
However, let me remind you of what the Commission’s original report said two years ago when putting forward the case for the new network to be set up on a not-for-profit basis. I quote: “Importantly, a channel which is not pursuing advertising revenue would not be competing for the main source of income of Scotland’s existing commercial media, which face significant pressures on revenues and costs.”
That statement seemed to me a recognition by the Commission that there was no advertising pot of gold over the rainbow with a spare £75 million to tap into. Two years on, there is still no rainbow in sight.
The Panel then flags up a third option: funding from a combination of public and private sources. I hope I am wrong but that sounds ominously like a BBC with the right to advertise thrown in.
And into the mix we now have the UK Government’s plans for local television.
Is it feasible to bring together the Scottish Digital Network and local TV in a way which is economically viable? I suspect that at this stage there are too many unknowns to say definitively whether or not the combination offers a way forward.
Perhaps Bobby Hain will reveal STV’s thinking and no doubt some of the Society’s larger member companies who were engaged in the previous Government’s IFNC proposals will be looking at the opportunites. However, dividing £25 million from the BBC settlement for local TV start up costs plus £5 million per year for content from local TV stations between up to 20 stations pales into insignificance against the £75 million needed for the Scottish Digital Network.
In his interim report, Nicholas Shott advised Jeremy Hunt that even in densely populated urban areas, the economics of a TV business funded mainly by advertising would be challenging. Additional revenue sources would therefore need to be explored exhaustively.
All of this tells me that the economic reality of delivering this aspiration is an enormous challenge, most particularly in current market conditions.
In conclusion, we are concerned that public funding for the Scottish Digital Network to provide services covering news and current affairs, information and sport, which we consider to be fully met by commercial media, could have a damaging impact on the Scottish Newspaper industry and its online services.
We trust that the Panel will take due account of our concerns when framing its recommendations.
