'Newspapers face carnage in recession.'

Thursday, October 30, 2008

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Five Papers Could Close In Crisis, by James Silver, Media reporter

As many as five national newspaper titles could close in a recession which looks set to cut a swathe through the UK media industry - so claims one of the most respected figures in broadsheet newspapers.

"The last time we had a really profound recession was 1990-91 and we lost three national newspaper titles as a result of it or a short time after it, because of the weakened state of the market," says Emily Bell, Guardian News and Media Group's director of digital content, in an interview with Sky News Online.

"The Sunday Correspondent, The News on Sunday and eventually Today, all closed back then.

"Now we're seeing a recession which could be worse than that one - according to the Chancellor, the outlook for the economy is at its worst for 60 years.

"So, if you think that we're now witnessing in the newspaper market a more rapid rate of decline in terms of circulation than at any time previously and add to that the fact that people are going to be very cautious about discretionary spending, which means they will buy fewer newspapers and buy fewer products - which means advertising will be driven down - then I don't think it's unrealistic to say that 25% of the nineteen mainstream national titles out there will go out of business," she says.

What's more, the notion that the newspaper industry, while in terminal decline, still has decades of life left in it, will be sorely tested, she continues.

"This recession is going to be a real test of that theory, because there isn't necessarily going to be a revival in the advertising industry on the other side in the way that there has been in the past."

Which newspapers does Ms Bell think are most likely to fail?

"Although you would pick The Independent titles as the ones with the lowest circulation, I don't think that means they are the most likely to fail, as they are not necessarily run for profit. So don't write them off.

"[Express owner] Richard Desmond, on the other hand, does run his papers for profit and they are still profitable.

"But if that ceases to be the case in the next few years, then I think you would look at the Express group and say what's its long-term future?

"Particularly as [mid-market rival] The Daily Mail is going to be aggressive and investing through the downturn.

She says: "Trinity Mirror has to turn a profit and return money to shareholders, which could leave its titles similarly exposed."

However, Ms Bell is more optimistic about the digital side of the business.

"At The Guardian well over 10% of our revenues come from digital now," she says, "but while [digital] is still growing, I'd expect the rate of growth to slow.

"Although revenue streams from web video advertising are holding up very well, we are seeing a stalling in digital display advertising.

"And if the recession is deep - and doesn't bottom out quickly - I think the answer for newspaper groups is to keep investing in digital, as that is where their growing revenues are going to be."

While it's a "grim time" for any business at the moment, she continues, the "core" UK newspaper brands are very innovative, and arguably better equipped to deal with economic upheaval than other sectors.

"News International are moving all of their assets onto one campus in Wapping. The Guardian Media Group are moving into a fantastic new building, where everyone will integrate and work together. The Telegraph have already done it with their move to Victoria.

"These moves are about getting much more out of your existing assets, to improve and expand your journalism into new formats."

So how gloomy is she exactly about the next few years?

"No one really knows where all this is heading," she replies. "But what we're certainly seeing is a shuffling of the pack. And that brings with it a lot of opportunities too."

Posted by James Silver - On Thursday, October 30, 2008

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