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Publisher breaks ranks with media groups on mergers

1 April 2009

A leading newspaper entrepreneur has told the Office of Fair Trading of his "total objection" to his fellow publishers' call for the relaxation of media monopoly rules.

Chris Bullivant, who has been publishing free papers in Middle England for around 30 years, says that big publishing companies have "hidden their true motives behind a spurious argument."

His submission to the OFT agrees with the NUJ's contention that relaxing media ownership rules will lead to more job losses and the closure of more papers. He predicts mergers will lead to two big regional newspaper groups – with the financial clout to muscle out any new start-ups.

Chris Bullivant's Observer Standard group is currently in administration.

The NUJ has obtained Chris Bullivant's submission to the OFT:

Dear Sir or Madam,

You may recall I wrote to you regarding the above previously. I am the Chairman of a small newspaper company, Observer Standard Newspapers, based in the English Midlands publishing ten free newspapers in Worcester, Evesham, Bromsgrove, Redditch, Solihull, Stratford upon Avon, Leamington Spa, Rugby, Lutterworth and Coventry.

You have since invited interested parties to comment further on on the above proposals in the light of OFT 1069, the discussion paper you recently circulated.

We compete with Trinity Mirror in Coventry, Solihull, Leamington and Rugby, with Johnston Press in Leamington and Rugby and with Newsquest in Redditch, Bromsgrove, Worcester and Evesham. I have launched more than 50 newspapers over the last 38 years and wish to put on record my total objection to the relaxation of the competition rules as explained in the trade press.

As I said previously, I believe the large publishers are advocating an exchange of assets between them to create greater local newspaper monopolies and nothing in 1069 sways me from that belief – indeed the submissions you have received from stakeholders contained within it merely strengthen my belief.

Their zeal for mergers is no secret – indeed it has largely prompted this review and discussion document.

But they have hidden their true motives behind a spurious argument that the current rules negates their ability to turn the threat of digital media to their print businesses into an opportunity. Newspaper publishers had, and indeed in many ways, still have the ability to be the number one choice for the public on the web. They have just not gone about it very well, as evidenced by the Fish4 failure.

And backed it with the implicit threat that there will be hundreds of closures and thousands of job losses unless they are allowed to consolidate their position. The reality is that all of these large groups built themselves on a sea of debt which has become unrepayable. Johnston Press, as an example owes £750 million and has a value of about £75 million on current share price. This has everything to do with historic business choice and risk in the face of the internet, dwindling circulations as the public seek other platforms for news, views and goods and the stockpiling of a problem which, once the recession hit, became insurmountable.

Their answer to their impatient backers is: "Don't worry – we'll get the government to change the rules so that the four of us can carve the market up profitably again. Those that want to get out, get out clean, those who remain clean up the marketplace."

Is it really the job of the government in a free market to allow the creation of even greater monopolies to save these companies from their own bad business judgement?

It may have made that argument with some justification about the banking system but the failure of some or all of these groups is hardly a threat to civilisation as we know it.

Yes, it is true that there have been product cuts and job losses already and certainly more will follow if the OFT review finds against this crude attempt at cartelism.

But if it finds in favour, there will be as many if not more product closures and job losses.

In the existing scenario such closures may lead to new entrants into the market – be they community, journalist driven, or entrepreneurial.

But if merger and consolidation is allowed into two big groups, they will have an even great stranglehold on the marketplace to keep budding publishers out of whatever ilk – and the ability to charge advertisers what they like and dish up whatever quality of journalism to readers they feel is adequate.

Chris Bullivant
Chairman
Observer Standard Newspapers Ltd

Barry Fitzpatrick, NUJ Head of Publishing, said:

"It is rare that we agree with a newspaper publisher, but on this occasion Chris Bullivant is absolutely right.
"Even though we are looking at this problem from opposing perspectives, we share his conclusions that it is the wrong time to relax regulations which already work in favour of the big regional monopolies and against the interests of the readers.
"I hope the Office of Fair Trading will not only look at the commercial interest but also the need to protect plurality of media outlets."

Today was the closing date for submissions on the media monopoly rules to the OFT. The NUJ has also made a submission.

Tags: , regional media, review, chris bullivant, oft, media plurality, ownership, trinity mirror, johston press, newsquest, observer standard, merger