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Arthur MacMillan

The sad decline of The Scotsman

British Journalism Review
Vol. 23, No. 4, 2012, pages 64-69


Arthur MacMillan is a foreign correspondent and news editor for Agence France-Presse (AFP), currently based in Washington. He was previously Scotland on Sunday’s education correspondent and wrote about media for the Sunday Herald in Glasgow.


Contents - Vol 23, No 4, 2012

Editorial - A question of trust 3


Not finally... Subjective views on matters journalistic 5
Irfan Ashraf, Mihir Bose, Andrew Gimson, Joy Johnson

Kevin Marsh - Why the BBC’s boss had to go 19

Phil Harding - It’s time to take ethics seriously 29

Tim Luckhurst - A sordid era, but the future’s bright 35

Jerome Taylor, Mark Neary and Romana Canneti - Opening up closed doors of justice 42

Andrew Gray - Military reporting needs new fronts 51

Graham Lord - Life with a Fleet Street monster 57

Arthur MacMillan - The sad decline of The Scotsman 64

BOOK REVIEWS
Ann Leslie on Ryszard Kapuscinski 70
John Kampfner on Brian Winston 73
Damien McCrystal on Tim Burt 75
Donald Trelford on Miriam Gross 77
Bill Hagerty on Ian Mackay 79
Quotes of the Quarter – 18
Twitter Watch - 40
Leveson Blogs - 50


 

The resurgence of politics in Scotland should have profited its national title, but it is now too late — the money’s running out

The day after The Scotsman was sold to Johnston Press in 2005 for £160 million in cash, the latter’s highly-regarded chief executive appeared at the paper’s Edinburgh headquarters. Along with around 250 journalists and staff I listened intently to Tim Bowdler. “This is a great business and these are great newspapers,” he said of The Scotsman and its sister titles, Scotland on Sunday and the Edinburgh Evening News, seeking to reassure anyone whose first instinct was that the new owners were a local newspaper outfit, not necessarily suited to owning Scotland’s national title.

After a tumultuous decade under the ownership of Sir David and Sir Frederick Barclay, however, there was an appetite for renewal and Johnston Press received a fairly warm welcome. Seizing the moment, Bowdler pointed out that the deal had the backing of Scotland’s top politicians, and though the reference was veiled he couldn’t resist a dig at the outgoing regime and the prodigal son who had led it. The son in question, present only in the minds of everyone listening, was Andrew Neil, the Paisley Grammar School boy who had conquered London at The Sunday Times in the 1980s and 1990s. A gallus and talented journalist who loved a fight, Neil had since tried to redraw the much smaller Scottish media market to his own liking, enraging many in the process. The sale of the Edinburgh papers, alongside scotsman.com – the group’s award-winning website – and a free newspaper franchise, said Neil’s critics, was confirmation that he had failed in his own land. With pleasantries dispensed, the new boss outlined his corporate thinking. Scotsman.com was key to growth and there was scope for improvement in the ageing, yet highly profitable, print business. There were no plans to cut jobs and the company would invest in content, Bowdler insisted. On the financial side, something Johnston Press was very interested in, there was a tax-efficient share purchase scheme that would allow staff to become “stakeholders” in the company. The message was unanimous: good times lay just around the corner.

By all accounts, however, the plan was not a success. Seven years later, the business has been sweated to stagnation. The website is a shadow of its former self. Resources have been slashed and hundreds of employees sacked. The Scotsman currently averages around 30,000 sales on weekdays.

Johnston Press, more than any other, is the British newspaper company that ate itself. Having grown by acquisition, it was probably running out of road before the ink on the Scotsman deal was dry. The group borrowed massively to expand but the spending spree seemed perpetual – within 12 months further purchases brought the company’s outlay over a five-year period to more than £1billion. With the share price halving from its 2007 peak of 491 pence to 250 pence by the end of that year, investors took fright when the advertising market stalled. The subsequent credit crunch and financial downturn tightened the noose and there has been no recovery. At the time of writing, Johnston Press was trading between 10 and 13 pence a share, amid rumours of a market rally on moves to consolidate the regional press.

What appeared to be the company’s crowning moment heralded its decline. After decades of buying up unglamorous, though highly profitable local newspapers, a once small family company had become one of the four biggest newspaper owners in Britain and a popular media stock on the FTSE, given its ability to eke big profits and control costs. Any concerns about Johnston Press making cutbacks at The Scotsman were countered by the memory of Neil’s worst moments as publisher and chief executive. The latter included a vote of no confidence from journalists, some eccentric appointments to the editor’s chair at the flagship daily, a failed price-cutting initiative, and innumerable rows over Scotland’s political direction in the age of devolution. There was a boycott when Neil backed the proposed demutualisation of the Edinburgh insurance institution Standard Life. Its employees and directors, invariably Scotsman readers, had been implacably opposed. The Barclay brothers’ interest in Scotland began to ebb and as soon as they bought the Telegraph Group the die was cast. Neil had also tired of his dalliance north of the Border. Late in 2005, in stepped Johnston Press, a company with a seemingly endless credit line. The Barclays, sensing a happy ending, took the money.


‘Completely out of their depth’

In recent years all newspapers have faced difficulties, but it has been a particularly humbling period for Johnston Press. Nothing better captures the company’s rise and fall than its purchase of The Scotsman, a newspaper that opened in 1817, just 18 months after Napoleon’s defeat at Waterloo. Along with Scotland on Sunday, the paper had a reputation for journalism that required a level of investment that went beyond the ‘Life is Local’ motto of Johnston Press. When editors in Edinburgh told Bowdler about this geographical gap, the warnings had a tranquilising effect.

“He just didn’t say anything,” said a Scotsman executive in post at the time of the takeover. “It was apparent to me, almost instantly, that they did not know what they had bought and were completely out of their depth. There’s always a time lag with new owners but they either had to have a plan that they were going to tell us, or they had to say, ‘We’ve got this marvelous thing; let’s talk about how we’re going to take it to the next level.’ But they didn’t have any of that.”

With ideas in greater demand than ever, with the internet fast becoming the preferred delivery system for journalism, such conversations exposed the gulf in thinking. Johnston broke up the development team of the scotsman.com website, which they lauded at the time of the takeover, and based the company’s online effort in Peterborough, 300 miles away in the English Midlands. The relaunched website bombed.

“They screwed it up within about three months,” said the executive, who was not employed on the online side of the business but was party to the conversations that surrounded it. “To them, the web was just another thing that had to be centrally run.” The hard-won online audience that had made scotsman.com one of the top sites worldwide on Google News was not impressed. Traffic to scotsman.com halved within 18 months.

Another harbinger came early in 2006 when John McGurk, editor of The Scotsman, and his counterparts Iain Martin, of Scotland on Sunday, and John McLellan, of the Edinburgh Evening News, were summoned to a Johnston Press meeting in Leeds, home of the group’s previous flagship title, The Yorkshire Post. Any notions they had that their new owners were interested in journalism disappeared that day.

“They did not care about producing quality at all,” McGurk recalled. “They only cared about producing profit. We all came back with our heads hung low and feeling very miserable about the whole business and it just went from bad to worse.”

Johnston Press had paid a lot for The Scotsman’s parent group, The Scotsman Publications. As a larger company, it possessed the economies of scale to reduce the cost of everything from newsprint to payroll and pensions. It was on this model that Johnston Press earned its money, but it was a naïve basis on which to pay £160million for a product that was approaching its maturity. The Scotsman, aided by a knocked-down cover price of 20 pence and upward of 10,000 bulk copies, had briefly topped a circulation of 100,000 after a relaunch in 2000, but had dropped back when the freebies stopped. By 2004 it had become clear that large numbers of people were no longer buying the paper, opting to read it online. Neil’s last throw of the dice was a compact/tabloid format and, again, the gains were short-lived. Print journalism was dying.

“It had become very apparent that things in the industry were changing dramatically and I think that the Barclays, when Tim Bowdler came along with his £160million, couldn’t believe their luck,” McGurk said.

With advertising revenues already under strain at the time of the deal, incomes started to fall a year later before plunging precipitously across the Johnston group. In late 2007, Bowdler announced he would retire. The long goodbye and a more painful declaration followed in May 2008 when, facing a default on the company’s debt, he was forced to conduct a whip-round on the stock market, the last significant act of his tenure. Bowdler’s successor as chief executive, John Fry, from the Archant group, lasted just over two years. The task of turning the company around has now fallen to Ashley Highfield, a former computer programmer and management consultant who previously held senior positions at Microsoft and the BBC.

Highfield’s lack of newspaper experience is possibly a good thing, given the changing face of the industry. Unlike his predecessors, he has gone on record to say that Johnston Press did fail to invest in content at its stable of around 250 newspapers, a process that self-evidently speeded the company’s demise. “If we start to invest in our papers then we can, actually, if not completely, halt that decline, certainly get it to a place where it’s manageable,” he recently told Radio 4’s The World This Weekend, in an interview that coincided with a relaunch of 170 titles, which did not include The Scotsman group of newspapers.


Cover price increases as paper gets thinnner

The only measure that seems to be heading upward is cover price. This is the “harvesting” approach being played out at The Scotsman, Scotland on Sunday and the Edinburgh Evening News. As Professor Philip Meyer, author of The Vanishing Newspaper, explained, it is a strategy that seeks to maximize shortterm revenues from a troubled product until the market dictates it is no longer commercially viable. While the news, sports, business and comment sections get ever thinner and editorial budgets shrink, the cover price of The Scotsman was increased from £1 to £1.10 in October, a hike of 29 per cent from the 85 pence it cost less than a year ago.

It should be said that The Herald in Glasgow raised its price to the same level within a fortnight. The burning question at The Scotsman, however, is how long can it and its sister newspapers last? On average, the daily sold 30,654 copies in October – 13 per cent fewer than a year ago, and 48 per cent less than the 59,478 copies in October 2005, before the takeover, when it retailed for 55 pence, half the current weekday price.

A deeper insight into the impact that Johnston had on the Scotsman group can be seen in Companies House records. There were 322 journalists on staff in 2005 when the Barclays left. The number fell 13 per cent, to 280, in Johnston’s first year in charge, with the total editorial and production head count standing at 456. The two functions have since been combined in the annual report, but in 2008 the number was 414. By the end of last year it had more than halved to 196. A Johnston Press spokesman said in a statement: “At the end of 2007, the group employed 7,538 people, of which 32.3 per cent were editorial staff. By the end of 2011, overall head count was down by 35.8 per cent but editorial represented a far greater proportion of the remaining staff at 37.2 per cent.”

Such corporate sophistry fails to disguise that, based on its own arithmetic, 635 journalists have been shown the door, but Johnston Press denies such cuts might have something to do with its problems: “Editorial quality and content were and always will be key to our overall growth in audience and hence our ability to generate strong advertising revenue.”

Perhaps Bowdler’s pledge to invest in The Scotsman and its stablemates was genuine before wider debt problems took hold in 2008, but several decisions taken years earlier suggest otherwise. The opening hours of the Scotsman library and archive, an important journalistic resource, were reduced just months after the takeover, illustrating the new management's mindset. And in 2006, Johnston Press cancelled the editorial floor lawyers who checked the pages for libel risks, leaving news editors and senior executives with the impractical option of consulting them by email. Every time the management faced a choice between safeguarding the Scotsman brand or protecting the bottom line, they favoured the latter. It was a different culture from the first seven years of the Barclay brothers’ tenure, when millions were spent on heatset presses, new colour magazines and supplements, more staff, marketing and promotions. As polarising a figure as Andrew Neil was, he never lacked enthusiasm or ambition for the papers and there was a mission to compete with the London-based nationals. The antipathy towards Neil’s personal views was genuine, but it gave his successors a level of political cover that has manifested itself in the sad state of affairs that persists today. At the time of the takeover, Alex Salmond, now First Minister but then a mere Westminster MP, criticised the “poor performance” of the Scotsman group under Neil. The profits of the Barclay era, however, have been followed by losses under the current owners.

In May this year the final link to the Johnston family, which started the company in 1767, was severed when Michael Johnston, latterly the managing director of Scotsman Publications, resigned. His departure illustrates that the company bears no resemblance to the family enterprise it once was. Despite promises to invest, Johnston Press did the opposite. In the process, they have wrecked The Scotsman and their own reputation.