The Isle of Dogs is sleeping a little easier. They naively imagine that, with the closure this week of the down-market leftish tabloid (ital) Today (end ital), the newspaper war is over.
(Incidentally, the watchdogs of democracy in Britain were formerly known by the collective noun “”Fleet Street”, but now many have moved both editorial and presses to the eastern docklands, in and near the Isle of Dogs, that is perhaps a better collective noun to describe them, though they have not put it into print themselves.)
The war began about a year ago when Rupert Murdoch, owner of The Times began to cut cover prices. And it has resulted in the man who started it closing one of his own newspapers, Today, which he bought from founder Eddy Shah in 1987. But save the tears. (Ital) Today (end ital) was no loss, either to Murdoch, or indeed to journalism. It was a tabloid with nominally centre-left views, articulated in the crass way of British tabloids. It had collected about $280 million in losses.
The war has some lessons for classical economic modellers _ information is not like widgets _ and for those concerned about media monopolies in democracies. It may seem a contradiction, but the regional monopolies of newspapers in Australian cities like Perth, Adelaide, Brisbane, Canberra and Hobart, are perhaps less threatening to diversity of views (even if nearly all Murdoch owned) than the great diverse British press with its five major daily tabloids (two minors), now four; five major daily qualities and four quality Sundays all circulating throughout the nation. More on why this may be so anon, but first to some background on the recent events.
Murdoch led the tabloid market with The Sun, the Sunday tabloid market with The News of the World, and the Sunday quality broadsheet market with The Sunday Times, but the quality broadsheet market was dominated the Daily Telegraph, owned by Conrad Black (who, incidentally owns The Age, Melbourne, and The Sydney Morning Herald, rivalling the tabloid Herald-Sun and Telegraph Mirror in those cities respectively).
Murdoch halved the price of The Times to at 40c. Its circulation rose dramatically from around 400,000 to 680,000. But the Daily Telegraph held on. Its circulation remained above a million. Murdoch did not reckon on the loyalty of its mainly elderly, Tory readers. Instead, the collateral damage was done to The Independent. The Independent, founded in 1986 largely with institutional share-market money (and no-one to won more than 15 per cent), was initially a great success and at one stage overtook The Times’s circulation.
The cover-price war forced The Independent to savagely cut costs and it eventually came under the control of the Mirror group. It lost its independence, and a lot of its quality. The Independent _ and onwnership free from barons _ was the victim of the price war.
Another victim was the balance sheets of all the quality broadsheets. During the war, cover prices were well below what was required for reasonable profits.
Moreover, with the increase in the circulation of The Times, Murdoch’s presses were becoming stretched.
The upshot came last week with Murdoch announcing the closure of Today (circulation 500,000), which would give him more printing capacity, and an increase in the cover price of The Times to 60c. Just two months ago it was 40c.
Further, he preferred closure rather than sale of Today. He hoped Today readers would move to his other titles, and he offered free copies of The Sun to Today buyers on the day it closed and the day after sold The Sun on some stands for a large discount in a hope of enticing them.
And so Today, founded with the intent of breaking free from print unions with computer technology (as the Independent was founded to break free from press barons), was also the victim of the price war.
The closure decision tells us something of the nature of the economics and character of British newspapers.
He could have sold the paper to owner of Harrods Mohammed al-Fayed, for perhaps $25 million. However, if he picks up even half the Today readers with his other titles he will get more than that very quickly.
This is because the tabloid newspapers are very thin and most are sold on the street. It means extra copies sold are almost all profit _ unlike the fat, home-delivered classified-ad-laden papers in Australian capitals, where the costs of marketing, printing and delivering extra copies is substantial.
There is, therefore, a great incentive for British tabloids to engage in sensationalism to attract newsstand buyers. Large home-delivered papers in Australian cities, on the other hand, require consistency in quality. Most copies are sold to regulars before they are printed, so there is no reward for sensationalism.
Of course, another reason to close Today, rather than sell, is that Murdoch will not want Fayed to do with Today what Murdoch himself did with the Sun a decade ago _ buy a failing paper and turn it into a market leader. And with one fewer title, it will be easier for him to buy the Express, should the opportunity arise.
A lot of British commentators have bemoaned the loss of another voice. (Ital) Today (end Ital) was moderate leftist.
They could have saved their breath. There are still plenty newspapers expressing a very diverse range of views in the British national press. But it is not necessarily a good thing for democracy, and is perhaps more open to manipulation than in newspaper markets like the US, Canada and Australia, where, typically, each major city is dominated by one paper, or at most two.
The nine major British national dailies attract readers according to their political and socio-economic leanings, and tend to reinforce those leanings. Thus the Guardian is up-market left, the Daily Telegraph and The Times up-market right, the Mirror down-market left and the Sun usually down-market right. And so on.
Their readers know exactly where they are, and nod sagely and approvingly as their commentators tell then what they want to hear in a way they want to hear it. There is no reader pressure to be balanced. To the contrary, there is reader pressure to be biased _ to give people what they want.
In the US, Canada and Australia, on the other hand, the single newspapers which dominate most cities are under constant reader pressure to stay reasonably balanced.
The Canberra Times’ readers, for example, is regularly denounce the paper as a dangerous Labor-supporting ripper of the fabric of society, on one hand, and a typically capitalist, pro-business organ that has forsaken its social responsibility, on the other, and call for it to mend its ways.
No-one would accuse the Telegraph in London of the former, or the Guardian of the latter. Sure, each London paper gets attacked or ridiculed for its political spots, but for what they are, not with any idea of asking the paper to change them. And much of the attack and sarcastic ridicule comes from each other, as they attack each other’s politics. This is rarely done in Australia _ attacking a paper geographically far away is pointless.
British newspapers appear to be judged and judge themselves on the readership market alone. If they are being bought by their particular pocket of the market they are happy. They each seem to be responsible for their own segment of readership and pander to it, with no regard for overall political fairness.
Herein lies a danger. Murdoch has pushed a very hard pro-Tory line with the Sun. He has also built up a large reader loyalty in one slice of the market _ about 10 million of them. This puts him in a very powerful position because he can make the Sun swap sides and the readers will be influenced accordingly. Indeed, he is doing it. Whether he just like the exercise of power or whether he sees his business benefiting by backing a winner is not so much the issue _ either way it is dangerous.
He cannot do such a thing in the Australian cities where he has a monopoly paper, or at least not as successfully.
That this is the case is due purely to geography. When most papers were founded, transmission of pages to many printing sites was not technologically possible. You could not base a paper in Sydney or New York and have it on the breakfast table and newsstands in Brisbane, Adelaide and Melbourne or San Francisco, Chicago and Los Angeles the next day. Yet the Britain’s small size and its road and rail system permitted London papers to go overnight through the whole nation.
The irony has been that while British geography and transport has resulted in a seemingly very diverse press, it has resulted in individual owners having great power because they could build an intensely loyal readership segment and then seek to influence it.
In the US, Canada and Australia, on the other hand, newspapers generally have to appeal to the whole market, across the political spectrum and through all economic groups. There is nothing to be gained by political alignment. The circulation battle is not to pinch readers from other papers, but to get non-newspaper buyers to be buyers.
In Britain, though, the geography and economics of newspapers suggest that the events of the past few months have not been a newspaper war, but just another battle. Sure, it has been 17 years since the last daily closed, but in the past 35 years there have been at least eight national daily or Sunday titles launched. There is no reason to believe the fluidity will change.
In the US, Canada and Australia, on the other hand, the trend is towards one dominant paper in each city and the demand for expression of diversity of opinion is one that demands diversity within the newspaper, and then all readers are exposed to it _ so it is often a more effective diversity than having many titles as the vehicle of diversity because few readers are exposed to it.
I do not want to be an apologist for Murdoch in Australia, but the geography and economics in Australia makes his high percentage of overall ownership (though unacceptable) less threatening than his lesser percentage of ownership in Britain _ as his wooing of Tony Blair testifies.