UK: STREET OF SHAME. - The UK press is a reformed character only in its own mind. Though production is '90s-style, its people management would shame a '50s building site - and its readers want more than it offers.

by Simon Caulkin.
Last Updated: 31 Aug 2010

The UK press is a reformed character only in its own mind. Though production is '90s-style, its people management would shame a '50s building site - and its readers want more than it offers.

When Management Today last wrote about the national press it was 1979, the Conservatives had just come to power and the royal family commanded affection and respect. Journalists produced newspapers on typewriters, trade unions controlled print-runs and employment, and Fleet Street, with its cramped premises, cliquey drinking holes and legendarily bizarre working practices ('Old Spanish Customs') was the corrupt, boozy and sentimental heart of the industry.

Seventeen years later, the picture has drastically changed. 'Oh yes, newspapers are far better managed than they were then,' declares Sir Frank Rogers, chairman of the Newspaper Publishers' Association and a director of the Daily Telegraph. 'They were, frankly, extremely poorly managed in 1979.' He, like others, credits the sobering up to a healthy dose of economic reality. Managers have at last learned to manage while journalists grudgingly weigh budgets as well as adjectives. New technology has lowered the industry's costs, brand new printing plants are dotted around Docklands, and their output is delivered by road not rail. Most newspaper groups are reasonably profitable. Sir Frank Barlow is managing director of Pearson which owns the Financial Times. 'We used to spend this much time and energy,' he says spreading his arms wide,'on production, and this much' - parting finger and thumb - 'on marketing. Now it's the other way round.' In the folklore of the industry, the turning point was a January day 10 years ago when Rupert Murdoch transferred his stable of newspapers lock, stock and printing-press from central London to the East End - and, as Lunchtime O'Booze certainly put it at the time, drew down the curtain on a passing era. When journalists woke up the next morning, Fleet Street, to the regret of many, was no more. In a typically pugnacious celebration of the Wapping anniversary, Andrew Neil, a long-time editor of Murdoch's Sunday Times, boasted that News International's initiative not only helped keep newspapers owned by other publishers alive, it also prepared the ground for the launch of the Independent.

Not everyone ascribes all the credit to Murdoch. 'The worm,' says Barlow, 'was already beginning to turn.' But in any case in the long view this was the end of a paragraph, not history. Less feted in the newspaper annals than the flight to Wapping is another January day eight years later. When on 16 January 1994, Los Angeles was hit by an earthquake, the news broke not on TV, still less on the wire services or in the newspapers, but on the Internet. The spectres haunting newspaper publishers these days are no longer trade-union militants but something much more unpredictable: the fluid circuits of technology and the changing habits of those who used to be their customers.

In California, computer buffs wake up, log on, check their e-mail and then call up the news headlines on screen, personalised to their own requirements. A screen-based 'Daily Me' - the much hypothesised electronic newspaper combining, say, The Times letters page, the Telegraph's foreign news, sport from the Mail and all the coverage of certain companies or industries - will soon be feasible. And already at experimental stage is a kind of electronic scroll, rolling up to the size of a fountain pen, which combines the portability of the newspaper with the instant reaction of the computer. As Nicholas Negroponte, founder of the Media Lab at the Massachusetts Institute of Technology, tersely told a reporter (by e-mail): 'If a newspaper takes the word "paper" seriously, it will be used to wrap dead fish.'

Newspapers are only beginning to come to terms with the historic shift from 'atoms to bits,' to quote Negroponte again. 'In the past newspapers were a manufacturing industry,' notes Peter Preston, editor-in-chief of the Guardian and Observer. 'Over the past 10 years there has been a shift to a realisation that we are news-and information-gatherers who currently happen to put out the result as newspapers. The real assets are in the news-gathering and processing, not production.'

Embracing another round of new technology, newspapers are queuing up to go on line. Five hundred now have sites on the World Wide Web, and more are following daily. As they try and figure out where the revenues will come from, however, outsiders may wonder whether the press is facing backwards or forwards - or, indeed, whether the character is as reformed as it thinks it is. 'When legend becomes fact, print the legend,' famously advises the newspaperman in John Ford's The Man Who Shot Liberty Valance, justifying his decision to maintain a romantic fiction rather than expose the inconvenient truth. There is none so prone to believe its own legends as the press, and just as it loved to regale itself with stories of Fleet Street excesses, so now it may be in danger of taking its new realism a bit too seriously for its own good.

Consider for a minute the industry's preoccupations over the past few months: oceans of sentimentality expended over the closure of Today; savage price wars prompting accusations of predatory pricing; spiralling costs of the main raw material, newsprint; controversial sale of the ailing Independent titles to the Mirror Group; the Maxwell trial; the proposed merger of MAI and United Newspapers of the Express; and a game of editorial musical chairs which has involved half the senior jobs in the industry. In other words: confrontation, intrigue, disaster, production constraints and tycoonery, the stuff of Fleet Street not just 17 but 50 or even 100 years ago. For a supposedly hard-nosed, modern business, newspaper behaviour and agendas can still look decidedly, well, tabloid: more early 20th than 21st century.

Indeed, with hindsight, the best epitaph for the whole post-Wapping decade might be, to paraphrase the famous headline: small earthquake in Fleet Street, not many newspapers closed. Far from new technology enabling a dawning era of consumer choice, of the newcomers, Today, like the Sunday Correspondent, is yesterday, and now that the Independent and its Sunday sister aren't, most in the industry agree with Doug Flynn, managing director of News International, that 'there's not much reason that they can, or should, survive'. A new pluralism? Hardly, with News International and the Mirror Group controlling more than 50% of newspaper circulation between them. Says Barlow: 'In the days of globalisation, medium-sized groups are vulnerable. You need to be part of a big group to avoid the threat of takeover.'

Nor have the 1990s brought an upturn in an overall sales curve which, since the newspaper heyday of the 1960s, has slid from 16 million to 14 million for dailies and more steeply from 25 million to 16 million for Sundays. Much of this has to do with changing social habits rather than the failings of the press - competition with TV, the decline of public transport, the proliferation of alternative occupations on Sunday - and is partly offset by much larger papers. But whatever the reason, the sales droop is matched by an equally steady decline in national newspapers' share of the advertising cake, which for broadsheets is their most important source of revenue.

Even the shine of current financial respectability fades under scrutiny. Some is due to the windfall sale of Fleet Street properties and the cashing in of Reuters shares. Moreover, like lottery winners buying Ferraris, too often newspapers overinvested in physical production, ignoring the fact that with new technology and the trouncing of the unions vertical integration was no longer necessary. Result: considerable print overcapacity and, recently, a steady move to combine and rationalise facilities.

To be sure, the gloom can be overdone. 'I see nothing to suggest that we are in terminal rather than cyclical decline,' says Preston. He points to the vitality of the UK newspaper marketplace - 'easily the most competitive in the world,' agrees Flynn. No other country comes close in breadth and quantity of national newspapers, nor in the intensity of the rivalries between them. High-voltage competition is one reason that the UK industry looks positively vibrant compared with, say, the gloom-racked US, whose mainly regional papers are steadily leaching circulation and may well be early sufferers from Internet-borne competition.

Within this local context, at least, some groups are thriving. Associated Newspapers is widely admired for its consistent investment in the Daily Mail and its Sunday stablemate, now among the most confident and profitable titles in the country. Under Conrad Black, proprietor since 1985, the Daily and Sunday Telegraph seem to be managing the difficult trick of making themselves more attractive to younger readers without making older ones apoplectic in Tunbridge Wells. The Guardian is also rated a success story, although many query its 1993 purchase of the Observer, while the FT and its Pearson companion the Economist demonstrate the viability of serious specialist and international journalism.

Then there is News International. Despite Murdoch's far-flung ambitions, his UK arm is by some margin the industry's most aggressive and feared competitor. The combination of parent company News Corporation's newspaper assets with the control of TV, film and satellite delivery mechanisms gives it a range of strategic options which other groups can only dream about. For example, industry-watchers speculate that the company's latest satellite venture, ASkyB, may be used to beam newspapers down to subscribers' desktop computers in the US.

Not everyone warms to Murdoch. Many figures criticise the corrosive effects on the industry of the headlong downmarket rush of the Sun. And 'he should never have been allowed to buy The Times or control BSkyB the way he does,' snorts a senior executive at another company. No one, however, underestimates his company's ruthlessness or its ability to alter the rules of the game to suit its own agenda.

The closure of Today is an example of the former, the broadsheet price war a classic of the latter. Slashing the cover price of The Times hobbled its rivals (only the Guardian and the FT gambled, successfully, on keeping their prices up) at the same time as it boldly attempted to recast the paper's chronically loss-making finances. The strategy may be paying off. Circulation figures up by half to 600,000 have enabled the paper to lift advertising rates by 15%, going some way towards making up for losses on the cover price. Asserts Flynn: 'The Times is within sight of breaking even. Although,' he adds, straight-faced, 'I might add that we are a reasonably long-sighted organisation.'

And yet, and yet. Despite the successes, it's impossible to shake off the impression that as an industry, newspapers have never grown up. Symbolically, 'The industry probably never achieved its full potential,' regrets Barlow, pointing out that even when circulations were at their highest - the Daily Mirror selling 5.2 million copies and the Daily Express over 4 million - they were stunted by production problems. Less tangibly (although it can be seen in the contents) this is also true editorially. The cause is a wicked brew of cultural factors which effectively make editorial offices a no-go area for management. First, like all professionals, journalists are promoted because they are good writers or editors, not managers. Then, they are under intense pressure to produce instant results - a short-termism exacerbated by intense professional focus on today's news. A wide cultural gulf separates editorial from advertising departments, where more sophisticated notions of management apply. But in any case, it's not obvious that management is necessary since the editorial process, a daily miracle of just-in-time creation, is so focused and self-evident that it appears to run itself.

Finally, newspapers' inherent tendency to think of themselves not as businesses but as actors in the dramas they are describing is dangerously compounded by the flattering attentions of tycoons whose reasons for desiring them - power, prestige, revenge, entertainment - have nothing to do with business or management theory.

The result is a weird paradox. On one dimension the generation of a newspaper is a masterpiece of process-engineering, fusing the creative efforts of 100 people into a brand new product every day (with variations for different editions). If this isn't an adaptive learning organisation, what is? On another, the manner in which it is done would shame a 1950s building site. While production and commercial sides have been transformed, human relations practices on the editorial side are now a ghastly anachronism, the last relic of pre-Wapping days.

Thus, the instant-results syndrome means that editors are hired and fired like football managers. In turn, some of them operate by what one senior journalist calls 'management by ritual humiliation'. With every new appointment, huge amounts of money are wasted clearing out underlings to make room for allies. Turnover in some newsrooms runs at 30% a year. Editorial training, meanwhile, 'has always been hopelessly inadequate - a national failing,' as the Telegraph's Rogers admits, while with the honourable exception of the FT, personal development is as rare as a positive story about the royals.

Unaware of these management assets and liabilities alike, newspapers are thereby condemned to miss out on the quality and improvement movements which have transformed the performance of the best industrial firms in the past decade. This may become a crucial failing in the emerging world of 'communicopia'. The burgeoning of media and information sources will be an 'opportunity as well as a threat,' says Flynn - but only for those that get it right.

Despite the progress of miniaturisation and the extraordinary development of the Internet, few people expect computers to supplant newspapers any time soon. 'Newspapers are cheap, portable, versatile and easy to read,' points out Sir David English, chairman of Associated Newspapers. 'TV hasn't replaced them, any more than radio did.' Rather, it supplemented them, providing, as any tabloid front page proves, a fruitful source of copy into the bargain. From this point of view, the Internet is another content-hungry medium. One of its few tangible commercial spin-offs so far is a magazine of the written word, Wired, dedicated to making sense of it.

The real struggle, suggests English, will be for what is now in scarcer supply than consumers' money: their time. In this battle, newspapers possess intellectual assets which could - should - be as central to the distributive economy of cyberspace as to that of road, rail and air. For a start, their hitherto unregarded archives and libraries could be mined commercially. 'They're like film libraries before the advent of multi-channel television,' says English, who is overseeing the compilation of a CD-ROM of the history of the last century as seen through the Daily Mail pages.

But more pivotal in the long run may be newspapers' expertise as content organisers. In an age of information plenty, says the Media Lab's Negroponte, the emphasis switches from getting information to being able to make use of it. Less is more. Notes Preston: 'The information explosion isn't quite as pervasive as people think. There's plenty of information around, but not much effort has gone into making it available in ways that people can use.' Adds Flynn: 'Ninety-five per cent of the stuff out there is garbage. Locating the 5% that's valuable is what's going to be important for the next decade.'

This, of course, is called editing, and it's what newspapers are supposed to be good at. But they can't assume they'll be winners. As they launch into cyberspace, good newspapers start with one main asset: the loyalty they command on terra firma. This kind of loyalty is hard won and easily lost. Like pixels on a computer screen, it needs to be constantly refreshed. And it isn't susceptible to management by numbers or technology. 'It's not enough to have an idea about what you can do with colour or without the unions, as Eddie Shah did with Today,' says Preston. 'Good newspapers are founded on a long-term idea and purpose.' Not coincidentally, those that have them - the FT, the Guardian and the Daily Mail - have performed strongly in the price wars. Conversely, lack of them is why ailing newspapers are so difficult to turn round. It's not that the trick can't be done: it's that sustained investment in new sections, new presses and promotion, while necessary, can't by itself provide the other essential part of the cure, a heart transplant.

The logic is inescapable. What's true for the physical newsstand just applies twice over for the virtual one. To succeed in the expanding universe of information, it won't be sufficient for newspapers just to be 'out there'. They must do better - much better - what they do already: get closer to the reader and find ways of adding value to the bewildering possibilities of cyberspace. In turn, this means tackling the unfinished management business. There's plenty of it. Reluctantly, journalists have come to terms with budgets, but they're only beginning to address the marketing issues - the Telegraph, for instance, is setting up an ambitious 'lifestyle' database of 200,000 readers to target their buying and leisure habits more closely. And it is even less clear that they are tackling the crucial editorial quality and improvement issues - the people side.

Only newspapers will be surprised to learn that the issues they face are exactly the same as those confronting businesses from computer manufacturers to retailers. At its simplest, to win customer loyalty in a competitive world, newspapers, like any other product, need a powerful, distinctive brand. Maintaining it requires the journalists and editors - who are the brand - to be committed to it. Casualisation and short-term contracts, increasingly common in even the best papers, pull in exactly the opposite direction unless other means are found of cementing the loyalties that underpin innovation, risk-taking and learning.

These are management issues which are quite capable of being solved. Those who shrug and say, 'That's newspapers,' should take a look at a role model under their noses, the last major newsgathering operation based in Fleet Street. It's a household name around the world for editorial prowess. It's as advanced technologically as it is with fast-breaking news. It has loyal, well trained staff and systematically measures its output for errors, quality, timing and customer satisfaction. It's half as big again as News Corp, has a return on capital employed of 54.7% and was dubbed by one analyst the best large company in the world. How it got there is one of the great management stories of the past 25 years. The newspapers should know: until 1984 they owned it. It's Reuters - and it's run by journalists.

Simon Caulkin edits the Management page of the Observer.

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