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Regional asset swaps not the answer, MPs told

A leading regional newspaper boss today said that asset-swaps between the big publishing companies would deliver only “limited” savings.

Speculation has been rife over the last few months that leading publishers could engage in a series of ownership transfers to consolidate their operations in more geographically coherent locations.

It could see, for instance, whole UK regions dominated by a single publisher, although none of the companies rumoured to be involved have said anything publicly.

But Northcliffe Media managing director Michael Pelosi told a committee of MPs today that he thought some asset-swaps would have only limited value.

“When you are swapping titles in contiguous areas, the opportunity for cost reductions is limited,” he told the Culture, Media and Sport committee.

“The only opportunity for serious cost reduction is when you have two or more titles in one market and they are fighting it out.

“It may make sense for there to be only one title serving that market, but that goes against all that the Office of Fair Trading stands for. It is very difficult to tell how this is going to pan out,” he added.

Last month’s Digital Britain report effectively challenged publishers to come up with a consolidation plan that could be viewed as a test-case for a future merger regime.

Newspaper Society director David Newell said newspaper groups “would like to be able to have discussions about the possibility of title-swapping and rationalisation,” but it was not entirely clear how the OFT and other regulatory bodies would respond.

“It will take one company to test it and then we will know,” he told the committee, which is carrying out an inquiry into the state of the regional press.

During today’s hearing, Mr Newell also called on the government to spend more of its £193m advertising budget in the regional press.

“The government spends £193m a year through the Central Office of Information in government advertising. Only three or four percent of that finds its way into local or regional newspapers,” he said.

Comments

Observer (07/07/2009 15:46:54)
Let me get this right. Newspaper publishers have spent years cutting back on staff so titles (and now websites) are filled of PR guff and little else. Circulation has fallen as a result. Therefore, advertisers have decided to spend their budgets on alternatives. Therefore the inevitable spiral of loss, jobs cuts, losses, job cuts etc. Now David Newell is bleating that the government doesn’t spend enough of its budget on the regional press. Erm, why would it, exactly? The people who have turned our once-proud industry into a shell are now whingeing that no one will support it. Get real and take some responsibility for the mess you have all created.

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