Ofcom: Investment In Newspapers Should Be Welcomed
Ofcom has said that financial investment to support the long-term viability of newspapers, which have “a key role in the democratic process” and continue to play a vital role in UK society, should be welcomed.
In advice to the Secretary of State on the acquisition of shares in the London Evening Standard and the Independent by a Saudi investor, Ofcom highlighted the importance of newspapers to democracy and said that the transaction should be considered in the context of the challenges faced by newspapers.
Ofcom said: “In February 2019, the Government published an independent report entitled ‘a Sustainable Future for Journalism’ by Dame Frances Cairncross. This report stressed the vital contribution that newspapers make to the UK news ecology including by holding the powerful to account through their public interest journalism and investing in original journalism.
“The report also highlighted the significant pressures facing newspaper publishers given the declines in print circulation and readership and, consequently, print advertising revenues. Despite efforts to grow their digital revenues, this growth is so far not offsetting declines in newspapers’ print revenues. The latest estimates also suggest that online players such as Google and Facebook account for an increasing proportion of the UK’s online advertising market.”
Ofcom referred to its advice last year to the Secretary of State on the acquisition by Reach plc of publishing assets of Northern & Shell Media Group Limited in which it noted that newspapers play a “particularly important role in a democratic society”
Of com added: “The transactions should be considered in the context of the challenges faced by newspapers. As Ofcom’s previous public interest tests have stressed, newspapers play a vital role in UK society and help ensure media plurality. Newspapers are adapting to the challenges brought by the growth of online news by diversifying revenue streams, cost cutting and consolidating. Ofcom’s view remains that investment to support the long-term viability of newspapers should generally be welcomed.
“Newspapers have responded to the increased competition from online providers in a variety of ways. Looking to optimise digital advertising revenue, some titles such as The Times, The Telegraph and The Financial Times have put in place paywalls and The Guardian has introduced voluntary contributions. The online offers of others, such as The Evening Standard, The Sun and The Daily Mail, still rely predominantly on generating revenues from online advertising.
“While the newspaper industry continues to develop a range of approaches, no clear model of success has emerged. Given the important position which newspapers occupy within the democratic process, investment to support their continued existence is generally to be welcomed.”
Last month, a Competition Appeal Tribunal judge ruled that the Government missed a key deadline in its attempt to investigate the sale. In its advice, Ofcom said it did not consider that a reference to the CMA was warranted on either the accuracy of presentation of news ground or on the free expression of opinion ground.