The “hollowing out” of the local news industry has been partly down to “too much money being taken out of local newspapers”, the culture minister was told in a parliamentary debate on the industry’s future.
Helen Goodman MP, chair of the National Union of Journalists all-party parliamentary group, made the remarks as she called for a government inquiry into the state of local media.
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The debate follows an NUJ commissioned report revealing 418 journalists lost their jobs in the last 17 months and there had been a net reduction of nine local newspapers over the same period.
Goodman said four publishers were responsible for “three quarters” of the local newspapers in the UK: Trinity Mirror, Johnston Press, Newsquest and Tindle Newspapers.
Noting the role of digital technology in changing reading habits and taking advertising revenue away from print, she added: “I don’t think the technology is the only explanation for what’s going on.
“I also think that there has been – some people might call this greed some people might call this unrealistic expectations – too much money taken out of local newspapers.
“Tesco. One of the most successful supermarkets in this country makes seven per cent a year return on its capital. These people [news publishing bosses] are extracting between 20 and 30 per cent each year. That’s what they expect and if they can’t make that they say the papers are uneconomic.
“They [the papers] are perfectly financially sustainable. They are making enough money in order to keep going even to expand but they are just not making whopping profits of 30 per cent.
“If these people would be content to make the kind of profits that our supermarkets were making we could have a flourishing of local news across the nation.”
The MP for Bishop Auckland said the “concentration” of ownership of local newspapers within the big four UK publishers was “very serious”.
“The house has taken a considerable amount of time over the last six months to consider the proposed Fox Sky takeover,” she said.
“This is extremely important – we are all very worried about it, however we have not taken the same amount of time and care to look at what’s going on in local newspapers.”
Newsquest was revealed in the NUJ-commissioned report published this week to have made a majority of the job losses reported in the industry (139) between November 2015 and March.
Newsquest is owned by Gannett, the largest US newspaper publisher, which took it over in 1999.
Goodman said: “While I don’t wish not to appear as a true socialist internationalist, foreign ownership in this arena can also be quite dangerous because it means that decisions are being taken about the way newspapers are run and the closure of newspapers in board rooms in New York by people who have no idea that Sunderland and Newcastle are two different places.
“We need to get back some better control of the way newspapers are run and to restore the idea, which was most recently voiced by Harry Evans, that journalism is a sort of public service. This isn’t purely a commercial enterprise – it’s also a public service.”
The report’s findings that 58 per cent of people in the UK have no local daily newspaper was said by Goodman to be a “matter of concern”.
“Absence of local newspapers is dangerous,” she said. “People will lack information. They will not be able to hold local institutions to account.
“Communities will suffer a loss of identity and this is creating the environment in which fake news can flourish because there isn’t real news.
“What we need across the board is good quality information and journalism.”
She also raised the issue that local newspapers with small teams resulted in journalists becoming “exhausted”, adding: “They also suffer significantly from low pay. This is a profession, they need to be properly rewarded for their skills and their energy and their efforts.”
She said: “It’s a vicious circle. If you hollow out the quality of the local newspapers of course they become more boring so of course the readership will fall, whereas if you maintain them then people will want to keep reading them.”
On the proposed Government initiative to fund 150 local democracy reporters to cover councils, Goodman said: “There’s a real question mark here and it’s really important to ensure that there’s a system to make sure that these posts are genuinely additional.
“What we don’t want is the BBC to send two people into a local newspaper and the managers of that local newspaper to think ‘great, we can sack two people that we were paying’. We can’t have that and we need a system to prevent it from happening.”
She also said it was important to make sure Government initiatives, such as a business rate discount for local newsrooms that comes into force on Saturday, a BBC newsbank of audio and video content and a data journalism hub, aren’t “sucked up” by the big four publishers.
“What we want is more variety and more diversity and more new ventures,” she said. “So we need to ensure that the things we do reach those people and not just the big multi-national chains.”
Responding to the call for an inquiry Matt Hancock MP, minister of state for digital and culture, said: “ I think we have got to see how the BBC initiative beds down, see how the business rates support comes into place.
“I would say that we are keeping this question under constant review and it is one area of very important significance to the government.”
He added: “Rather than have a single fixed inquiry we will keep it under constant review.”