Britain’s national daily newspapers are a legacy of the pioneering railway network that, more than 100 years ago, put them on every breakfast table. That’s the root of their power and influence and why, even now, the country’s politicians and broadcasters worry more about the printed papers than anything digital – despite the shift in audiences. It also explains the long line of UK proprietors who have invested millions in order to peddle their own views and influence. The years of runaway profits have been shrouded by decades of decline. But the continuing cashflow of the UK’s nine national dailies is the real obstacle to the transformation of these powerful news brands.
All the newspapers are (more or less) still profitable but sales are declining inexorably. It’s only going one way. Their collective insistence on digital services that are largely clones of the printed product and the refusal to unbundle the content for digital users reflect the pervasive fear of cannibalising newspaper sales. Print profits still subsidise the losses of much larger digital audiences. But that may be due, as much as anything else, to the refusal to set digital services free to compete with the newspapers. The incumbents are finding it impossible to become authentic disruptors.
Arguably, this reluctance to change the rules of the game is reinforced by the still widespread UK practice of pumping out free copies to prop up the advertising sales story, even though ad revenues have become much less significant. News Corp’s two dailies The Times and The Sun padded their daily circulations by 15% and 6% respectively with free copies during September. Then, there is the Financial Times, 50% of its UK circulation is distributed free copies at airports, rail stations and hotels. You might have thought that a newspaper whose journalists are so good at critiquing unwise practices in business would know better.
One of the UK’s leading supermarket chains, Waitrose, routinely returns to customers the price of the newspaper they have just “bought”. It’s an arrangement that may be loss-making for the publishers but might account for more than 5% of all national daily “sales”. Until this year, the Daily Telegraph (now up for sale) had long been giving away pricey bottles of water to newspaper buyers at the largest retail chain. You don’t have to go anywhere near the folly of pumping free content into Facebook and, arguably, also Apple News to get the impression that these traditional news brands have not been thinking much about the future.
The mish-mash range of these national dailies are certainly working hard to promote their audience to advertisers. Even today, they still sell almost 4m copies daily. But this is 10% down on the year.
There is something else. The newest UK national newspaper, The Independent (launched in 1986), is the only one (so far) to have scrapped print and gone digital in a move which has produced steady profits for an online news brand that seldom managed it in print. Nobody else has done anything like that, even though readers are delivering a clear message. In the latest copy sales figures, weekday sales were down across-the-board by anything up to 17%. But Saturday sales were much stronger, steadier and are making most of the profits for these newspapers.
This is significant because these Saturday editions have up to double the copy sales of their weekday counterparts – and at c50% higher prices. The stand-out examples are: the Weekend Financial Times selling 64.6k copies ((24.7k on weekdays) at £4 (£2.90); and the Daily Mail selling 1.7m (1m) at £1 (70p). The Saturday profits are turbocharged by more advertising as well.
The point is that these Saturday editions are quite different to the newspapers published during the week. They are stuffed with magazines and leisure supplements; they’re mostly not news. In the post-digital era when few newspaper readers actually learn the news first in print, these battered brands are actually generating substantial profits from the kind of special interest and lifestyle content once dominated by paid-for magazines. The trouble is that newspaper staffing and budgets are still dominated by the low-value general news they once monopolised. It’s a roadblock.
UK newspaper executives like to predict the demise of their peers and (just as in magazines) it is difficult to see why there have not been more closures or fundamental change in a market that has been shrinking for more than 10 years. But even small profits are preferable to expensive closures and disruption.
The country’s largest newspaper publisher is Reach Plc whose three tabloid dailies – the Mirror, Express, and Star – now together sell less than either The Sun or the Daily Mail. Reach’s papers each lost 9-16% of their copy sales in September, compared with 2018. You can imagine that the company’s very-digital new CEO Jim Mullen is giving some serious thought to its long-time role as a “consolidator” of print in the UK. Does he really want to buy the bankrupt regional newspaper portfolio of the former Johnston Press?
The choices for the dailies are tough. Even a decision, say, to reduce frequency might actually not work, despite the arithmetic. The loss of ‘hard core’, every-day readers might simply wreck even the highly-profitable Saturdays. But publishers must work towards a situation where they are eventually able to make some sensible economic choices.
They really do need to separate digital media from print, not least to build new audiences among young people and internationally. Perhaps some will pitch for Huffington Post (put up for sale by Verizon) or BuzzFeed as a way of making a digital break-out. In the week when it became known that The Sun was ramping up its US-based competition with the Daily Mail Online, this might be starting to happen. If not, then the emerging plans by CNN to become a digital news aggregator should begin to worry newspapers.
Quality UK dailies like The Times, Daily Telegraph, Financial Times and the not-for-profit Guardian need to consider whether news-stand sales really are a sensible long-term business. They’re not. Publishers should, instead, drive even harder to build home-delivery subscriptions and get to a point where they can discard retail sales and use the resulting readership stability to generate advertising revenue, rather than hyping casual audiences.
The tabloids, including the 1m+ circulation Sun and Daily Mail, must hope that at least some of the Reach-owned tabloids will disappear. But they might have to wait. Meanwhile, they should consider distinctively branding their weekend editions. Why wouldn’t The Sun create special football editions, so that these super-profitable newspapers could be developed (and survive) independently of whether the newspaper itself was publishing on seven days a week or not?
While The Athletic’s assault on the newspapers’ coverage of Premier League Football doesn’t yet seem competitive, the next rival for a vital slice of newspaper content might prove more threatening. The dailies need to use their existing content and resources to develop new products – and new brands – so they can compete with specialist providers in the longterm.
The UK’s national daily newspapers have always been the most wasteful of media providers, ditching large volumes of content each day in a ritual that would long ago have bankrupted every movie studio. They can turn some of that discarded journalism to advantage in targeting hungry specialist audiences. Providing new ‘vertical’ services and apps augmented with unused content could even help them to charge prices that posed relatively less of a threat to their printed newspapers.
There’s a need for real change.
The best example of an emerging strategy is the Financial Times Weekend, which is quite different from its weekday newspaper, much more leisure than business. It is now building separate subscriptions and, with its annual Festival, is emerging as a key profit centre for the FT. While the newspaper may increasingly become (sort of) content marketing for its snowballing digital services, the Weekend edition would be able to continue uninterrupted even if the weekday print editions were cut back.
As the FT’s readers know, strategy is all about pursuing a long-term ambition. The old newspapers of Fleet Street (and many of their counterparts around the world) must face up to the future. Or else.
