CONCENTRATION OF OWNERSHIP due to Google Facebook ad dominance

The newspaper industry has been based on ad revenue since the scrapping of stamp duty (tax) in 1851 led to a sharp increase in professionalism, with production (and distribution) costs exceeding revenue from cover price. As Curran and Seaton argue in great detail in Power Without Responsibility, this led to a mass closure of ‘radical press’ titles and consolidation and concentration of ownership by wealthy individuals who pursued right-wing agendas such as low business taxes and attacking trade unions/workers rights.

The modern-day online migration of ad revenue (one major consequence of disruption from digitisation, the other being the youth market almost disappearing as a paid-for print media market: steep circulation decline) is an important factor in any possible change to press regulation.

The industry is struggling for survival, so tougher regulation, especially that proposed by Impress, linked to the Royal Charter idea that Leveson proposed, which would see newspapers routinely charged for the legal fees of accusers even if their complaints were ultimately rejected, could result in mass closure and a further loss of pluralism.

Guardian: Newsquest targets Archant as newspaper consolidation gathers pace.

“Consolidation is inevitable,” Ashley Highfield, chief executive of Johnston Press, owner of the Scotsman and Yorkshire Post, said last week. “It’s the obvious and necessary road ahead and smaller publishers increasingly cannot survive without being part of bigger groups to bring economies of scale and shared content.”
Last year, Johnston Press, the UK’s second-biggest regional newspaper group, paid Evgeny Lebedev, owner of the Evening Standard and Independent websites, £24m for national newspaper the i to bulk up the publisher’s scale. It also was one of a number of suitors, including Lebedev, to look at buying national freesheet Metro when DMGT, which owns the Daily Mail, tested market appetite for a sale.

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The shift of readers away from printed newspapers, which have traditionally provided the bulk of revenues and profits through sales and advertising, has been profound over the last decade.
Total weekly regional newspaper circulation fell by half from 42m to 22m between 2009 and 2016 , with paid-for copies falling from 26m to 13.8m, according to Enders Analysis. Similarly, the national newspaper market has shrunk from selling 9.3m copies per day in 2009 to 5.2m last year.
On Tuesday, investors in Trinity Mirror, the publisher of the Mirror titles, will vote to approve a £200m takeover of Richard Desmond’s Express and Star titles as the national newspaper industry faces the same issue of the need to build scale to survive in the battle for advertising against the tech giants.
The impact on publishers’ bottom line has been further affected by lower rates for digital advertising, exacerbated by giants such as Facebook and Google hoovering up to 90% of all new ad money being spent online.
Since 2008, almost £800m in ad spend has been stripped from national newspapers, from £1.54bn in 2008 to £757m last year. The impact is even more stark in regional newspapers, which have seen ad revenue fall from £2bn in 2008 to £723m last year, according to figures from Group M.
“In order to survive, consolidation is key to compete with the online players and retain some share of digital advertising,” says Alice Pickthall, media analyst at Enders.
“As the digital market grows, publishers aren’t seeing a proportionate amount of share gain. Facebook has had an especially big impact on the local market. If a local business is offered a lovely shiny [presence] on Facebook who wouldn’t use it? The largest [traditional] players in the market will win, they will continue to pick up smaller publishers to maintain scale in a shrinking market.”