Stephen Foley: OFT puts the kibosh on newspaper consolidation

 

Outlook A dinosaur decision from the Office of Fair Trading, which has just scuppered the sale of Northcliffe Media's Kent newspapers to a rival family-run publisher called KM Group. The OFT referred the deal to the Competition Commission, prompting Northcliffe, owned by Daily Mail & General Trust, to withdraw its acquisition.

The costs of fighting a full competition investigation are disproportionate to the size of these businesses, KM said. That fact alone ought to tell you something about the declining power of many regional and local newspapers, and it is hard not to laugh out loud at the OFT's reasoning.

"These companies publish the only local weekly newspapers in seven local areas in East Kent," it said. "The OFT's investigation concluded that the monopoly of local newspapers that would result in these areas risks costlier advertising for businesses and higher cover prices for readers." The OFT has appeared not to notice that businesses can reach local consumers through a dizzying array of new media, either through paid advertising with Google and Facebook, or for free, with a bit of creativity on their part.

Northcliffe's managing director Steve Auckland now has a more complicated task in slimlining his business. He says the OFT has made a mockery of politicians' promises to smooth consolidation in the regional press. Hear, hear. "We are not talking about a Google or a Microsoft here," he said.

The OFT ruling significantly dents the chances of consolidation in the local and regional newspaper industry, at a time when it needs to get creative about cutting costs and sharing content. Without such consolidation, it is only a matter of time before the good people of East Kent – and everywhere else – are left without newspapers all together.

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