Governments may bail out newspapers, says Sorrell

Sir Martin Sorrell, head of the advertising giant WPP, said governments may have to step in and support ailing newspapers if losses bring them to the brink of collapse.

Sir Martin said: "Governments probably have to decide whether consolidation and media titles going out of business is the right thing from an editorial point of view."

In an interview with Arabian Business, he compared the situation to the recent state support for the banks. "You could argue that newspapers provide a vital service," he said. "It's the same issue, whether the state should intervene in certain issues to help preserve a service. That is what every piece of welfare economics is based on."

The media has suffered declining revenues since the onset of the economic downturn, which led to the worst advertising recession in living memory. Since then, many media groups have been looking to alternate sources of revenue, such as charging for online content, to make up for the decline in advertising.

Sir Martin cited The Guardian as an example. "In the long-term it can't go on losing money," he said. "So let us say, hypothetically, that The Guardian could not continue to lose money after a certain period, then you would have to think about whether the Government should subsidise it, or whether you give tax advantages to people to subsidise it."

He added that in thinking of models to bail out media organisations there were "plenty of ways to skin that particular cow".

Sir Martin said that while the advertising losses are slowing there was still no sign yet of a recovery. In October he said that economic Armageddon had been averted, and market conditions were "less worse".