Even Mr Black, however, cannot have been fully prepared for such a bloody opening to his campaign. Within 48 hours he had seen nearly 40 per cent of the value of his company wiped out and encountered the wrath of institutional investors who only a month earlier had been persuaded by Mr Black to pay top dollar for a substantial number of his own shares.
He is now talking about taking the company private if the institutions refuse to re-evaluate Telegraph shares. It is not very likely that they will. Apart from the fact that many of them will simply never do business with Mr Black again, industry analysts reckon that at least pounds 40m has been wiped off the Telegraph's bottom line.
If that was not a high enough price to pay on the home front, the news from the battlefield has hardly been better. Mr Murdoch's lightning response in cutting the price of the Times by another third to 20p has resulted in a further narrowing of the circulation gap with the Telegraph. While the Telegraph appears to be selling only 3 per cent more than a week ago, the Times is up by about 15 per cent.
By selling the Times at 20p, Mr Murdoch is in effect giving it away. Of that 20p, about 17.5p goes to the wholesalers and retailers who distribute and sell the newspaper. The 2.5p which comes back to News International does not even begin to cover the cost of the printing and paper (about 15p a copy). It is difficult to estimate the precise amount of subsidy the Times is now receiving, but it is unlikely to be less than pounds 30m a year. If the Telegraph followed suit again, it would be on the road to bankruptcy. To add salt to Mr Black's wounds, the share price of News International has barely wobbled.
Although it is relatively early days, it is beginning to look as if Mr Murdoch has lured Mr Black into fighting on ground of his own choosing. Mr Black may look big and powerful, but in any comparison with Mr Murdoch he is both puny and vulnerable. The Telegraph is a fine and well-run newspaper company, but I fear that in allowing Mr Murdoch to dictate the terms of the contest, Mr Black has made a catastrophic miscalculation.
If this were only a private battle between two newspaper owners of broadly similar ideological bent, Mr Murdoch's ruthless use of profits from one part of his business to subsidise patently uneconomic pricing in another would still be a serious cause for concern. It is, however, rather more than that. Mr Murdoch is pursuing a two-track strategy. If his primary objective now is to destroy the Telegraph's traditional franchise, it has also been his hope since the Times first cut its price last September that the Independent would be eliminated from the market entirely.
He has failed in that aim, but the past nine months have been undeniably difficult ones for the Independent. This time last year, the circulation gap between the Times and the Independent was a few thousand. Since then, our circulation has fallen while the Times has put on 200,000 sales. Because the Independent is a highly efficient producer, it can be viable at a lower level of circulation than its broadsheet rivals and in recent months sales have not only stabilised but slightly increased. The paper is also now backed by newspaper shareholders, as opposed to institutional investors, who can take a more robust long- term view of the paper's prospects.
Last week's thuggery has, however, put us back on the defensive. While our circulation has proved more resilient than the Guardian's since the Times went to 20p, even small losses are potentially dangerous. The Independent's values, which are clearly distinct from those of the price-cutters, give it some protection, but it is Mr Murdoch's dubious achievement to have elevated price as the overriding consideration in the minds of many broadsheet readers. If people are encouraged to believe that 20p is the proper price for a 40-page newspaper, 50p or 45p will soon be thought expensive by all but the most committed readers.
Mr Murdoch's motives are clear enough. Having tried and failed with different editorial and marketing strategies to make the Times 'successful' by the brutal criteria which apply at News International, he is now determined to use virtually unlimited resources to rearrange the market to suit his own convenience. He is a pessimist about the future of newspapers, believing that by the turn of the century there may be only one strong paper in each market sector; and he is a cynic about human nature, believing that price will always overwhelm values, particularly those liberal values he so despises.
Some people will regard this as whingeing. After all, the Independent is a product of the free market and espouses the benefits of competition and the market economy in its editorial columns. Yet anyone who understands anything about markets knows they require regulation. Without regulation, strong companies will always be tempted to abuse their market power to get rid of competition and capacity or any choice which is not offered by them. The newspaper market is especially vulnerable to such hijacking because it is not exposed to international competition and because newspapers are a source of power, as well as money.
What, if anything, can be done? In theory, predatory pricing is illegal under both British and EU law. However, with the post-Maastricht emphasis on subsidiarity, the European Commission may not wish to intervene in a purely national market. As far as the Office of Fair Trading in Britain is concerned, when the Independent complained about News International's pricing last autumn, it declared that although there was a fine line between aggressive pricing and predation it did not think there was evidence enough to suggest that the line had been crossed. If there was any doubt then, there surely cannot be now. But even if the OFT changes its mind, it has no authority to order injunctive relief or levy fines, while a full-scale Monopolies and Mergers Commission inquiry could take many months.
There is, however, one thing which might make Mr Murdoch think twice: the certain prospect that a Labour government, taking note of the way he had exploited his 37 per cent share of the national newspaper market and 50 per cent of BSkyB, would introduce legislation to force him to choose between his newspapers and his television station. Mr Murdoch is a master of regulatory manipulation and has succeeded in making the rules on cross-media ownership appear ridiculous. The likelihood now is of some levelling of the playing field between News International and terrestial television companies. But whatever happens, these will still be pipsqueak companies beside Mr Murdoch's leviathan.
The real question for politicians of all parties is whether they are prepared to do anything about the overweening power of a man who is contemptuous of most of the institutions and values which give our society its worth and its uniqueness. If they are not, all of us will get the media they deserve.
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