Will the last unindicted Sun journalist please turn out the lights?

February 11, 2012

A News International spokesman tells us Sun editor Dominic Mohan is “not resigning” in the wake of 5 more high-profile arrests of his senior colleagues.

Well, thank goodness for that. Someone has to be there to switch off the lights, and there now seem precious few editorial staff of any standing who aren’t on bail, or facing the threat of arrest.

The climate of fear at The Sun is, it would seem, being deliberately intensified by the police, in the hope of breaking NI’s culture of omerta and persuading more witnesses to squeal on each other. What other interpretation can be placed on police commander Sue Akers’ decision to organise the two waves of arrests, a week apart, as high-drama “dawn raids”, timed to coincide with Sunday newspaper interest? Whatever these men may or may not have done, they are not gun-runners, drug-traffickers or international terrorists. So why the heavy-handed police choreography, if not to a) impress the public that the police are at last getting tough on corruption and to b) create maximum distress among the people at NI?

As the web of alleged corruption spreads to more police officers, the army and the ministry of defence, it has emerged that Rupert Murdoch will be making a special pilgrimage to The Sun offices to personally reassure its staff he will not be doing unto them what he earlier did to their colleagues at the News of the World.

Maybe not, for now. But one thing I suspect we won’t be hearing much of from here on is Son of NoW, the Sun on Sunday. The Sun is a broken brand.

The latest wave of arrests will also put pressure on other parts of The Sun’s ultimate owner, News Corp. It could turn the screw on a Federal investigation into alleged racketeering. And, nearer home, it will surely rekindle calls for an investigation into News Corp being a fit and proper holder of a TV licence. Should BSkyB’s share price be seriously depressed as a result, you can be sure that – for all their stalwart support of James Murdoch up to now – the board will have no compunction in firing him as chairman.

UPDATE 18/2/12: First, some humble pie. “One thing we won’t be hearing much of from here on is the Son of NoW, the Sun on Sunday”. Er, no. Rupert Murdoch has just given his personal assurance that the launch will go ahead “very soon”. Industry experts believe this means some time in April, possibly the 29th.

However, what may play well with demoralised Sun staffers is not guaranteed to be a publishing success. Particularly if more distracting scandal damages the Sun brand in the meantime. And who, given the unbridled brief of the MSC to cleanse the Augean Stables at News International, can say it will not?

Labour MP Chris Bryant, who has been leading the anti-hacking campaign in parliament, neatly expresses the commercial paradoxof an SoS launch: “He (Murdoch) is meant still to be ‘draining the swamp’ and yet the swamp is meant to produce another newspaper.”

As it happens, Murdoch seems to have lost his sureness of touch in the realm of newspaper launches. His foray into the London freesheet market, with thelondonpaper, certainly did financial damage to Associated Newspapers, owner of London Lite and (at that time) the paid-for Evening Standard. But News International lost heavily on the project and eventually had to close it down.

The SoS will be launching into a rapidly declining market. Ad revenue was down over 17% last year (end of January) and – even stripping out the now-folded News of the World – the underlying slide was 11%. Readers are deserting too. And their contribution, in the form of circulation revenue, is even more vital to mass-market tabloids than advertising. The only way in, it would seem, is a price-war. That may well damage the SoS’ prime adversary, the Sunday Mirror. But whether it will create a financially viable Sun on Sunday is a moot point.

Is now the moment when The Sun brand begins to set?

January 29, 2012

Arrested: four senior Sun hacks, plus an allegedly bent copper.

Is this the moment that damage to The Sun brand becomes systemic and unstoppable?

Not if News Corp, which ultimately owns the title, has calculated correctly. After all, the information that led to the arrests – carried out as part of the Operation Elveden investigation into police corruption – was volunteered by the company itself. It’s a gesture clearly designed to demonstrate that the House of Murdoch is now whiter than white, thanks to the “fearless” probing of its so-called Management and Standards Committee (driving force, former Telegraph editor-in-chief Will Lewis).

Sacrificing the prospects of 4 more Sun employees superficially looks like a shrewd way of cauterizing existing brand damage. But on one condition only: that no more evidence of criminal behaviour comes to light. And who, in the circumstances, is going to guarantee that?

Because these four are not the first Sun staff to be arrested. Remember Sun district editor Jamie Pyatt, who was assisting police with their inquiries last November, and has now been bailed until next March? The suspicion must linger that more arrests – inextricably linking The Sun to the culture of criminal deception imbuing other parts of NI – are on the way. And how might that play with advertiser sentiment?

When perception will actually catch up with reality is, of course, anyone’s guess. One of the remarkable aspects of this marathon phone-hacking (computer-hacking and police bribery) scandal is how long everyone at News Corp rival Trinity Mirror – from CEO Sly Bailey down to Daily Mirror editor Richard Wallace and, indeed, The Mirror’s most famous alumnus of all, Piers Morgan – has been able to cling to the increasingly threadbare “Three Wise Monkeys” defence strategy. Only the other week, Bailey was telling the Leveson Inquiry that she had never launched an inquiry into potential journalistic abuses “because she had never been given any evidence of it“. Of course she hasn’t. Which turkey ever votes for Christmas?

UPDATE 30/1/12: Nick Davies, the man who has done more than anyone else to break open this scandal, clearly sees the arrest of senior Sun editorial executives as a pivotal moment. In his Guardian piece today, he suggests that News Corp has now lost control of its own database, and therefore the ability to obstruct further disclosures. With potentially terrifying consequences for a lot of senior people in the Murdoch news organisation. See ‘Mysteries of Data Pool 3 give Rupert Murdoch a whole new headache‘.

Why HSBC £40m fine over mis-selling scandal gives marketing a bad name

December 6, 2011

Chris Barraclough is right. While the marketing community obsesses about Marks & Spencer lingerie ads, Size Zero models, Twitter trending and the monetisation of Facebook, it is almost entirely oblivious to some criminality of Dickensian proportions tarnishing its name.

Criminality? We’re talking big banks here, and yet another “mis-selling” scandal, although in truth the scandal involves everything from new product development through to sales, marketing and marcoms. Not to mention some truly appalling internal supervision, with a hint  of News International about it.

Villain of the piece is HSBC, Britain’s biggest bank, which has just been fined £10.5m by financial services regulator the FSA and ordered to pay back £29.5m to old age pensioners it had systematically swindled out of their savings over a period of 5 years.

It’s a complex story with many, unflattering, angles. Here are a few of them, to give the flavour. The mis-selling involved an investment bond with a capital protection element. The snag was, you had to put the money away for about 5 years or incur a huge financial penalty. Many of the 2,485 victims were very old; one was 94 – the average age was 83. Obviously, a large number had a life-expectancy shorter than the term of the bond. Yet, they were easy prey, not necessarily on account of mental infirmity but because they were 1) capital rich (compared to most of the rest of the population) and 2) very fearful of the eventual cost of living in a halfway decent care home. Quite a few sold their houses to fund what they were told was the answer to their financial prayers; on average, they handed over £115,000 each. The average loss was £11,790 per customer, spookily adjacent to the £11,500 commission over 5 years received by advisors who had helped to sell the product. The FSA judged that 87% of sales were “inappropriate”.

HSBC is not solely culpable. It bought the rogue organisation responsible, Nursing Home Fees Agency, long after it had been set up in 1991 – presumably on the basis that NHFA was a nice little earner (as indeed it was). Then, too, NHFA came highly recommended. Help the Aged, the charity, was being paid commission for passing on names to the NHFA, while the Royal British Legion listed the company as a place to seek advice on how to pay for care fees. NHFA salesmen were also aided by a listing in the government’s financial advice website at Direct.gov.uk.

For all I know, malpractice may date back two decades. But that hardly exonerates HSBC, which took 4 years to wake up to something being rotten and then to report it. NHFA was only closed down in July of this year.

Horrendous though this mugging of pensioners may be, it would be nice to think of it as an isolated incident. No such luck.  In January 2011 Barclays was fined £7.7m and ordered to pay £60m compensation to thousands of elderly victims of a similar mis-selling scandal. In April, the banks finally lost a case in the high court, after years of procrastination over the payment protection insurance scandal – making them liable for billions of pounds of compensation. In May, the Bank of Scotland, a subsidiary of Lloyds Banking Group, was fined £3.5m and forced to pay £17m compensation to elderly customers after – guess what? – selling them risky investments.

How do they get away with it? Well, because they can. These fines may seem astronomical by my standards or yours, but they are a spit in the ocean compared with the Big Fours’ bottom lines. HSBC, for example, made interim profits of about £7bn this year. Banks also benefit from a culture of impunity. This is usually taken to mean stratospheric and wholly unjustified annual bonuses, or irresponsible, arcane, casino investments that eventually bring the house down. It is equally apparent they have a licence to plunder the needy and vulnerable with little fear of meaningful retribution.

For that state of affairs we too, as Barraclough implies in his blog post, are partly responsible. And marketers, obsessed with youth and cutting-edge technology, especially so. Finance, particularly retail finance such as pensions, investment bonds and mutual funds, is nit-pickingly complex and unsexy. It’s also, as often as not, about an unsexy sector – the over 50s – who happen to own most of the nation’s wealth. So we defer to the so-called experts. These experts don’t mind being boring, in fact they positively revel in it. And you can well see why.

Holier-than-thou Trinity may come a cropper over Sunday Mirror

July 8, 2011

I note, with some amusement, that shares in Sunday Mirror publisher Trinity Mirror have soared to their highest level in a year. A development not unconnected with Rupert Murdoch’s draconian decision yesterday to close down its principal rival, the News of the World.

Which gooseberry bush were these City folk puffing Trinity’s stock born under? The knee-jerk thinking seems to be that the NoW’s nemesis is the Sunday Mirror’s good fortune. All that £40m-worth of advertising formerly populating the News of the Screws will have to find a new home. And where better targeted than the Sunday Mirror, whose own annual revenue is languishing at something under £20m? According to City analyst Alex de Groot, that figure could increase by over 50% to £30m.

Er, not necessarily Alex. Beyond the perspective of the next few Sundays, this is no zero sum game. Murdoch’s misery is a reverse for the whole red-top sector, and the Sunday Mirror may well turn out to be one of the prime collateral casualties.

Why so? The phone-hacking scandal and associated police corruption is now to be the remit of a judicial inquiry. Not that I have much faith in the individual acumen of the judge, whoever that may be, presiding over it. Lord Hutton’s wilfully eccentric conclusions drawn from his own inquiry into the ‘sexed up’ WMD dossier cured me of any such illusions. What did impress me about the Hutton Inquiry was the wealth of uncontrollable detail that spilled into the public domain. I suspect a similar torrent of information will pour out of this, as yet unnamed, inquiry (relayed verbatim, no doubt, on The Guardian’s website, if nowhere else).

The key word here is “uncontrollable”. It is no longer possible, if it were ever desirable, to restrict the terms of reference of such an inquiry to the News of the World. It will, inevitably, have to investigate the whole culture of phone-tapping and police bungs rife within the tabloids these past 15 years.

Trinity has vigorously denied any complicity. That’s not strictly true, though, is it? In terms of sensationalism, the case of Paul Marsden MP may not be up there with NoW’s blatant and cynical tapping of war widows’ voicemail messages. But it tells an unsavoury tale all the same.

The Lib-Dem MP decided to step down in 2006 after a spate of revelations in the Sunday Mirror detailing various adulterous affairs. No doubt the Sunday Mirror had every right to expose the “love cheat” exploits of the errant MP. Less evidently justifiable are the means by which it seems to have acquired its information. According to Marsden these involved voicemail hacking and impersonating a policeman. It may be of more than passing interest that the Sunday Mirror reporter responsible for the Marsden story subsequently moved to NoW, at a time when Andy Coulson was editor. I’m sure Marsden himself would happily update us on the details.

If the Marsden case proves more than a bizarre lapse of judgement, I wonder how long advertisers will remain at the Sunday Mirror? And what will become of Trinity’s share price then?

UPDATE 23/7/11: I wonder who the ‘Master of the Dark Arts’ is? Sure enough, the Sunday Mirror is now up to its neck in phone-hacking scandal, after a Newsnight exposé. Here’s an excerpt, reported in The Guardian:

The source said: “One reporter, who was very good at it, was called ‘the Master of Dark Arts’. At one point in 2004, it seemed like it was the only way people were getting scoops. If they didn’t just randomly hack people in the news, they would use it to stand up stories that people had denied.”

According to the former employee, the “dark arts” were used to try to beat the News of the World at its own game.

What are the chances of the BBC negotiating a decent licence fee for 2016…

August 30, 2010

… and Mark Thompson, the present director general, leading those negotiations? Much better than they were a few weeks ago.

In his much-awaited MacTaggart lecture at the Edinburgh Festival, Thompson skilfully deflected the incessant barrage of brickbats hurled at the BBC’s corporate flatulence by painting BSkyB as the real enemy of UK media plurality.

Get-back time at James Murdoch, head of News International, after his cruel gibes in last year’s lecture at the expense of the corporate bloater, of course. But more than that, Thompson has read his runes well. The times, they really are achanging.

The argument, beloved of BBC critics, that the corporation is stifling commercial competition falls to pieces once we begin to examine the success story that is BSkyB. A few deft brush marks from Thompson’s speech tell the tale well enough. Sky’s dominance is underlined by a marketing budget that is bigger than ITV’s programme budget; and subscription revenues of £4.8bn that “dwarf…all other commercial broadcasters put together.” Lurking not very far below the surface is the suggestion that in Rupert Murdoch we have a UK version of Silvio Berlusconi – owning well over 40% of our newspapers, and poised to buy out the 61% of BSkyB his organisation does not already own.

That last bit may be a bit fanciful, but there are certainly compelling elements to the Thompson narrative that argue for a strengthened rather than reduced role for the BBC. If there’s been a failure in public service plurality over the past 20 years, it’s not so much the overweening power of the BBC that has been responsible for it as the inability of the ad-funded sector – represented primarily by ITV, C4 and C5 – to build a countervailing digital subscription-driven complement to their free-to-air analogue offering. If BSkyB could do it, runs the argument, why couldn’t they? To which, once we dust down the sorry case study of ITV Digital, there is no very good riposte.

Moving on, and acknowledging the chronically weakened position of the free-to-air, ad-funded sector, there seems little sensible alternative to recognising a new balance of power if broadcast plurality is to be maintained. Unpalatable as it may seem to people at ITV, the BBC is now the best bastion it’s got against further encroachment from Sky – along the lines of the enemy of my enemy is my friend.

Thompson’s specific proposal – that Sky should pay the ad-funded channels for carriage of their content, rather than the other way round, which is what now prevails  – is unlikely to gain traction. But it was shrewd propaganda, underlining the point – as it does – that Sky would not be where it is today without a big subsidy from free-to-air sector content.

What’s more, Thompson’s thinking chimes nicely with a change of heart by the regulatory authorities. Ofcom’s recent decision to open Sky’s lucrative but restrictive Hollywood first-run film offer to the Competition Commission is an indication of increasing concern that Sky is getting too big for its boots. It comes hot on the heels of an earlier probe into Sky’s sport offer.

A back-handed compliment, in a way. Sky has become the one to beat. A situation which, if nothing else, will give the BBC a breather for a while.

Murdochs in glass houses shouldn’t throw stones

May 24, 2010

“I believe that if there is an imbalance between the providers of creativity and those who exploit it, then we should care about it, and do something about it. Do not be misled by claims of high principle in this debate. When someone tells you content wants to be free, what you should hear is ‘I want your content for free’ – and that is not the same thing at all. We must rediscover something that should be very obvious: the importance of placing a proper value on creative endeavour.”

Fine, sonorous words from James Murdoch, uttered at a speech at UCL last week. Murdoch used the occasion to broaden his attack on the public sector from the BBC to, rather extraordinarily, the British Library. Why? Because the British Library is planning to digitise newspaper collections, among them the News International-owned Times’ – and then charge a fee for them. Superficially, Murdoch has a point. As of right, the British Library receives a copy of every publication free of charge. It seems a bit rich that it should be allowed to profit from the private sector by charging a fee to online users.

Except, of course, that our champion of “creative endeavour” is here perpetrating a wilful misunderstanding of the facts in order to advance his cause. It transpires that what the British Library is in reality doing is charging for out-of-copyright material. Since, on any given day, there is little demand for this archive stuff, digitisation becomes a relatively expensive process – justifying an online fee. The Library will not be charging for in-copyright material, except by prior agreement.

So, what exactly is Murdoch Jnr up to here? Clearly preparing the ground as vociferously as possible for News International’s imminent retreat into paywall purdah. He should not be too cavalier with his arguments, however. NI is, itself, a glasshouse at which brickbats may be hurled. Take the Sky News website for instance. A fine example of free access to content piggybacked from subscription-driven enterprise if ever there was one.

Former Sun and NoW boss Mike Anderson launches smartphone apps company

May 19, 2010

Mike Anderson, former managing director of The Sun and News of the World, is launching a company specialising in building and marketing mobile phone applications for smartphones. Handheld Company, based in Chelsea, opens its doors this month.

Anderson believes that with smartphones – such as the iPhone, Blackberry and Google-spawned Android handsets – becoming cheaper, more efficient and popular, the mobile platform is finally coming of age as a commercial opportunity. And that the way ahead is to be found in the development of apps that work effectively across platforms.

Anderson tells me: “Most brands, and agencies, don’t yet understand that there’s an opportunity beyond Apple and the iPhone, which account for most of the 200,000 apps currently available. This business is just taking off, with a lot of smarter apps about to come on stream. But the rhythm of publishing, the model, isn’t yet established. There’s a shortage of good developers and lots of ‘garage’ moms and pops out there. Few understand how to go to market, fewer still how to make money. And no one yet has grabbed enough land to be a significant player. There’s a lot of consolidation coming in the next 18 months.” Anderson sees the business evolving along the same lines as the record and computer games industry, with successful developers and labels commanding “rock star” status and fortunes.

Handset Company is based in a converted warehouse, dubbed the Chelsea Apps Factory, and has an initial staff – comprising designers, software and marketing specialists – of about 30. Much of the start-up capital has been provided by Anderson and his partners, but he is now initiating a private equity funding round.

Anderson has had a long career in the newspaper industry, punctuated by short spells in commercial television and as a media buyer. Before joining News International as managing director of News Group Newspapers in 2005, he was md of The Standard, and before that founding md of the successful freesheet, Metro – both at that time owned by Associated Newspapers. Anderson finally stepped down at News International in autumn last year, after tragedy blighted his private life. His wife, Jane, died of cancer, leaving him to bring up three children. In his own words: “It was a difficult time – it is very different being a single parent… When I came back, News International couldn’t find a role for me. They tried to find something, but I thought the best thing to do would be to get out and do what I believe in.” Initially, he set up a consultancy, Frank Business – one of his clients being The Sun.

At Handheld Company, Anderson’s partners are Mike Spencer, former marketing director of QVC Shopping Channel and the Disney Channel Europe; mobile content specialist Gordon Robson; Jo Rabin, former chief technical officer of Reuters Mobile Flirtomatic; and communciations and brand specialist Jane Allan.

Last post for the London freesheet

August 21, 2009

thelondonpaperSomething old, something new. While loss-laden Guardian Media Group dithers over a rare opportunity to mercy-kill the venerable but decrepit Observer, News International has shown no such compunction with its own failures, in axing thelondonpaper freesheet. Sixty rather shocked staff look like being out in the cold by mid-September.

In its way, thelondonpaper had become as much of an institution as the Observer, although a rather less sympathetic one. We’ll miss, with a sigh of relief in most cases, the army of free distributors who stiffened the ranks of seasoned chuggers obstructing our route to Oxford Street bus and tube stops. London Underground won’t, however, be regretting the 10 million tonnes of paper waste it had to dispose of daily. I imagine Westminster and Camden Councils will be similarly relieved at the reduced charge on their services.

I speak of this as the end of an era (albeit only three years’ long) because surely it is. Associated Newspapers cannot take long in reaching the same conclusion about thelondonpaper’s principal rival, London Lite: that it is a waste of time and money. Which would leave the much-better established Metro as sole contender in the London freesheet market. At least it has the merit of being able to make a profit in the good years.

Freesheets looked the way of the future when they first came out; in fact they were a last-gasp reaction by beleaguered newspaper barons. Paid-for no longer paid, as the eventual fate of the Evening Standard all too clearly demonstrated. The villain of the piece was the internet in general and Google in particular. If news and comment could be had for free, then where was the justification for all those expensive reporters and columnists on mainstream publications? Freesheets appeared to dispense with these tiresome overheads, by providing a confection of cheap wire news and stale celebrity chit-chat interspersed by listings. At the same time, traditional distribution and marketing costs could be stripped to the bone. But it was fool’s gold. Display advertisers, the freesheets’ exclusive source of revenue, didn’t buy into the recycled pap of their content. The worst recession of the past 50 years has proved the freesheets’ coup de grace.

However, the immediate reason for thelondonpaper’s demise (apart from its shocking losses) probably has something to do with Rupert Murdoch’s newly espoused enthusiasm for putting all his content behind paywalls. Ideologically, thelondonpaper simply wasn’t in tune with the new gospel.

Is there a silver lining in this cloud for Alexander Lebedev’s Evening Standard – which now faces considerably reduced competition? We’ll have to see.

Have a look at my colleague Ruth Mortimer’s blog for more thoughts on what the “free” concept had to offer. Also, a possible way ahead for niche products such as City AM and Shortlist, in the FT.

Biting the hand that feeds news

July 29, 2009

SharonBaylay006It seems the BBC is damned if it does, and damned if it doesn’t extend the hand of co-operation. Co-operation with others was a key stipulation in Lord Carter’s Digital Britain white paper. And it has clearly been taken to heart by the BBC’s new director of marketing, Sharon Baylay, who says, in response to my recent column: “We are playing our part in growing and re-energising ‘UK plc’, (we are) committed to forming new partnerships and recognising a special responsibility to maintain public service broadcasting beyond the BBC…”

But, oh dear, look what happens when it puts this doctrine into practice. The announcement that the BBC is to share video news content with four of our national newspapers has caused uproar. All right, part of this uproar is manufactured by News International. Given it owns BSkyB as well as The Times and the Sun, it was never likely to be happy about having BBC branded news content on its online sites. More to the point, though, is the apoplectic rage of ITN which is threatening to throw all its toys out of the pram by “pulling the rug” from the internet video market.

Clearly, Sharon, there’s no such thing as a honeymoon period.

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