Trinity International Holdings Plc and Thomson Regional Newspapers Limited: A report on the proposed transfer to Trinity International Holdings Plc of certain newspapers of Thomson Regional Newspapers Limited

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On 20 July 1995 the Secretary of State for Trade and Industry asked us to investigate and report on whether the proposed transfer to Trinity International Holdings plc (Trinity) of the newspapers published by Thomson Regional Newspapers Limited (TRN) listed in Appendix 1.1, of the assets necessary for the continuation of those newspapers and of plant and premises used in their publication may be expected to operate against the public interest. The proposed transfer involves all of the newspapers published by TRN at its regional centres in Belfast, Cardiff, Chester, Newcastle-upon-Tyne and Teesside.

TRN is the largest publisher of regional and local newspapers in the UK, with a 10.4 per cent share of total sales or distribution. The Thomson Corporation (TTC), TRN's parent company, told us that it had made a strategic decision to withdraw from the UK regional and local newspaper market. At the start of our inquiry TRN had eight regional centres, five of which are the subject of this inquiry. Its Luton centre was sold to EMAP Newspapers Limited in the course of our inquiry. Separate negotiations for the sale of its two Scottish centres are currently in progress.

Trinity is currently the sixth largest publisher of regional and local newspapers in the UK with a 5.5 per cent share of total sales or distribution. Its six subsidiaries operate in Scotland, north Wales, Merseyside, Huddersfield and southern England.

We gave particular attention to the increased concentration of ownership of regional and local newspapers that would be brought about by the proposed transfer. It has been put to us that such increases in concentration are inevitable and will benefit diversity of opinion by securing a healthier newspaper industry. We are not convinced by this argument. We believe increases in concentration need to be examined critically although we accept that they will not necessarily be harmful to diversity.

The effect of the transfer would be to give Trinity 12.3 per cent of the total sales or distribution of regional and local newspapers in the UK. Although this is nearly two percentage points more than the current leader, TRN, we do not consider it to be an unduly high level of concentration. Trinity has a well-established policy, which it has assured us will continue, of allowing freedom to its editors. It would share the regional and local newspaper market with other strong newspaper groups and this would limit its market power in the UK.

At regional level, the proposed transfer of TRN's Belfast, Newcastle and Teesside centres will have no impact on the concentration of ownership in Northern Ireland or north-east England. The political situation in Northern Ireland gives the regional press there a particularly sensitive role. Trinity has assured us that it does not expect any change to the Belfast Telegraph's political stance as a result of the proposed transfer.

TRN is the dominant publisher of regional and local newspapers in south Wales, Trinity in north Wales. After the transfer Trinity would have 51 per cent of regional and local newspaper sales or distribution in Wales. However, due to topography, communications between north and south Wales are poor and there is very little cross-selling of regional and local newspapers between the two areas. We are satisfied that Wales is not a single market for local and regional newspapers. Within south Wales alone, the proposed transfer of TRN's Cardiff centre would have no effect on concentration of ownership.

We examined the Merseyside, Cheshire and north Wales region particularly carefully. The proposed transfer of TRN's Chester centre would give Trinity 62 per cent of sales or distribution of local and regional newspapers in this region. Unlike Wales as a whole, this region is already served by a single regional newspaper (Trinity's Daily Post).

There is little overlap between Trinity's existing publications and those of TRN's Chester centre. Local competition would not, therefore, be greatly affected by the transfer. However, Trinity's dominance in the region as a whole would be reinforced and some of its competitors fear that it would use market power to drive them out of business. In our view this is unlikely. Driving out competitors, for example by cutting advertising rates, would be expensive for Trinity in the short term and would give it no assurance of long-term gain. The barriers to entry of new free newspapers into the market are low and advertisers have other media to which they can turn (for example, advertising only publications and, increasingly, electronic media), if Trinity tried to force up rates. Any attempt by Trinity to undermine its competitors by offering region-wide advertising packages would be limited by the fact that most advertising in local newspapers is purely local in scope.

Trinity told us that it intends to continue to publish TRN's existing titles. We believe it is in Trinity's commercial interest to do so. Given this, and the continuation of Trinity's policy on editorial freedom, we consider that the transfer would have a negligible impact on readers' choice in the Merseyside, Cheshire and north Wales region.

Trinity's past record on editorial freedom and its assurances for the future also lead us to conclude that the proposed transfer would not have an adverse effect on the accurate presentation of news and free expression of opinion. We note that the financing of the transfer would greatly increase Trinity's financial commitments and this could affect editorial standards. However, we conclude that the risks are not such as to threaten the accurate presentation of news and free expression of opinion.

Trinity has given us an estimate of the employment consequences of the transfer. They are small and we do not consider that they are such as to operate against the public interest.

Trinity would more than double in size as a result of the proposed transfer. The financing of such a large expansion has major implications for Trinity but we do not believe it would be taking on excessive commitments.

We conclude that the proposed transfer may be expected not to operate against the public interest.

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