Mr David Sullivan and The Bristol Evening Post PLC: A report on the proposed transfer of a controlling interest as defined in section 57(4) of the Fair Trading Act 1973

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Summary

On 5 March 1990 the Secretary of State for Trade and Industry asked us to investigate and report on the proposed transfer to Mr David Sullivan of a controlling interest in The Bristol Evening Post PLC (BEP) (see Appendix 1.1).

BEP's main activity is in publishing a range of newspapers based in the Bristol area, including the Evening Post, the Western Daily Press (a Bristol- based morning paper), and a number of local weekly paid-for and free newspapers in the South-West. Its main other interests are in newspaper printing and distribution, property and a chain of confectionery, tobacco and newspaper shops in the Bristol area. Associated Newspapers Holdings Ltd holds 23.8 per cent of BEP shares and associated pension funds a further 6.1 per cent. Mr Sullivan holds almost 7.5 per cent and the other shares are widely dispersed between institutions and individuals, almost half of whom are based in the Bristol area.

Mr David Sullivan holds a 50 per cent interest in Sport Newspapers Ltd, publisher of the Sunday Sport and The Sport. His other interests apart from bloodstock dealing include the publication of a range of magazines, the promotion of films, video recordings and associated products and the operation of telephone entertainment services. Most of these products and services are described as `adult' and sexually oriented.

Mr Sullivan has indicated that he intends to increase his present holding of BEP shares and does not wish to do so without knowing whether consent would be forthcoming, should he increase his shareholding to the 25 per cent level at which such consent is required under the Fair Trading Act. He has also indicated that it is his present intention to proceed to a possible bid situation. Against this background we have examined in the inquiry not only the effects of the acquisition of 25 per cent of BEP shares by Mr Sullivan but the likelihood that such an acquisition may lead to effective management control of BEP by him and the public interest issues that would then arise.

The main public interest issue is the likely effect of the transfer on the character and content of BEP newspapers, particularly the Evening Post and the Western Daily Press. We consider that if the acquisition of shares were allowed Mr Sullivan could be expected to influence editorial policy and the character and content of these papers and that this would harm both the accurate presentation of news and the free expression of opinion. We also consider that the acquisition could harm the standing of the papers in their community and that there could be some adverse effects on circulation. The evidence from Mr Sullivan's previous involvement with the Daily Star suggests that his proposed acquisition could well impair the ability of BEP newspapers to hold readers and advertisers and thus their profitability. Given the different readership of Mr Sullivan's present newspapers and BEP's titles the acquisition would raise no significant competition concerns. Mr Sullivan's own ideas for improving BEP's efficiency and profitability were not provided in sufficient detail for us to conclude that there would be offsetting benefits.

We find that the transfer to Mr Sullivan of a controlling interest in BEP may be expected to operate against the public interest. We are unable to recommend any conditions which might be attached to consent to the transfer to prevent it so operating.

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