Gannett UK Limited and SMG plc: A report on the proposed
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Under the reference (see Appendix 1.1) dated 10 December 2002, we were
required to investigate the transfer to Gannett UK Ltd (Gannett) of the
three newspapers of SMG plc (SMG): The Herald, the Sunday Herald and the
Evening Times. Gannett is a wholly-owned subsidiary of the US company
Gannett Co., Inc., whose primary activities are the publication of newspapers
and operation of television channels in the USA. In 1999 Gannett acquired
Newsquest plc, and in 2000 acquired News Communications & Media plc.
It is now the UK's third largest publisher of regional and local newspapers.
SMG is incorporated in Scotland, and its three titles all circulate within
Scotland. Its interests also include Scottish Television and Grampian
Television, and local and national radio production and broadcasting.
The majority of sales of the SMG titles are in Strathclyde and Glasgow.
The SMG titles are widely regarded as playing an important role in the
Scottish newspaper market, particularly valued for their focus on Scottish
news and opinions, including coverage of the Scottish Parliament and Executive,
but supplemented by wider coverage of UK and international news from a
Scottish perspective; their editorial stance; and their liberal, pro-devolution
Gannett does not currently operate within Scotland; hence the transfer
does not alter the structure of the Scottish market, nor do we believe
that the transfer is likely in any other way adversely to affect competition
between newspapers in Scotland.
We are required under the Fair Trading Act 1973 to have particular regard
to the need for accurate presentation of news and free expression of opinion.
SMG told us that its editorial policy was one of editorial independence
but subject to commercial considerations. Concerns were raised with us
about the prospects for editorial independence but also for editorial
stance, content and quality under Gannett's ownership. We noted first,
however, Gannett's reputation for preserving editorial freedom and not
interfering on a day-to-day basis in the editorial content of titles.
Gannett said that it was committed to maintaining the autonomy of local
editors. Gannett's management structure is also locally focussed and it
plans to manage the titles in Scotland as a separate regional division
with its own managing director. Second, commercial considerations are
themselves likely to deter Gannett from adopting a different approach
to these titles. Third, such considerations are reinforced by the pressure
of competition within Scotland, including competition from Scottish editions
of UK national titles. A fourth and final safeguard regarding the performance
of the titles under Gannett's ownership is the risk to Gannett's reputation:
for example, in any future inquiries into newspaper acquisitions by Gannett,
the competition authorities are likely to be alert to its record in operating
the SMG titles. We do not therefore expect the transfer adversely to affect
the current editorial freedom, the current editorial stance, content or
quality of the SMG titles, accurate presentation of news or freedom of
We also do not expect the purchase price paid or any aspect of Gannett's
likely financial management of the newspapers to reduce editorial quality.
Gannett's bid was not significantly out of line with that of other bidders
or SMG's own valuation of the business. We saw no reason to infer that
Gannett would require or attempt to bring about a higher operating margin,
or that the titles would be put under any greater cost pressure, than
would otherwise be the case.
We concluded therefore that the transfer may not be expected to operate
against the public interest.
Summary and Conclusions
Background and evidence
||Background: regional/local newspapers and suppliers in
||The main parties and the proposed transfer
||Scottish markets analysis and editorial issues
||Views of the main parties
||Views of third parties
||List of signatories
|(The numbering of the appendices indicates
the chapters to which they relate)
||The reference and background
||Published issues statement
||Annex to public interest letter to SMG and Gannett
||Commission and other reports on newspapers and related
markets since 1990
||Ownership of local daily and Sunday titles
||Circulation/distribution areas for Gannetts titles
in the UK
||Newsquest financial information
||SMG newspaper titles: advertising and circulation revenue
||SMG: reconciliation of EBITDA to operating profit/loss
before exceptionals, online and amortization of goodwill
||Circulation and other details on newspapers published
||Linkages between publishers of local newspapers and other
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