Magazine article The Spectator

The Most Important Thing Now Is That the Telegraph Should Be Sold Soon

Magazine article The Spectator

The Most Important Thing Now Is That the Telegraph Should Be Sold Soon

Article excerpt

So the Barclay brothers' bid for Conrad Black's controlling share in Hollinger International has been vetoed by an American judge. We are back to square one. A lot of time has been wasted. Meanwhile the patient itself - i.e., the Daily Telegraph - is ailing. Mercifully its journalists have called off a strike, though they remain sunk in gloom. But the paper is losing sales (though not on a Saturday) as some readers defect to the tabloid Times or the tabloid Independent. The Telegraph's management has its own tabloid plans, and a budget of £15 million to launch the thing, but dares not push the button until it becomes clear who the new owner will be.

The thought that the sale of the newspaper might take several more months is not a happy one. (By the way, in writing about the Daily Telegraph I should declare an interest, since the upmarket newspaper I am planning with colleagues might be accounted a potential competitor. In fact I have inexhaustible affection for the Telegraph.) It so happens that Nick Shott, who is handling the sale of the paper on behalf of Lazard bank, is a former Telegraph senior executive. Stephen Carter, the head of Ofcom, the regulatory body which will assess the suitability of bidders, dealt with the Telegraph's account when he was an advertising executive. If either of them has any residual affection for the newspaper, they will realise how important it is that there should be a speedy conclusion to this process.

Not that I think that any of the suitors has a miracle cure for the Daily Telegraph. There is no such cure. If a newspaper has gradually been losing readers for 25 years, it is not possible to turn it around in an instant. Possibly the decline cannot be reversed but only stabilised and managed. Looking at the various suitors, it seems to me that some of them may not have the long-term interests of the Daily Telegraph (or of the Sunday Telegraph and The Spectator) at heart.

One category of investors is looking for a quick turn. They know that the Telegraph Group made £69.7 million in the year 2000. In 2003, after a 20 per cent decline in advertising revenues, the profit was £43.7 million. As advertising recovers, Lazard is hoping for better profits in 2004 and better still in 2005. These investors are licking their lips. They look at the Telegraph Group's editorial complement of 542, and overall staff numbers of more than 1,200, and not unjustifiably ask whether there might not be substantial costs savings which could boost profitability in the short term. But I can't help wondering whether these prospective investors, who mostly comprise financial institutions and venture capitalists, have a long-term strategy for the Daily Telegraph once they or their backers have pocketed the savings.

Richard Desmond of the Express Group surely comes into the same category. At the Daily Express he has improved profitability not by increasing sales but by slashing costs. This works in the short term but offers no longer-term strategy for arresting circulation decline. Of course there are other objections to Mr Desmond, namely that he is a pornographer. No one should be fooled by his announcement that he is selling off his porn magazines, since he is hanging on to the much more profitable, and no less pornographic, Fantasy Channel. Actually, it would help our own newspaper venture if Mr Desmond were to acquire the Telegraph Group, since readers and journalists might defect to us. …

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