Advertising in newspapers: let's remain positive

Newspapers often carry reports about "fat cats" in the City and elsewhere who earn "obscene" salaries. However, they are less keen to publicise the whopping pay packages of their own senior executives.

Last week, the annual report of Trinity Mirror revealed, as it is required to, that the remuneration of its chief executive, Sly Bailey, in 2006 had increased by almost half to £1.47m. This included a bonus of £755,000. Why so generous? Trinity Mirror's profits fell substantially last year. Every national newspaper it owns lost sales, and the company is selling the Racing Post and many regional newspapers. Hardly a triumphant record, and yet Ms Bailey's pay package shoots up.

At News International, controlled by Rupert Murdoch, the highest paid director in 2006, not identified in the annual report, was almost certainly Les Hinton, the chief executive. He received £2.1m. Why this former Sun journalist should be paid so much is something of a mystery, given that the profits of the company's national newspaper division (which includes the Sun, Times, Sunday Times and News of the World) fell last year from £136.2m to £102.1m.

Almost all newspapers are losing sales and revenues, and yet at Trinity Mirror and News International bosses are paying themselves ever larger amounts. I am not just talking about chief executives. At Trinity Mirror, the finance director, Vijay Vaghela, got £811,000 in 2006, a 39 per cent increase on the previous year. This at a time when employees on some of Trinity's national and regional titles were being made redundant.

This seems classic fat cattery of the sort that newspapers often deplore. But I have an even more fundamental objection, which is that the chief executive of a national newspaper has less power (and therefore should get smaller rewards) than his or her counterpart in most other large companies.

It is the editor who controls "the product", and is to a large extent responsible for its development, yet editors are almost invariably much less well paid than chief executives, the exception being Paul Dacre at Daily Mail and General Trust, whose pay of £1.23m in the year ending October 2006 was almost as much as the top person on the business side.

Look, for example, at the Financial Times, whose chief executive, Rona Fairhead, was paid £1.06m last year. As the paper and its website increased their profits from a derisory £2m to a not especially impressive £11m during this period, one might think that Ms Fairhead was worth her pay. And yet I am almost certain that she received more than twice as much as the FT's editor, Lionel Barber (his salary is not published), who is changing and developing the paper in a rather impressive way.

Good editors are extremely difficult to find, competent chief executives, let's face it, not so difficult. Editors are also much more likely to be asked to walk the plank, if things go wrong. To judge by the repeated redundancies at Trinity Mirror over the past year or two, the chief skill of Sly Bailey, in common with many of her kind, is cost-cutting. Is that a sign of particular brilliance? I would guess that she is paid considerably more than double the Daily Mirror's editor, Richard Wallace, who, in the view of many observers, is doing a pretty good job in difficult circumstances, and shows creative flair.

Doubtless there are some brilliant newspaper executives who are worth their keep, but there are others who are paying themselves more than they deserve. I suppose whoever possesses the key to the cash box is always going to get more of the cash.

scmgox@aol.com

'Harassment' is a rather subjective concept

Kate Middleton, Prince William's girlfriend, has accused the Daily Mirror of harassment in a complaint to the Press Complaints Commission that was probably initiated by Clarence House.

She says a picture of her in last Thursday's Mirror was obtained as result of her being harassed by a paparazzo on the way to work. Rather amusingly, the Daily Telegraph reported this development by carrying a front-page picture of Kate taken at the Cheltenham Festival. In other words, a respectable newspaper reporting a complaint uses another picture presumably also taken without her permission.

The only difference is the alleged harassment. If Kate is able to prove she was harassed, her complaint may be upheld. But she was in a public place, as she was at Cheltenham, and I would have thought that harassment in these circumstances is a rather subjective concept.

The problem is that newspapers have an insatiable appetite for Kate which she is usually happy to indulge.

Last week it was reported that internet advertising revenues have for the first time overtaken those of national newspapers. According to the Internet Advertising Bureau, they grew an incredible 41.2 per cent last year to £2.02bn, compared with national newspapers' take of £1.9bn.

This is exactly the sort of news that will have the usual soothsayers wagging their fingers and prophesying the demise of the print media and the ineluctable rise of the internet. I would certainly agree that the increase in internet advertising revenue is phenomenal, but we should not write off printed newspapers just yet.

In what is recognised as having been a very tough year for national newspapers, advertising revenue grew fractionally (by 0.2 per cent), whereas television advertising actually fell. We are not seeing a collapse in national newspaper advertising so much as a kind of sclerosis.

Might that be changing? Last week DMGT, publisher of the Daily Mail, reported that in the first five months of its current financial year, advertising revenue had increased by 10 per cent, thanks to strong online revenue and buoyant spending from retailers such as Marks & Spencers. Of course, its national newspapers may simply be taking a larger slice of a cake that is barely growing, and these figures may tell us more about DMGT than they do about the state of the national newspaper advertising market.

Still, even Trinity Mirror, whose problems have been worse than most, recently said it expected market conditions to stabilise during the year.

I am determined not to be too depressed, largely because there is such a Gadarene rush against newspapers, often by people who do not study the small print. I think we can fairly say that, so far as national newspaper advertising is concerned, the outlook is challenging rather than hopeless.

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