The Daily Telegraph had reacted to the price cut of its principal rival with a degree of sang froid bordering on complacency. With a forecast £60 million profit for 1993 its position at the head of the broadsheet market doubtless appeared unassailable. Its managing director had even argued its rising cover price was an asset on the grounds that it was ‘a premium price for a premium brand’. In fact, the Telegraph’s half-century domination of the broadsheet market rested on exactly the sort of tactic Murdoch was now pursuing. In 1930, the Telegraph had halved its price from twopence to a penny. Its sales soared past the million mark leaving behind The Times to cater for its small, if influential, metropolitan catchment area. It had taken a long time for The Times to catch on. The Telegraph’s problem – whatever the talk of ‘premium brands’ – was that in the space of the past eight years it had gone from being the cheapest national broadsheet to the most expensive of the four (the FT, retailing at sixty-five pence, cost more, but it catered for a targeted market). The Telegraph’s initial ability to withstand the price assault bolstered the arguments of those in its ranks who believed there was no need to panic. Of Murdoch’s efforts, Neil Collins took the view, ‘there must be something better you can do with £40 million than hand it to your customers’. But by June 1994, after nine months of withstanding the assault, it was clear to those assembled at the Telegraph’s offices in Canary Wharf that their paper’s sales were starting to slide and that delaying matters could be catastrophic. Retailing at eighteen pence more than its direct rival, the Telegraph risked pricing itself out of the market. They persuaded Conrad Black to cut the price.17
On the evening of the Telegraph’s price cutting announcement, Stothard was at a party thrown by the publisher Lord Weidenfeld when Black, looking gruff, came up to him. ‘What you and Rupert Murdoch don’t understand,’ he warned, ‘is just how rich I am.’ To Stothard these sounded like the words of a man who was not quite as rich as he would like to be.18 Black’s patience and his pockets did transpire to be limited. The Telegraph’s cut in price attracted back lost readers but provoked a far more negative response from the City where its share price dived from 540 pence to 349 pence, wiping £264 million from its market capitalization. The crash also put the spotlight on Conrad Black who had raised £73 million by selling shares at 587 pence only the previous month while sticking to the line that the Telegraph would not enter the price war. Feeling misled, financiers were furious at his volte-face and he suffered the indignity of having Cazenove, his corporate stockbroker, state they were terminating their relationship with the Telegraph Group. Max Hastings would later write in defence of Black’s claim that the had not consciously deceived investors19 and the Stock Exchange also cleared him of impropriety. Nevertheless, the affair damaged Black’s reputation in the City. Critics were quick to dredge the episode back up when, in 2004, his business affairs came unstuck.
In June 1994, Black may have hoped that sanctioning a price cut would bring The Times’s offensive to a halt. He was wrong. Stothard and Murdoch immediately agreed to meet fire with fire. Thus The Times responded by cutting again, taking the cover price down to twenty pence and immediately wrong-footing the Telegraph. Between them, Hollinger and News International were writing off around £80 million in lost revenue from circulation. Many in the City believed it was madness. The Times now cost the same as the Sun. ‘I am watching with the bemusement that I sometimes reserve for a bad pantomine,’ commented Peter Preston, the Guardian’s Editor.20 The Independent, having taken the most high-minded line of all, dipped its toe in the water with a one-off twenty-pence edition on Monday 23 June. It boosted sales on the day, but few were so impressed that they came back for more at full price the following morning. Black, meanwhile, made informal approaches to Murdoch to call the price war off.21 The moves were rebuffed. Regardless of how rich Black claimed to be, the evidence was that Murdoch was richer. While the £45 million cost of the price war reduced News International’s operating profits to £96.2 million in the year to June 1994, this was more than balanced by the surging profitability of BSkyB and News Corp.’s television and film divisions in the United States.22 Over the summer of 1994, The Times felt sufficiently confident to increase its advertising rates by 15 per cent, a decision that reflected the extent to which gaining sales was also making it a more desirable vehicle for advertisers. Year on year, The Times’s circulation was up 40 per cent in the first six months of 1994.
The attempts of competitors to prevent the price war continuing was dealt successive blows in 1993 and 1994 when the OFT reported that there was no evidence of predatory pricing. Nonetheless, while The Times’s sale continued to soar, there were casualties at Wapping. Andrew Knight continued as News International’s chairman, but the executive powers of the post had passed to August (‘Gus’) Fischer. The Swiss-born Fischer was far more of a technocrat than the urbane, editorially minded Knight, whose social and political contacts nonetheless continued to make him a formidable defender of the company’s interests against further regulation. John Dux, an energetic Australian and former editor of the South China Morning Post, continued as managing director until March 1995 when a crisis over the short supply (and correspondingly high price) of newsprint reached such severity that it forced the newspapers to temporarily cut pagination. Voices were raised that the shortages should have been foreseen and better planned around. The crisis precipitated Dux’s replacement by his compatriot David Flynn. Gus Fischer also fell by the wayside. Bill O’Neill momentarily stepped back in as Murdoch’s eternally safe pair of hands before Les Hinton was appointed executive chairman later in the year. He proved a remarkably stabilizing influence on the Wapping atmosphere.
Ignoring the impressions of those such as Stephen Glover who wrote that, ‘Even in this free-market age there is something undignified about The Times, of all papers, desperately marketing itself as though it were a soap powder’,23 Stothard was buoyed up by the evidence that once the paper got into readers’ hands they were impressed by the product. ‘We were in a risk-taking mode,’ he later confided. When it was suggested to him that for one day only The Times could be offered free in a deal sponsored by Microsoft, he agreed to it. There appeared not to be a conflict of interest since Microsoft would have no editorial say in the content. Instead, the computer software company would merely underwrite the sales’ cost in return for the advertising gains of being seen as the paper’s sponsor. The free paper duly appeared on 24 August 1995 with a supplement attached advertising Microsoft’s new Windows 95 software. A giant print run of 1.5 million was produced to anticipate the inevitable demand the offer of the free paper would create. Circulation was up 8 per cent in the days following the free issue and was still 3 per cent up by the end of the month. ‘I think we probably did get something out of it because we could show the paper to a lot more people,’ Stothard reflected, before adding, ‘would I have done it again? No.’24 In terms of boosting sales without the cost of promotion, it was a cheap and easy success. Yet it was a mistake insofar as it risked The Times’s reputation. It had become, even if only for one day, a ‘give-away’ product. This tarnished the brand name for quality. Furthermore, despite the avowal that Microsoft had been rewarded with no say in what was printed in the paper, it allowed detractors to suggest that editorial integrity might nonetheless be strained by reliance on the benevolence of a single company. Although this did not happen in practice, it was certainly a most unfortunate possibility in theory. The deal certainly appeared to make commercial sense for Microsoft. Media Week magazine reflected that it was ‘widely regarded as the most magnificent media coup in recent memory’. Others were sniffy. ‘Worth every penny – Times for free,’ jibed a headline in the Guardian.25
In November 1995, with circulation approaching 700,000 – double what it had been when the price war had begun just twenty-five months earlier – the decision was taken to raise The Times’s price to thirty-five pence. The Telegraph promptly upped its cover price to forty pence. Yet this was not a si
gn that Murdoch was preparing to call off the assault. In June 1996, The Times slashed its Monday cover price to ten pence. The intention here was to attract a new market for the paper’s revamped sports coverage, which had been invested heavily in and was, at last, ready to take on the Telegraph at its strongest point. As a means of attracting new readers, the ten-pence offer was a resounding success. Sales on Mondays soared to 1.2 million, while the paper was selling in excess of 700,000 on the other weekdays. Yet the numbers buying on the Monday and then becoming new, regular readers for the rest of the week were not of a scale to suggest that the price war could bring benefits indefinitely. Not prepared to wait, The Times’s competitors launched a fresh appeal to the Office of Fair Trading. There were two principal allegations. They argued that by continuing the price war into a fourth year, the tactic could no longer be defended as being merely a typical promotion exercise and that the ten-pence Monday edition must surely constitute selling the paper at a loss. The critics’ case was strengthened by rumours that the Independent was about to fold. Having started the loss-making Independent on Sunday, the paper’s financial difficulties were not, of course, purely the fault of Rupert Murdoch, but the prospect of the paper’s death was held up as evidence that The Times’s price cut was destroying competition. In the House of Lords, a cross-party group led by Lord McNally, a Liberal Democrat peer, attempted to ride to the rescue. The Government was proposing new legislation that intended to harmonize British law with the principals of European law. The peers voted by 121 to 93 to amend the Competition Bill in a way that, they hoped, would make price wars like that being waged by The Times illegal. Among those voting with the Liberal Democrats were twenty-three Labour peers in defiance of their party whip.
The argument made by McNally dovetailed with that put forward by the Independent, that ‘the media is a special case in competition law’.26 The Government took the contrary view with Margaret Beckett, the President of the Board of Trade, maintaining that the McNally proposal was ‘unworkable in law and practice’. The amendment had attempted to prohibit any price cut that intended to ‘injure or eliminate’ competition. A law that prevented a company pursuing a business strategy that injured its rivals was not a recipe for innovation in the newspaper market or good value for the customer. The amendment was duly removed from the bill during its committee stage in June 1998. The following May, John Bridgeman, the OFT’s director-general issued what was the fourth report into The Times’s pricing policy. The ten-pence paper on Monday was criticized (although the price had subsequently been increased to twenty pence in January 1998) but once again the complaints that the paper had been engaged in predatory pricing with the explicit intent of eliminating a competitor were rejected.27
By then, it had become clear that The Times was not going to overtake the Telegraph, encouraging some to believe that the latter, in remaining the best-selling daily broadsheet, was winning the war. It was a sign of The Times’s success that an offensive commenced amid derisive comments that it would make little headway ended up being questioned because it had not left its opponent for dead. In this sense, it had altered the perspectives on what was possible. By 1997, The Times had doubled its circulation while the Telegraph had only kept its head above the one million mark by means that went beyond lowering the cover price. It invested in a vast subscription scheme to try and lock in 300,000 readers at a cut-price rate. This was hugely costly to the Telegraph, whose profits had fallen from around £60 million in 1993 to £1 million by 1996.28 On the newsstands, it was The Times that was making the advances as was clear by the fact that it was selling almost as many copies a day at the full cover price as was the Telegraph. This was an extraordinary turnaround.
No treaty or proclamation marked the price war’s end. The cover price simply went up in five-pence hikes. Given the turn-of-the-century collapse in revenue because of the advertising recession, the need to claw back some revenue from cover-price sales became inevitable. Nonetheless, it was not until the autumn of 2002 that The Times was retailing at the forty-five-pence rate at which it had been priced on the eve of the great gamble nine years earlier. By 2002, circulation had fallen back but remained above 600,000. It had been selling only 354,000 copies when it last sold for forty-five pence. During the intervening period a vast new readership, dwarfing anything the paper had ever attracted in the past, had been enticed by a low price to try it out. The triumph of Stothard’s Times was not that people bought it because it was cheap but that so many opted to stay with it when the price went back up.
III
Dangerously, The Times had begun its great push for new readers before it had sorted out the problems on the backbench that had beset Simon Jenkins’s editorship. Nonetheless, changes began to be made that effectively addressed the problem. Tim Austin was appointed chief revise editor. As such, he very successfully eradicated the misspellings, inconsistent punctuation and general lapses from perfection that had riled Jenkins, while making his corrections without the same amount of drama. Most importantly of all, Andrew Knight suggested to Stothard that he might be able to lure David Ruddock over from the Telegraph as night editor. Taking up his new position in 1994, Ruddock was a no-nonsense professional whose style of enlightened despotism on the Telegraph’s backbench had been a central component to that paper’s success. Recognizing a man searching for a new challenge, Knight hoped Ruddock would perform the same task at The Times.
Ruddock got to work with relish, gaining the ear of Peter Roberts, the managing editor, to ring the changes. The four-day week enjoyed by subeditors working late nights was abolished, reducing the amount of work done by ‘casuals’. The computer system was modified to allow the editor to read copy prior to its being made available on the page. It was a privilege his opposite number at the Telegraph had long enjoyed. ‘It’s the first time I’ve been able to read what’s going on’ a delighted Stothard told his new night editor. Smoking was abolished in The Times building. This made a significant change to the work environment. The rum warehouse was a long, open-plan shed with few windows (none of which opened anyway) but, worst of all, it had poor air conditioning. For the past eight years its inmates had been cooped up inside within a blue haze of smoke. The decision soon came to be seen as an improvement.
There were further staff changes, among them Tom Pride, who was brought in as a copy taster, and Simon Pearson – whose talent Ruddock early identified as making him a worthy successor when the time came – moved from the foreign subs desk to the position of home chief Sub. Away from the paper, Ruddock was an outspoken and hospitable man with a particular interest in the Peninsular War. From his command point on the backbench, he led by example, working tirelessly from 1 p.m. to 1 a.m., encouraging and exhorting the troops around him for another attack. On one memorable occasion he told the home news editor, James MacManus – a patrician figure not easily cast for a life in domestic service – that he was the waiter and that he, Ruddock, required a menu each night from which he might choose what to put into the paper. This was not how MacManus had seen the relationship. There was no shortage of plats du jour but Ruddock generally had a clear idea of what was to his taste and what was not. He inherited a paper that ran six different editions every night. Each edition saw a refining of the copy that had appeared in its predecessor, with reactions to breaking news (and a chance to snoop on what was in the first editions of the rival newspapers) as well as tailoring content to the area the edition was being sent to (more Scottish news in the edition that went north of the border, more West Country news for the edition that was despatched there, and so on).
Stothard took a great interest in the features, the leaders and the main decisions about what was going to be in the following day’s newspaper. He usually left the office after the first edition was completed at 8 p.m. He was content to leave John Bryant and David Ruddock to take decisions about breaking news developments as they came in during the night. News that had important political implications for its treatment was a diffe
rent matter. Nonetheless, at some stage on most nights Stothard would be telephoned for his deliberation on a specific matter than had arisen. Generally, he knew that Bryant and Ruddock were more than capable of handling matters as they arose. It was an understanding that allowed Stothard to adopt a far less interventionist approach to the wording of the news pages than, for instance, Simon Jenkins, had felt at ease to permit. Stothard was also spared the burden of having to shoulder managerial problems by Peter Roberts who Jenkins had appointed managing editor. Roberts continued to oversee the budgetary, contractual and personnel issues even though he was dying of cancer. Despite increasing pain, he carried on until September 1996, dying the following year aged sixty-two. In his place, James MacManus picked up the baton. The price war and the paper’s expansion were exciting times in which to be in command of resources and MacManus threw himself into the task with customary flair. When he subsequently moved over to direct the Times supplements’ operations, Stothard’s friend and colleague George Brock took charge. It proved another successful relationship.
The History of the Times Page 60
