EXCLUSIVE

EXCLUSIVE: £35m Covid Cash Fund Dominated by Big Media While Small Publishers Struggle


  • BRITAIN’S wealthiest newspaper publishers are taking the lion’s share of emergency taxpayer support for the free press
  • RESEARCH by Byline Investigates shows that seven in 10 companies to benefit from handouts turn over at least £20m a year
  • BUT 94% of small publishers are struggling in lockdown with 75% concerned they will be forced to fold, according to the Public Interest News Foundation (PINF) while;
  • FLEET Street lobbyists the News Media Association “evaluate” newspapers for funding eligibility – with 92%* of beneficiaries its own members, as:
  • INDEPENDENT news providers say it raises questions about public procurement rules and Press freedom in the United Kingdom

Wrapped : The Government is pumping £35m into ‘sponsored’ newspaper content during Covid-19 (c) Newsworks
Wrapped: The Government is pumping £35m into ‘sponsored’ newspaper content during Covid-19 (c) Newsworks

TAXPAYER funding intended to support the UK’s free press during the Covid-19 crisis is being channelled overwhelmingly to corporate interests at the expense of independent media, it can be revealed.

Almost 70% of publishers to benefit from the £35m ‘All In, All Together’ Cabinet Office-approved subsidy scheme turn over in excess of £20m a year with cumulative revenues of around £3.5bn and profits exceeding £500m, we have found.

The findings, based on analysis of public and industry datasets, come as the Public Interest News Foundation (PINF), which supports independent news providers, says 94% of its publishers are suffering in lockdown, with 75% fearing closure, and the vast majority not benefiting from other government support.

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This raises real questions about public procurement rules and about Press freedom

— PINF Executive Director Jonathan Heawood

PINF Executive Director Jonathan Heawood is also concerned that OmniGOV, the media-buying agency appointed by the Cabinet Office to oversee the £35m scheme, has put partisan national newspaper bodies in charge of evaluating eligibility for handouts.

He said PINF’s publishers were being referred to join industry lobbying organisation the News Media Association (NMA), and its marketing arm, Newsworks, before they could access taxpayer funds.

Mr Heawood said: “We have had three emails from OmniGOV referring our publishers to Newsworks or the NMA, they said ‘for evaluation and verification purposes’.

“This suggests that Newsworks and the NMA are being treated as quasi-official bodies with a remit and capacity to judge whether or not news publishers count, for the purposes of this funding campaign.

competition

“These are private bodies. We have nothing against them as bodies, but they exist to represent the interests of their members, which are not obviously the same interests as our publishers – in fact they may way well be different as they are in competition to each other.”

A spokesman for the Cabinet Office said the NMA is not a funding “gatekeeper” and has “no role” in deciding where Government money goes, and that at least 60% of the £35m is going to regional and local media.

Adding that the fund is still open to new applications, they said: “All titles have been selected by our media planning and buying agency, OmniGOV, on their ability to engage with audiences at a national, regional and local level and are verified by our media auditors.”

Byline Investigates’ analysis suggests that of 614 national and regional newspaper “non-community” titles to receive taxpayer support, 92% are NMA members.

Among the benefitting publishers are Rupert Murdoch’s News UK, owners of phone hacking-dogged The Sun titles, and the Daily Mail and General Trust, which recorded a pre-tax profit of £145m to September 2019, and is owned by billionaire tax non-dom Lord Rothermere, whose newspaper was coincidentally named last week at the High Court over allegedly unlawful surveillance on a former partner of Prince Harry.

Also benefitting are Reach plc, another publisher facing major phone hacking litigation at its Mirror national titles. Alongside its regional newspaper group – the UK’s largest – and the Daily & Sunday Express and the Daily Star, Reach recorded pre-tax profits of £150.6m in the last accounting period.

Only a small handful of benefitting news organisations are regulated by Leveson-compliant Press watchdog IMPRESS – the one regulator formally approved by the UK’s Press Recognition Panel (PRP) – while hundreds were signed up to breakaway industry “self-regulator” IPSO, our research has found.


Vocal : PINF Executive Director Jonathan Heawood speaking at its conference last year (c) Tariq Sheikh
Vocal: PINF Executive Director Jonathan Heawood speaking at its conference last year (c) Tariq Sheikh

THE NMA’s apparent role as a funding gatekeeper is a conflict of interest because the body has held a long-standing opposition to the very existence of IMPRESS, says Mr Heawood, who is also the regulator’s founding director and former Chief Executive.

In 2017 the NMA went so far as to bring judicial review on behalf of its membership, made up largely of “legacy” media companies, of the PRP for recognising IMPRESS as a bona fide regulator at all.

The judicial review failed and a subsequent appeal dropped, leaving the NMA saddled with costs, as the judge considered and rejected its argument that IMPRESS’S members, which are smaller independent publishers, were not “significant enough”.

shunned

Mr Heawood, who now heads up PINF, added: “It seemed counterintuitive to us that small independent media, that have historically been shunned by big publishers, and are sometimes led by journalists made redundant by big publishers, or who have set themselves up as a contrast to legacy media, should have to speak to Newsworks or the NMA.”

Mr Heawood warned that small publishers are being disproportionately affected by the downturn in advertising since lockdown began on March 23, while also missing out on Government support if they lack affiliation to corporate lobby groups.

He said: “For two months from the start of lockdown to the present the plight of independent small publishers has only grown worse and the Government’s response has been to predominantly support the big corporates, which are already benefitting from other relief mechanisms, for example they can furlough because they have enough staff over-all that they can still operate.

“This raises real questions about public procurement rules and about Press freedom.”


Decision : Cabinet Office Minister Michael Gove MP (c) Chris McAndrew and (inset) NMA / Newsworks
Decision: Cabinet Office Minister Michael Gove MP (c) Chris McAndrew and (inset) NMA / Newsworks

INDEPENDENT news providers had initially been cautiously supportive of the Government Covid-19 advertising scheme.

Jonathan Heawood said: “It was obvious from the outset that the news industry was going to be affected at every level. Advertising collapsed and everyone got that.

“All industry bodies from the National Union of Journalists (NUJ) to the News Media Association (NMA) to think tanks were saying to the Government ‘you need to step in’.

“For a few weeks we were all singing from the same sheet.

campaign

“Then on April 17 a new government advertising campaign was announced by the NMA and Newsworks, with a quote from Michael Gove suggesting this was a clever solution to the problem – two birds with one stone – to support the news industry and get out public health information.

“With a budget of £35m, that seemed like a step in the right direction. Not exactly what we had been calling for – we thought grant funding was important too – but if this was the only way the Govt would free up some cash then so be it.

A small portion of £35m could go a long way for some of the smaller publishers who are worst hit – 94% of independent publishers are suffering in the lockdown, with 75% worrying they will have to close down and the vast majority not benefiting from other government support.”

Instead, many smaller publishers have been left without support, while our research shows 20% of titles to benefit so far are from Newsquest, a media company owned by Gannett, America’s biggest newspaper publisher by daily circulation, and for which the whole pot of £35m would barely represent a third of its annual profits.

great need

Mr Heawood added: “Small news organisations have a very great need and small resources. They can’t furlough staff, and their turnovers are too low to benefit from VAT or other tax reliefs, while loans are not always helpful.

“It seemed obvious to us that if the Government’s intention through the scheme was to support ‘cherished local institutions’, then some of those institutions are independent, and some are owned by big companies, which also employ great journalists, and they should all be supported on a level playing field.

“We saw [Minister] John Whittingdale at the Department for Digital Culture, Media and Sport (DCMS) and he said the scheme was nothing to do with him and to do with the Cabinet Office.

“The Cabinet Office told us the campaign was being administrated by a company called OmniGOV, who we met, and they suggested repeatedly that we needed to talk to a body called Newsworks.

patience

“We were running out of patience and we said that as people who worked with small independent publishers it made no sense for us to speak to Newsworks, which represents the national corporate publishers that dominate the industry.

“Many small publishers are feeling forced to reduce their output at a time when they want to be doing their bit. There are a lot of stressed out people around the country.”

Mr Heawood says PINF has managed to offer some financial support for its publishers, having raised £60k from the Joseph Rowntree Reform Trust fund to support 20 small publishers with grants of £3k each.

Accepting even this funding was just a “drop in the ocean”, Mr Heawood added: “It is extraordinary that civil society is having to step in to support such an important public service.

“It is a complex situation. You have great journalists employed by these big companies and if they need support they need support.

“The NUJ has said rightly that if there are to be big subsidies for big publishers it should be conditional so that during the period of subsidy they can’t make people redundant, and also cannot pay out dividends, so it is protecting journalists not the bottom line of big, in some case multinational, companies.”

“Any form of tax relief is regressive in the sense that the more tax you pay to begin with the more you benefit from not paying it.

“Big companies with big revenue streams will benefit but a small company will by definition not generate the same revenue and so will not feel a lot of difference.

“The Cairncross review recommended a year ago that the Government establish an arm’s length public body like the Arts Council that might take some of the money used to underwrite these tax reliefs and distribute it in a fairer way.

“The Government rejected that, saying it was not their business to define or support public interest journalism, but that essentially seems at odds with their current campaign.”

A Government spokesperson said ‘public audit requirements’ meant publications with ‘verified audience metrics’ were being given preference for access to funding.

They added: “Local newspapers are the lifeblood of our communities and the ‘All In, All Together’ campaign is providing vital funding to these much-loved local publications, as well as sharing essential information with the public. 

“Over 60% of the press partnership funding, £21million, is being spent on local and regional titles. We continue to work with over 600 titles, including many small and independent publications.”

And they went on: “The ad partnership brings together national, regional and local titles to reach 49 million people a month. The vast majority of titles are local papers and additional titles have been included in order to further reach priority audiences including BAME.”

Byline Investigates put this article to the NMA, Newsworks and OmniGOV for comment, but had yet to receive a response as this piece was published. We will provide an update if that changes.

* of “non-community” newspaper titles

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