The transcripts of the official inquiry into the culture, practices and ethics of the press. More…

  • Sir, I appear on behalf of the Telegraph Media Group.

  • Yes, after ten months, Mr Millar, I've got that.

  • Thank you for the opportunity to address the Inquiry and the time allocated to my client to do so. We have, just for the record, put in full written submissions.

  • I have seen them, I have them in front of me and I can assist you by saying I've read them. They will, of course, be published.

  • I'm very grateful.

    The aim of these submissions is not to, insofar as that's possible, repeat what's in the written submissions. I do, however, want to say a few words at the outset about phone hacking and unlawful or unethical journalistic practices generally.

  • Mr Millar, I'd be very grateful for that because I take the point you make about the Telegraph's position, which you make very clearly in your submissions, but of course I won't be addressing the Telegraph in terms, or indeed any of the titles in terms, because I'm seeking to address the culture, practice and ethics of the press or a section of the press, and therefore the assistance I'm seeking from you and from others, as I suggested this morning, is really concerned with the conclusions I should reach about the overall position.

  • And I appreciate that you can say, "Well, we run our title, we don't run the other titles", and I can only then ask you to have listened to all the evidence I've heard and help me reach what conclusions I should reach about culture, practice and ethics.

  • Yes, I will be endeavouring to do that.

  • But it would be remiss of me not to say at least a word at the outset about those matters.

    Then I want to focus on, time being limited, essentially three things.

    First, as you've mentioned, sir, the culture, practices and ethics of the press, the area you're asked to explore into in part 1 of your Inquiry. Secondly, the future of the press in the Internet age. And thirdly, the future regulation of the press, as to which you must now make your recommendations.

    The Telegraph was and remains appalled at the revelations about phone hacking which led to this Inquiry being established. Such activities are a very long way removed from the responsible journalism in the public interest which the Telegraph strives to provide to its readers. And, as we've said at paragraph 21 in our written submission, when something has gone wrong, newspapers should own up and seek to put it right.

    This has to happen in relation to phone hacking and all other unlawful and unethical journalistic practices identified by this Inquiry.

    The evidence of Murdoch MacLennan, TMG's chief executive, was that phone hacking was, and I quote, "non-existent" at the Telegraph. He was able to say this with confidence. First, when this Inquiry was set up, TMG carried out a thorough internal review going back to 2005 that found no evidence that any Telegraph journalist has been involved in any hacking or indeed any criminal conduct at all during this period.

    Moreover, none of the Telegraph titles appear in the so-called "league table" produced by the Information Commissioner identifying newspapers which had sought access to private data through the private investigator Steve Whittamore. That, of course, goes back before 2005.

  • You'll forgive me, Mr Millar, if I accept of course what you've said and I understand what Mr MacLennan said about the research that he'd done, but just so that it's known, I would be surprised if the Information Commissioner happened to alight upon the only private detective in the country who was working for media clients. I'm not for a moment suggesting the Telegraph were involved in anything.

  • But you understand the point I'm making.

  • I understand, but one can only work with the evidence one has.

  • Of course, I quite understand.

  • We believe that all of this is because of the high professional standards the Telegraph insists upon from its journalists. And -- and this is important -- in the unlikely event that it were to find itself with, if I can put it this way, one rogue reporter, the Telegraph has strict financial and editorial governance systems. These would quite simply make it impossible for such a reporter to pay private investigators to gather information illegally or to pay bribes.

    You, sir, I know, appreciate that not all British newspapers are open to the sorts of charges of malpractice that led to this Inquiry being established. The Telegraph is a prime example of one which is not. But it is important also that the public and our politicians understand that this is the case and that we start from that understanding.

    With those introductory comments, I turn to my and your first heading: the culture, practices and ethics of the press.

    It's logical to consider first the historical issues identified at subparagraphs 1(c) and 1(d) of your terms of reference, namely the extent to which the current regulatory framework has failed and the extent to which there was a failure to act on previous warnings about media misconduct.

    As to the current regulatory framework, that is by now, of course, well known. PressBoF, the Press Board of Finance, raises funding from the industry to support the system of self-regulation in its entirety. You've heard evidence indicating that it's been very successful in doing this in the years since its inception in 1990. Over £30 million-worth of funding has been provided to the Press Complaints Commission via PressBoF during this period. It's funded the PCC in full against agreed budgets.

    This is not something to be sniffed at in times when public funding for regulators is under serious pressure as a result of the financial crisis.

    The PCC deals with complaints but the rules applied in doing so are written and updated by editors in the Editors' Code Committee, a subcommittee of PressBoF. TMG, as you know, is a strong supporter of the Editors' Code.

    Now the evidence on the topic has concluded, we would suggest a number of key points need to be remembered about the Code.

    First and most importantly, the Code has received widespread acceptance across the industry during its time in existence. We would suggest that that is precisely because it is drafted by editors who are working in newspapers and magazines and who understand how they operate.

    Secondly, this process permits the Code to be updated regularly to keep pace with developments, both in society and in the industry, and indeed the continuous flow of PCC adjudications. This can happen without undue formality or delay under the current system.

    Thirdly, in 1998, Parliament enacted section 12(4) of the Human Rights Act, requiring courts to take account of any relevant privacy code when considering whether to grant relief which might affect the right to freedom of expression.

    The relevant provisions of the Editors' Code had only recently been updated to comply with the contemporary European Convention on Human Rights standards, and Parliament did so. It enacted section 12(4) with the privacy provisions of the Code in mind, and that surely represents a valuable endorsement of the Code.

    It's easy to forget the numerous specific achievements of the Editors' Code Committee. For example, you, sir, I'm sure will recall, as many of us who practised in the 1980s and 1990s will, that witnesses at criminal trials were very often bought up by certain newspapers.

    This presented problems for the administration of justice, in particular as to their credibility at trial. The Editors' Code Committee introduced clear and tough rules, now under paragraph 15, setting out the limited -- extremely limited -- circumstances in which such payments might justifiably be made. These rules have been complied with and since then that particular problem -- one of that age, if I can put it that way -- has effectively disappeared.

    Secondly, the rules on subterfuge were revised in 2007 following the Goodman/Mulcaire convictions to cover the activities of journalistic sources and agents, such as private detectives. That's paragraph 10(2). And successive updates of the Code, as I say, responding to concerns about newspaper activities, have protected both children and hospital patients when the subject of press activity.

    The predecessor of the PCC, the Press Council, had not managed to introduce an editorial code at all, and it's easy to lose sight of the effect that the Editors' Code has had more generally since 1990 in changing practices in the vast majority of newsrooms. Where an issue arises that is covered by the Code, the relevant provisions are considered and applied in most newsrooms. It does not seem to us that any of the evidence you have had would contradict that proposition. Certainly so at the Telegraph, where, as Mr MacLennan told you, the journalists live by the Code.

    It's important to remember that this process has raised standards considerably across this period from 1990 to date. What it's done is to enable occasions of malpractice to be identified and characterised as being, quote, "in breach of the Code", and that in turn has created a culture in which, in the vast majority of cases, ethical breaches are noted, responded to swiftly and rectified effectively and prominently by the newspaper concerned.

    PressBoF also guarantees the existence and development of the Press Complaints Commission.

    The latter point, continuous development of the bodies within the regulatory framework as well as the rules, is an important aspect of a system created by the industry and independent of statute.

    It can keep recreating itself under its own arrangements. Thus, during the same period, PressBoF has, for example, extended the remit of the PCC beyond print news publication to cover online newspapers and magazines. It has introduced public appointments procedures for membership. It's strengthened the lay majority on the Press Complaints Commission. It's introduced public consultation into the annual reviews of the Editors' Code, and in 2007 extended the PCC's remit to cover editorial audiovisual content that now appears on newspaper and magazine websites.

    It has been said that the evolution of the PCC has not been quick enough or far-reaching enough, and with hindsight the Telegraph would not disagree with that. The point we make here is simply that this sort of evolution can happen efficiently and organically under a system established and accepted by the industry.

  • But it only identifies occasions of malpractice and characterises them as being "in breach of the Code" if there is a complaint made by somebody who falls within the comparatively limited definition of those who can complain.

  • Yes. I'm coming to that.

  • There are other points to be made about the PCC. There are failings and shortfalls. I'm going to identify and accept them. That's part of the process of analysis by which you get to the case we're putting forward on regulation.

  • That's a very polite way, Mr Millar, of saying, "Just listen and stop interrupting me", and I shall.

  • The PCC has -- and this is really the point, sir, you've just made -- we would say, for the most part proved effective in dealing with single complaints from the public within its terms of reference; doing so swiftly and without cost.

    It can be very effective in intervening or mediating or heading off a problem presented by a particular story.

    Mr Gallagher, for example, the editor of the Daily Telegraph, said he has what he described as a very healthy relationship with the PCC. As he put it:

    "They can pick up the phone and they can send an email to me, and they're very quick to point out where there's an issue with a particular person that is requiring or demanding privacy".

    So that aspect of the PCC's activity is not to be underestimated or undervalued. But throughout this hearing Telegraph witnesses have acknowledged the shortcomings of the PCC.

    First, it operates more as a mediator of particular disputes. Mr Gallagher's predecessor, Will Lewis, had earlier in the same session memorably said, "I understand the PCC up until this point to have been a mediator with a regulatory reputation". And he concurred with the emerging consensus for a more independent, genuinely self-regulatory system.

    Mr Lewis's characterisation may be a good one and it might have come to be thought of as an industry regulator, for want of a better word, actually to describe its more limited role.

    Second, and in consequence of the first point --

  • It also described itself as "a regulator".

  • Maybe for the same reason. But it is acknowledged, I think by common consent now, the evidence has concluded at this Inquiry, that in the strict use of that term it is certainly not a regulator, and has not had available to it regulatory powers in the true sense.

    It lacks the powers to deal with systemic ethical or governance failures; in particular newspapers as opposed to one-off complaints. That is clear from the evidence that you've heard at this Inquiry. As Lord Black acknowledged in his evidence, this means that there are some instances of non-compliance with the code -- big instances -- which are simply beyond the PCC's control or outside of its remit. When one of these, like phone hacking, comes up, the reputation of the PCC is severely, and it would appear in the case of phone hacking, fatally damaged.

    Thirdly, there is a perceived lack of independence because of the direct relationship between PressBoF and the PCC, the adjudicatory body.

    Fourthly, there is the problem of the reluctant publisher. Lord Black also acknowledged that operating a voluntary system makes it difficult to deal with the occasional rogue publisher who wants to pick and choose when its in or out of the complaints system.

  • You need to be careful about the description "rogue", because there may be very good reasons why that particular publisher doesn't want to be within the system, which may itself reveal systemic problems.

    So, for example -- if I don't take the obvious one but if I take the example of Mr Hislop -- Mr Hislop made it abundantly clear that there was absolutely no reason whatsoever why he should participate in the PCC because his periodical, every week, week in, week out, laid bare criticisms of all those papers whose editors were represented on the PCC. So that is a systemic issue, quite apart from what might be other issues. Isn't it?

  • Yes. I ought to say, I was using the word "rogue" because it was the word that Lord Black had used in his evidence.

  • And I was summarising his evidence.

    We take that point, but the ideal is to have as many signed up as possible. Indeed, the ideal is to have everybody signed up.

  • Absolutely no question about that.

  • And Private Eye is, with all due respect, a very unusual publication in the firmament of British publications. There aren't any other examples --

  • There are other examples. You could then take -- now inevitably I'll take Northern & Shell. You didn't have to have the insight of a great thinker to appreciate that Mr Desmond has views about some of the editors who he sees are really running the PCC, and equally you don't have to be very perceptive to realise that they have views about him. That's all fair enough. Everybody's entitled to think what they wish about their competitors. But the thing that a regulator has to be is to be independent of all of that, doesn't it?

  • Yes. The point is well made and it's taken, and I'll say "stray" rather than "rogue".

  • I'm not criticising you or Lord Black.

  • The aim must also be to have a consensual regulatory system that doesn't give rise to a publisher -- and certainly not a major publisher -- expressing concerns such as those as the basis for not participating in the system. That must be the aim. And I think that is well recognised now as a result of all the water that's flowed under the bridge at this Inquiry.

    So, as you will gather from the recent remark that I've made, the Telegraph accepts the case for replacing the PCC with something better.

    As to 1(d), the extent to which there was a failure to act to previous warnings about media misconduct, in light of everything I've just said, the correct answer to this question is that the industry system in existence hitherto has been unable or ill-equipped to act effectively when facing serious examples of non-compliance.

    But it would be wrong, just for the record, to suggest that there has been a complete failure by the industry to act in the face of warning signs.

    To take the trade in data and phone hacking as the most immediate examples, as Lord Black explained in his first statement, the industry did respond to warning signs in these areas. As I've already mentioned, in 2007, following the Goodman/Mulcaire convictions, the subterfuge rules in the Editors' Code were amended to cover hacking, and to make clear that exactly the same ethical rules applied to acts of private investigators on behalf of newspapers.

    The industry, through PressBoF, also worked with the PCC to implement the six recommendations contained in its now much criticised 2007 report on phone hacking in the wake of the conviction of Goodman and Mulcaire. You've heard evidence about those and they would have been, if implemented, rules which would have prevented future misuse of cash to pay contributors to act illegally. So they were the right rules at the right time.

    Then following the publication by the Information Commissioner of "What price privacy?", PressBoF co-ordinated through the industry associations an information campaign to emphasise to all journalists the importance of respecting the legislation on data protection, and the Inquiry has a copy of the relevant guidance note.

    So, as I say, the problem was not no response. It was that the response was unsuccessful, in part because of the limited powers of the PCC, its inability to go beyond taking steps such as the ones that I've just listed.

    As far as individual publishers are concerned, I can only speak for my client, the Telegraph.

    At this level there's always been a notable commitment to action when warning signs appeared. For example, as you've heard, TMG led the industry's response to "What price privacy?" that I've just mentioned. And although it had not been criticised by the Information Commissioner in 2008, it updated its own expenses policy to make clear that all payments to sources or intermediaries had to be made through the company's contributor system, requiring audited BACS transfers and editorial scrutiny.

    Although none of its journalists had hacked phones, events at the News of the World prompted Mr MacLennan to issue a consolidated code of conduct to all editorial staff, with a covering letter reminding them of their obligation to maintain the very highest standards in their work.

    So what is the Inquiry to say about the culture, practices and ethics of the British press, about which it's heard so much evidence, some relating to phone hacking, but going a long way beyond that single unhappy topic?

    I look at culture, first. I suppose the first question is: what are you being asked about here? One has to define one's terms. Here it seems to us that you're being asked about essentially shared mental assumptions within each organisation, the assumptions that guide both interpretation -- interpretation of the Editors' Code -- and action by defining what is or is not appropriate behaviour for a variety of situations. Different situations.

    The problem, of course, is that in a large industry such as the British press, diverse and sometimes conflicting cultures are liable to co-exist due to different characteristics of the particular editorial and management teams at the particular newspaper.

    Certainly different newspapers -- we know this much -- behave differently in the same situation. Some may feel that the public interest justifies running a particular story or photograph or investigating in a particular way, where others may not.

    Is this because they're guided by different shared assumptions about how newspapers should act and what they should publish, particularly where their action impacts on the rights or sensibilities of others?

    We would say that the answer to this question, on the evidence you've heard, is yes. That is not to say that one can always or easily identify a right or a wrong way of acting as a newspaper in a particular situation.

    At the extremes, you clearly can. As we said, no one in their right mind could try to defend the hacking of Milly Dowler's phone by journalists. On the other hand, no journalist would say you should not publish a story about a Cabinet Minister accepting corrupt payments because his or her financial affairs are private.

    But where the judgment calls have been made in the vast middle ground between those two types of extreme example, it seems to us clear that different newsrooms operate on different shared mental assumptions; for example, about what readers want to read, how much privacy celebrities should have given that they are celebrities and they put aspects of their life into the public domain, how much fact-checking is required for a story and crucially, what or what is not defensible as being in the public interest?

    I'm just picking some examples there from the evidence that you've heard. It must be clear to you from the evidence that all of that is the case. It seems to us to be the case, and we say that you should recognise that in your report and make findings in recognition of that fact.

  • That's where there is the distinction between what might be described as the "broadsheet papers" and what might be described as the "tabloid" and "mid-market papers", and if you are saying to me that I must recognise that there is a range of legitimate responses by each type of paper, then I think that's right.

    There isn't a bright line in relation to particular stories, on one side of which nothing is permissible and the other side of which anything is permissible. And that line, that width, which is a grey area, is going to move. The question is whether the process should be different, albeit that the result, for different reasons, might not be the same. Do you follow the point I'm seeking to make?

  • I do. I think it's a little bit ahead of the point I've got to.

  • See, I didn't shut up. All right.

  • I will come to that. I was just trying to tackle this question of culture, because there's a lot in that word, and one has to ask oneself -- or, rather, sir, you have to ask yourself: "What am I being asked to think about and decide there?"

    It seems to us from the evidence that it is this differing set of shared assumptions that management teams in different newspapers have about a whom range of subjects. What their readers want to read is often put forward as the starting point. Certainly it is in the case of the Telegraph, which is very attuned to its readership and what they want to read, but equally we've heard evidence from an editor of the Sun who said exactly the same thing. The content of the perception is different, and that may affect the culture.

    All I'm doing at this stage is recognising that that is what the evidence at the Inquiry shows us quite clearly. And it is a useful starting point for analysing the rest of the issues you have to look at in one.

    A distinction between the broadsheets, mid-market and tabloids can be a little crude. It's not for us to suggest that there aren't perfectly good shared mental assumptions in tabloid newspapers; they're just different. That's the point.

  • I think that's what I just tried to say.

  • Well, I agree then.

    But we certainly don't want to be taken to be suggesting that this is in some way critical of other forms of journalism to that which the Telegraph is known for.

  • It's just the reality of a complex, diverse industry.

  • The problems of the word "culture" go slightly beyond that. It would be impossible to say that it was a culture within the medical profession that doctors behaved as Dr Shipman behaved, yet there was still an absolute requirement to review the regulatory mechanisms to make sure that every step was taken to deal with a problem such as that which Dr Shipman generated.

  • It strikes me that culture, therefore, must be more than a single example. It must be more than a single title, if you like. It has to be something that is perhaps a consequence of the way in which the job has to be done or can be done, depending upon what your aims and aspirations for your paper are.

  • But neither need it be universal.

  • Yes. Well, look, it's not for me to address a set of shared mental attitudes, as I've characterised them, at any other newspaper other than the Telegraph. But taking the Telegraph as an example, we can see -- and I'll deal with this in a moment -- that the practices within the newspaper are the product of a set of shared mental assumptions in management and senior editorial posts about how journalism should be done.

  • I will stop interrupting, but I just want to pick you up on what you've just said, because I don't agree with the assertion that it's not for you to address the shared mental culture.

    That's exactly what I have to do. I have to look at the culture, practices and ethics of the press, and the assistance that I would like from you, and indeed from all those who are to speak, is very much their perception of what the evidence reveals --

  • I understand that, sir. Maybe I put the point badly.

    I am saying that when an episode like phone hacking occurs, you can say it's the consequence of the culture in that newsroom in the sense that I've described it, because the shared set of assumptions about all these complex things allow it to happen. I'm not running away from that conclusion. What I didn't want to do was what each newspaper must do itself, which is to explain the particular cocktail of mental assumptions and attitudes to how journalism should be done that operate within its newsroom, because that's for others to do.

    One further caveat to this is important. The culture in an organisation can be changed. This may be because the management team changes or because the existing team changes its approach, including as to the governance arrangements within the organisation.

    We heard with interest, sir, your exchanges with Deputy Assistant Commissioner Akers this morning regarding the role of the MSC in the management of affairs at News International. That may be a good example of how such changes can be brought about: a big structural change as the beginning of the process of changing the culture.

    This point is clearly very important because to the extent that there are cultural problems in any industry or part of an industry, it can't be assumed that regulation, particularly, we would say, regulatory arrangements instigated by the government, will necessarily change those. One only has to look at the banking industry to see that that is the case, or, dare I say it, the House of Commons, albeit the members of the House have always had rather fewer rules to work under than the banking industry, especially prior to the expenses scandal.

    Sometimes the culture is changed by the public revelation of a scandal, or succession of scandals, so big, and to which there is such a powerful reaction, that there is no alternative but to change. This has proved true of the MPs' expenses scandal in relation to the claiming of allowances by our Parliamentarians, and it may yet prove to be true of the banking crash, particularly as matters such as the LIBOR fixing scandal emerge into the public domain.

    Sometimes the intervention of the law, especially the criminal law, alongside the public revelations and outrage can also shock or even frighten people into changing, but peer or industry pressure to change and pressure from advertisers and the public, public opinion, is likely to play a big role in this situation, bigger, we would suggest, than what's written down in rules required by Parliament.

    The Inquiry must bear this in mind, if you accept our submission on this point, because we say it's likely to be true of the phone hacking scandal and the subsequent allegations of other different types of journalistic malpractice that have been made since last summer.

    There has been a massive public response, expression of outrage, and the industry is under enormous pressure, where there are problems in the culture, to change those in response to that.

  • One might have said the same at earlier times in the history of press investigations.

  • Well, I was going to say next that repeated reference has been made at this Inquiry to the setting up of the Calcutt Committee in 1989, but it has to be remembered that the then Prime Minister, Margaret Thatcher, set up the Calcutt Committee because of progressive loss of confidence in the Press Council in the 1980s, which was felt not to have the powers and not to be doing the job.

  • If you read some the evidence that I've seen about that, it was felt that the press themselves undermined the work of the Press Council.

  • And they didn't like the Press Council so what they went about doing -- this is some of the material that I've seen -- is rubbishing it publicly, and therefore the public lost all confidence in it.

  • Yes, but that happened over a period.

  • And during that decade, there were certainly many examples of unethical journalism; chequebook journalism, the example I gave earlier: buying up witnesses being one of the big examples, and other intrusions into privacy.

  • Yes, that didn't stop then, because the biggest outrage about buying up witnesses occurred in 1995 during the prosecution of Rosemary West and those witnesses, the Cromwell Street murders.

  • I don't need to be reminded of any of that; it's seared on my conscience.

  • There were some other big examples. The Yorkshire Ripper case, as well, where there were many documented cases of attempts to buy up witnesses.

    But the point I'm making is that those examples and those concerns about intrusions into privacy were building up over a period. It wasn't a single one-off scandal of the scale of phone hacking that prompted almost overnight the setting up of the Inquiry.

    So, with respect, the background is qualitatively different here.

    As far as practices is concerned, we would say the position is the same in relation to practices; the next thing you're asked to look at.

    The practices of an organisation tend to be determined by the aims of the leadership. And it's apparent from the account I've given of the Telegraph's internal systems that that can be to the benefit of the organisation as far as practices are concerned. Thus the clear aim of management has been to avoid cash payments to private investigators and the like, so it's made clear to all editorial staff this is an unacceptable practice and arrangements are put in place to prevent it and effectively make it impossible. Thus management aims affect practice.

    Again, the evidence you have heard, we accept, shows that permitted practices can differ from newspaper to newspaper, as with culture.

    As far as ethics is concerned, there is, of course, there is of course a single set of ethical rules in the form of the Editors' Code, but TMG accepts, as suggested by the evidence received at this Inquiry, that the provisions of the code are simply not operated and applied uniformly across the industry.

    The Inquiry is by now familiar with the rules which tend to be applied differently by different newspapers: rules as to privacy, harassment, intrusion into grief, use of subterfuge in particular.

    To sum up, clearly the Inquiry can say that there have been high profile examples of the Code not being applied by one or more newspapers, phone hacking being the most glaring example; but equally it has to say there are many, many other newspapers, such as the Telegraph titles, where the journalistic culture and practices are exemplary and the publisher strives for the highest possible ethical standards.

    The next question is, having reached this point in my analysis: what of the future?

    I make my comments about the future of the press in the Internet age before those relating to future regulation, because we would suggest that no discussion of the latter should take place without an understanding of the former.

    Changing attitudes to news consumption, and in particular the arrival of the Internet as a mass medium for the dissemination of news and entertainment, means that the future of the newspaper industry is highly uncertain at the point at which you produce your report. People consume less and less news off the printed page.

    It's startling, sir, to recall now that when the first General Press Council was formed in 1953, following the 1949 Royal Commission, 21 million newspapers were sold in Britain each weekday, and 31 million on a Sunday. The weekday figure now, I believe, is just over 9 million and falling.

    Newspapers now have to compete not just with radio and television news, but also with an ever-growing supply of news and entertainment content in different forms on the Internet.

    As with many social trends, it's instructive to look at the United States on the basis that what happens there, happens here eventually, and eventually to much the same extent. The most recent work in this area in America has been done by the Pew Project for Excellence in Journalism. It's a non-profit research project in Washington, a fact tank, specialising in the impact of the Internet on society, and one strand of it is the Project for Excellence in Journalism.

    The State of the Media survey by Pew in 2011 revealed 46 per cent of those polled saying they read their news online at least three times a week, passing newspapers at 40 per cent for the first time.

    In a separate investigation by Pew, 47 per cent of those polled said they get some news from mobile devices such as cell phones, e-readers and tablets each week. Pew reports that this trend is increasing rapidly. This is important because three-quarters of those polled in this part of the poll said they would not be prepared to pay anything for news received via apps. Yet I'm instructed, and I think you've been told in evidence, that each additional form or format in which the newspaper has to curate and then disseminate and publish information, increases the overheads of the newspaper.

    So there are two different graphs going in two different directions there at the moment.

  • I don't understand how people can expect to receive well-researched investigative journalism, which gives the public information so that the public can hold power to account, and not pay for it. I don't see how that's an equation that can ever ultimately work.

  • You're right about that. We share that concern. But the logical conclusion of that analysis may be that investigative journalism shrinks to a vanishing point unless it can find streams of income to fund it and people are prepared to fund it to enable it to happen; but people aren't prepared to pay for it.

    The same is true of quality journalism. If they're not prepared to pay for it in a fragmented market, as a particular thing they buy in an app, part of the output of a newspaper, the industry is in a very difficult situation as far as that sort of content is concerned. And I think that's widely recognised.

  • Yes. It's a much, much bigger problem than having to cope with the problems of regulation, whatever form regulation might ultimately be.

  • Let's just say it's another problem that the industry faces.

    Reduced newspaper sales mean lost circulation revenues and lower advertising revenues. The 2011 Pew survey revealed that in 2010, both digital news readership and advertising revenue from digital streams in the US surpassed that of newspapers for the first time.

    So far as advertising revenues are concerned, this is so not because there have been large increases in digital advertising revenue, but rather because the loss of print advertising revenue has been so dramatic.

    The most recent Pew survey in March of this year looked in detail at 38 American newspapers, of necessity regional or local, because that's the way the press operates there. This showed that for every $7 lost in newspaper advertising revenue, the newspapers in the survey were picking up only an additional $1 in digital advertising revenues. I'm instructed by my client that a similar displacement ratio has occurred with many British newspapers. Online advertising rates are more competitive and are simply much lower.

    This factor is particularly important for the sort of local and regional papers that Pew was surveying, and is for our local and regional papers.

    Lastly, of course, there's no equivalent to the newspaper's cover price with the Internet. The fact that news is free on the rest of the Internet means it's difficult to run a newspaper website on a subscription basis.

    The Internet has also changed patterns of news consumption. The Internet is dramatically altering these, in three ways in particular. First, the reach of existing news organisations is being widened. Their reporting is accessible to a global audience. So online newspapers such as the Telegraph are competing in a much bigger global market.

    Secondly, more and more readers are accessing their news through online-only news providers, such as the Huffington Post. Some of these operate largely as low overhead aggregators of other Internet news content, usually content gathered at the considerable expense of a newspaper such as my client, the Telegraph.

    We don't get the browser, the person doing the browsing, making it harder to keep advertising revenues up, but the browser gets the fruit of our news gathering and our journalism.

    Thirdly, there is this thing called "crowd-sourced news", which is a phrase I hadn't heard before I started looking at this over the weekend. This is the phrase for something you have heard evidence about, which is news content from a variety of Internet news sources being aggregated and pushed at online readers via large social media platforms like Google, Google News and Yahoo News, and portals like MSN. This has precisely the same disadvantage from our point of view as the other aggregators like Huffington.

    So the upshot is that a paper like TMG now has to compete with other newspaper sites, online-only sites, big broadcast sites such as that of the BBC and news agency sites such as Reuters.

    We're not suggesting there are not some winners amongst the losers. The statistical evidence shows that different newspapers are faring very differently in the transition to digital. There can be success stories, and TMG's evidence shows it to be one of these, a profitable newspaper in a difficult time.

    To achieve this, the Telegraph has had to focus intensely on delivering to its readers and its commercial partners the service they want. It has also had to invest heavily in technology and digital operations, so that it can complete on even terms with all these other online news providers.

    It now produces immediate high quality content available to the world at large on an attractive and accessible website and in other digital forms, but, as I have said, at a considerable cost. And the future, even for a successful operation like the Telegraph, is necessarily highly uncertain. And I don't mean the long-term future. We're talking years not decades here.

    So against that slightly depressing background, I turn to regulation.

    A great deal of evidence has been given about the future of press regulation. There's also much argument in the written closing submissions. The Inquiry is aware that TMG supports the proposal put forward by its own director, Lord Black, in his capacity as chairman of PressBoF in Module 4.

    We've set out in our written closing submissions at paragraphs 112 to 118 the basic points we make about the dispute, or the issue, about what form future regulation should take. We don't want to repeat those or all of the points made by PressBoF and the two Lords, Lord Black and Lord Hunt, in their evidence in Module 4. These address in detail how the proposed system put forward by PressBoF remedies the failings of the PCC that I identified earlier on in these submissions, and we gratefully adopt those points.

    But TMG does want to emphasise the following points, as it were from its own particular perspective.

    The Telegraph does not want to be subject to a form of regulation which it opposed in principle -- that is regulation following statutory intervention -- when it does not require to be regulated in this way because it has achieved high standards under the current system.

    The same point can be made, no doubt, by many other newspaper publishers.

    TMG is also deeply concerned about the uncertain future that it and other newspapers face. As I've said, even profitable newspapers, such as those operated by TMG, may find it harder and harder to be profitable as more readers get their news through the Internet.

    The proposal put forward by PressBoF is known in its essentials and understood. It may not be perfect, but it does not add to those concerns. It's a work in progress and will doubtless be refined and improved.

    By contrast, we've not seen any proposals formulated by the Inquiry or by Parliament itself, and that is inevitably and necessarily a matter of concern for us.

  • Well, hang on. What would you expect me to do? If I'd started formulating proposals, then I would have been criticised roundly for pre-judging issues which I have to decide. What I have received is a dozen sets of proposals, which I have to analyse.

  • It wasn't intended, sir, as a criticism of you. It is simply a statement of fact, so that you understand our position and you think of things from our position.

    We have on the one hand a set of proposals put forward by PressBoF which have been subject to detailed scrutiny in this Inquiry, which we support. There is nothing in the domain of the Inquiry, promulgated by the Inquiry or by Parliament, saying what form regulation following statutory intervention would take and how the structure would operate.

  • But you could analyse each of the other submissions that I have received and subject them to the same critical analysis that the suggestions put forward by PressBoF have been subjected to.

  • Of course we could, but --

  • And then you'll be able to say, "This works", or, "This doesn't work".

  • But they're not going to make the recommendation and they're certainly not going to make the law. And what newspapers such as the Telegraph are asking themselves is: if there is to be a recommendation or a proposal for statutory underpinning, as it's been described in this Inquiry, what will that actually involve? How much statutory input will there be into the terms under which the ethical code gets formulated, the way in which the body gets constituted, the sanctions that are to be operated, the sanctions that are to be operated if you don't join the organisation? Nothing on that.

  • Well, you could start by looking at the principles enunciated in Ireland, which merely identify what a regulator ought to look like, but doesn't either set up a regulator or indeed define its precise remit.

  • But the point I'm making is: how do we know that that is what is on offer here? That's what has to happen. We don't, do we?

  • Of course we don't, because I don't know as yet. I'm waiting to hear everything, then I will make a recommendation, which then the Government will either accept or reject, which the press will either accept or reject.

  • No, but it's obvious there could be more or less statute involved. There could be more or less statute involved in each of the areas that I've described. Mandatory rules. Things that have to be achieved.

  • Well, I understand, and the real question is --

  • -- how close to the wall can you throw the penny?

  • To get a system that will work and that will satisfy the public concern about what the press has been up to. And I say "the press", not "the Telegraph". "The press".

  • But how close to the wall can you throw the penny doesn't help in terms of trying to envisage what a statutory framework would look like, or how much statutory material would influence the setting of the terms of the ethical code.

    You'll be familiar with the legislation that set up Ofcom. There were clear imperatives governing the formulation of the Ofcom code.

  • Well, I'd be surprised if I went down a route that sought to recommend a system that replicated Ofcom. I would be very surprised if I reached that conclusion.

  • We're glad to hear that, but the point I'm making -- and I think you understand it and accept it -- is that there are very many possible models for statutory intervention in regulation of differing degrees, with a different amount of statutory regulation of, or definition of, bodies, rules, sanctions. And we just have no idea what it might look like, if we face it.

  • I agree, which is why the help would be: what are the principles which I should be following when seeking to devise a recommendation? And: what are the red lines that would cause greater concern? What are the slightly fuzzier lines where there is more room for discussion?

    That's what I thought was the debate that was started by what Mr Dacre said as long ago as last September, I think, when he recognised the need for a different mechanism and he made some suggestions, some of which I think he's stepped back from. Well, he's perfectly entitled to that view. But I'm trying to understand what are the principled objections.

    I can understand you saying, "I recognise what the PressBoF people are suggesting because I can see it. How can I comment on what you're saying, because I don't know what you're saying?" Well, I don't yet know what I'm saying, but what I am saying is that you can help me by identifying where the lines could be drawn without offending what for you are absolutely unwaivable principles.

  • Sir, you know the answer to that question, with respect. The answer is that any form of statutory intervention in the process of regulating the newspapers is unacceptable to us.

  • But I don't understand why, Mr Millar. I mean, I mean it. Mr Dacre last September recognised there was a possibility of a need for statutory underpinning. Not for a statute that regulated the press. I well understand the view of the press on that subject. But one that would facilitate the provision of powers for the press itself to set up an independent regulatory regime.

  • Well, sir, there are objections of principle. They're set out in our written submissions at paragraphs 113 and following. I can go through them again. I fear I'd be repeating what's in the document and evidence and submissions that you've heard from other core participants.

    In summary, the concern is that once the door is open to some form of statutory intervention, which we have not had in this country for hundreds and hundreds of years -- and I'm going to deal with Ireland in a moment -- we're in a different ballpark.

    We're in a different ballpark because the principle has been breached. However benign the recommendations, sir, you may make, or however close to the wall the penny happens to be when you publish your report, there's no guarantee that the penny, having been put down on the pavement, will stay at that point that close to the wall.

  • Well, I understand that point, and I heard what Lord Wakeham said about the wishes of Parliamentarians. All I can say is, looking at the experience of the last 50 years, I've seen no evidence of Parliament wanting to get more involved and to go further than the press has been prepared to go.

    Look at the outcome of each Royal Commission. Look at the outcome of Calcutt 1. Look at the outcome of Calcutt 2. Look at what happened after the death of Princess Diana. They've not been straining at the leash to impose ever more rigorous statutory interventions.

  • No, but if recommendations are made by you, sir, to do it and the process is started, then the point is we are in a different ballpark.

    The Rubicon has been crossed. Prior to that, the Rubicon hadn't been crossed. We're very concerned, not least of all because of the vulnerable position of the industry, that Parliament will take it upon itself to overregulate, as Mr Barclay put it. Parliament has a history of doing that, a tendency to do that.

    Politicians and legislators are not subject to a self-denying ordinance when it comes to the amount and the content of regulation. Once they've got the bit between their teeth, history tells us they can get quite enthusiastic about it. So it's getting the bit between their teeth that we're worried about.

    There are other points of principle. The Government and Parliament are not stakeholders in press regulation. They should be apart from it and held to account by the press.

  • Yes. It is an important achievement that a society democracy such as ours can arrive at a system of self-regulation without the involvement of statute or Government that works.

    You say, "Well, we have to give up on that idea now". We say, "No, we don't have to give up on that idea now. We have to persist in that idea." And it's a very important idea because it means the people involved in the regulation are authors of their own fate, and they have achieved the regulatory system that they've achieved without legislative intervention, without coercion. And that is in itself an end and in itself important in a democracy.

    I can say that in most instances -- nearly all instances where one finds oneself, as I do, in emerging democracies, discussing press regulation through the auspices of international agencies, the Council of Europe, the EU, the OSC -- the default position, the primary position, is always and overwhelmingly the arrangement of regulation and regulatory arrangements without the involvement of the government. And there's a very good reason for that and it's the one that I've just given: that it gives people a stake in the result of the regulation, which is going to make it more effective, more likely to work.

    We may have to just agree to disagree about this, but --

  • I'm not agreeing or disagreeing at all. I'm merely listening, Mr Millar.

  • You said that there are issues of principle underpinning our position which you don't understand and I'm putting them to you. We do understand them. We believe in them passionately. This is our traditional in this country, this is the British traditional. It is a massive step to throw out the history of a free press, by which I mean a printed press that has no statutory intervention as far as its regulation is concerned. It is a very, very big step.

    You can look at, sir, Ireland and you can look at Scandinavia, as you have done, where there has been statutory intervention in press regulation, but you have to remember that there are dramatic differences between newspaper industries in different countries. These are not just to do with size.

    Other countries have very different traditions in relation to controls over the print media. Most other countries have a weaker and at least more recent tradition than we do of a press operating entirely free of government intervention. There would not be the same ingrained resistance, which is what you're encountering from the industry, to statutory intervention that you see in this country, no doubt making it easier to introduce in those countries.

    In fact, the best comparator is the United States, where there is a comparable tradition to ours going back to the First Amendment, where there's no agency-related central government which can licence or regulate the press or indeed the Internet. And that's an article of faith under the First Amendment.

  • Their press is also very different.

  • Their press is also very different in a lot of respects. Structurally it's very different. But that's not the point I'm making. The point I'm making at the moment is that you may be comparing apples with oranges if you compare the situation you face in the UK with Ireland or Scandinavia. You certainly are, one would have thought, so far as resistance to government intervention is concerned.

    Of course, it is with the US organisations providing news services globally that our newspapers will increasingly have to compete in the next few years.

    This brings me on, sir, to the final few points I wanted to make. I'm very mindful of the time and I apologise for having gone over my limit.

  • Don't worry, Mr Millar. This is very important and I'm keen to hear it. I think we asked people how long they wanted so we could sort out the right amount of time. Rather than tried to shut people down, we wanted to make sure that people had time to develop the points they wanted to make, so make the points you want to make.

  • Thank you.

    We were at the point where you picked me up on the observation, and it was simply that, that we haven't at this point seen any proposals formulated by the Inquiry or Parliament itself. What I was saying was it is a matter of concern for us, and you wouldn't expect anything otherwise.

    Aidan Barclay put it bluntly in his oral evidence. We don't want to destroy an industry through overregulation. We have no idea whether a regulatory system created following a statutory intervention might create this risk, or even a risk of damage to if not destruction of the industry and therefore collaterally damage TMG.

    In particular, we don't know whether we will end up subject to regulatory burdens flowing from statutory intervention which our future competitors on the Internet will escape. These are likely increasingly to be aggregators, especially the social media platforms, and domiciled abroad.

    We're having some difficulty envisaging a statutory provision that can be drafted that will be effective in bringing them, by matter of obligation, into a regulatory fold. We don't imagine they would take that lying down. But bringing them in consensually, as the PressBoF proposals have suggested, is a completely different matter.

    So in those circumstances, we would say it's hardly surprising, with respect, that the industry appears to be almost unanimously supporting the PressBoF proposal, and we would say that in these circumstances there is a heavy onus on the Inquiry, if it is to recommend statutory intervention in newspaper regulation, to show why the PressBoF proposals will not ensure that the shared mental assumptions and leadership aims in those newsrooms that we're all concerned about change and remain changed so as to avoid the problems the Inquiry has identified.

    We don't consider this has been shown or that it can be, but the key point from our perspective is that the industry will willingly commit to making these proposals work. This is the best starting point for a new system of regulation. No regulation through a mechanism about which the industry, almost without exception, is sceptical, has the same sort of chance of success.

    Sir, those are my submissions.

  • Thank you very much indeed, Mr Millar.

    Let's take a break now and then we'll carry on.

  • (A short break)

  • Yes, Mr Dingemans.