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

Indeed it does, sir. The pressures on the business over about the last five years have been intense, and the businesses face two challenges. One, which is structural, as we see the growth of new devices -- you know, first of all we saw the Internet and now we're seeing new tablet device and smart phones and the proliferation of news and information on those sources, and at the same time the business has been under the most intense cyclical pressure as a result of the poor economy.

My view is that the cycle has been much worse for us than the structural issues. I think we've coped pretty well with that and were coping pretty well with that. You can see in my statement that we publish more than 500 websites so we have a similar publishing strategy online in our local markets that we traditionally had in print, that what we seek to do is to have the products and services that our readers and advertisers would want to find, whether that's in print or whether that's in digital, and indeed our strategy is to build a growing multi-platform media business.

But the important thing to understand are the differences in the business model between nationals and regionals. A national newspaper is predominantly a circulation-driven business -- certainly tabloid national newspapers, I should qualify that as -- with traditionally 60 per cent of the revenues coming from circulation from cover price, and that, of course, is driven by the mass of -- the frequency and the number of copies that we sell at the price that we sell them at.

And the advertising is display advertising driven, so large corporates that you would know the names of that traditionally reside on the high street, with very little classified advertising.

Regional newspapers -- and this is the big issue -- have an inverse business model, where 70 from advertising, only 30 per cent comes from cover price. They're smaller, they're often weekly, so you just don't get the economic effect of the cover price in the same way, and perhaps most instructively in terms of advertising, it traditionally hasn't been display advertising-led; it's traditionally been classified, so the key elements of that being recruitment, property, motors and then community services like births, marriages and deaths.

Clearly, as we've seen a worsening of the economy pretty much since 2007, the category that's been hit hardest, which is our highest yielding category which really supports our news-gathering activities, in terms of that's the revenue that we generate to support the business that we're in, is recruitment advertising. So at the peak, we had around £150 million recruitment advertising supporting our titles, and last year we had less than 20. And when you're facing that happening to a business, then you have to reduce your costs effectively and quickly to ensure that you have a business and that you can come out the other side of that.

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