Rebekah Brooks: How will she boost sales at News UK?

  • 7 September 2015
  • From the section Business
Rebekah Brooks Image copyright Getty Images
Image caption Rebekah Brooks faces increasing challenges from social media amid declining newspaper sales

As Rebekah Brooks returns as chief executive of Rupert Murdoch's UK newspaper group on Monday, she faces some tough choices over the future direction of News UK, formerly News International.

The outlook for traditional newspapers - including News UK's Sun and Times - has looked bleak for some time, with online revenues failing to compensate for declining physical sales.

And in the past few years, the online sphere has also seen a structural shift away from individual news websites, to the sharing of news stories via Facebook, Twitter and other social media sites.

So Mrs Brooks rejoins Mr Murdoch's British newspaper operation at a time of falling profits amid this increased competition.

In June 2014, News UK (or News Corp UK & Ireland, to give it its formal title) reported a 12-month operating loss of £3.5m. This came after a £51m profit for the year before.

Meanwhile, annual profits at the Sun had almost halved.

Mrs Brooks has "got her work cut out," says Charlie Beckett, journalism professor at the London School of Economics.

It was back in 2011 that Mrs Brooks resigned from her previous time at the helm of News UK in the wake of the phone-hacking scandal. She was put on trial, only to be cleared of all four charges in June of last year.

Recently she has been working for a News Corp-owned video news agency.

Prof Beckett says that since Mrs Brooks' resignation: "I suspect she has been taking a keen interest in digital strategy.

"Online is where you have to build your brand and audiences, and the expectation is that it is going to get harder."

Mrs Brooks will no doubt be looking to see what other news organisations have recently done, such as doing deals with Facebook or Apple.

Threat or opportunity?

Currently Facebook is trialling a deal with news organisations - including the BBC - to publish some of their content directly rather than simply hosting it on their own websites.

The news groups taking part are BBC News, The Guardian, BuzzFeed, the New York Times, National Geographic, NBC News, The Atlantic, Spiegel and Bild. They will get all of the advertising revenue they sell directly, and 70% of the revenue from ads sold by Facebook.

Image copyright Getty Images
Image caption Rupert Murdoch has remained loyal to Mrs Brooks, and was understood to be keen to restore her to a senior role after her acquittal

As the mobile advertising market has exploded, so Twitter and Facebook have grown to dominate it. For instance, they will soon account for a third of all digital ad spending in the world's biggest market - the US - according to new figures from eMarketer.

Meanwhile, Apple is launching its news app this autumn. It wants to challenge existing social media sites like Facebook, Snapchat and YouTube. Apple hopes its huge iPad and iPhone user base will give it a crucial advantage.

So far 50 publishers have signed up to take part. As with Facebook, they will get to keep 100% of advertising revenue they sell, and 70% of the revenue for ads that Apple sells.

Paywall or free-to-view?

The key decision that now faces Mrs Brooks is how to shape the digital strategy for the Times and the Sun. In particular, she has to decide what to do about both newspapers' paywalls - which means their content is only available to subscribers, and crucially can't then readily be shared via social media sites.

Papers like the Mail and the Guardian have instead opted to make their content freely available online, hoping that by boosting digital viewing figures they will also see a return in online advertising revenue.

The Mail Online has carved out a very successful niche specialising in celebrity stories, while the Guardian pitches itself as an online liberal lifestyle paper.

Image copyright Getty Images
Image caption Facebook and nine news organisations have agreed a deal on publishing content

For specialist papers like the Financial Times, on the other hand, a paywall works. Its global readers are prepared to pay because many can make money from the information it provides.

However, for general newspapers like the Times and The Sun, paywalls have been a mixed blessing.

Subscription numbers for The Times are doing well, says Prof Beckett: "The question is how do they grow that base?"

Mrs Brooks may well opt to make more of the Times content available on other platforms - but while still charging for it, say some.

For the Sun the paywall has been less successful, which is borne out by the paper's most recent web traffic figures.

They show its website is the least visited of any UK national newspaper. In July 2013 before launching its paywall its website got 1.9 million website readers daily. This July that figure was down to less than 800,000 according to ABC (Audit Bureau of Circulations).

Compare this with the Mail Online's 14.2 million daily users and the challenge becomes clearer.

The Sun focuses on sports and celebrity news, and as there is a huge amount of this around, users can readily go elsewhere for free if this is what they want to read.

Image copyright Getty Images
Image caption Profits at the Sun have fallen significantly in recent years

'Editorial genius'

Already the Sun is placing more of its content outside its paywall. During this year's UK General Election, for instance, it launched Sun Nation online. This was freely available and was designed to tap into a younger market.

Most analysts expect Mrs Brooks to further lower the Sun's paywall, or even remove it altogether.

In doing this she is expected to have a strong ally in News UK's other new senior appointee, Tony Gallagher, who is joining as the new editor of the Sun.

Mr Gallagher is going to the Sun from the Daily Mail, where he was joint deputy editor. He is expected to push the Sun to compete more aggressively against his old title.

The appointment of Ms Brooks and Mr Gallagher "signals a belief in good journalists being able to solve the disruptive challenges papers face - the internet, social media and mobile device," says Douglas McCabe, a media expert at Enders Analysis.

He adds: "Tony Gallagher will give the Sun newsroom a lot more confidence in the product again."

News UK executives will also be thinking hard about how they can utilise their existing brands to boost their income. Mrs Brooks will know that her main task is to improve the newspapers' profitability.

Prof Beckett says: "Nobody doubts her editorial genius, her drive - she really is a very talented newspaper editor."

Yet he cautions that she has a difficult job on her hands. "She's stepping into an area which is particularly tough."

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