The media merger Scotland needs

Three years ago, as Scotland's devolved parliament met for the first time, newspaper editors and proprietors shared one faith: the new legislature would sell Scottish newspapers. Alien invaders, such as the Caledonian editions of The Sun, Times, Telegraph and Daily Mail, would be repelled. Indigenous titles would fly off the newsstands.

It was agreed that the Scottish broadsheets, The Scotsman and The Herald, would benefit most. With their experience of Scottish politics, and pro-devolution readerships, they would swat off the Sassenachs that had made inroads on their circulations. New politics meant new readers.

But, while political power has been repatriated from Westminster to Holyrood, newspaper sales have gone the other way. The Herald, placed on the market last week, along with its Sunday sister and the Glasgow Evening Times, by its parent, SMG, has only recently managed to slow a circulation loss, peaking at 7 per cent per annum. The Scotsman is selling fewer copies than in the year before devolution. So is the Daily Record. The success story is the Scottish Daily Mail, which outsells The Herald and The Scotsman.

In fact, the market for purely Scottish newspapers has been declining for some time. Twenty years ago, The Herald could sell 130,000 copies in west-central Scotland. On the other side of the central belt, The Scotsman peaked at 100,000. Now, they average 92,000 and 76,000 respectively.

The Scottish titles achieved their circulation peaks before new technology made British titles widely available. The gap between London budgets and those available to purely Scottish editors has had a huge impact since British titles have been printed in Scotland or delivered before dawn. It is hard to inform, stimulate and entertain with resources scarcely half those of the least-well-financed London editor.

And the limitations are real. Neither of the Scottish broadsheets has ever been remotely national. The Herald is a Glasgow newspaper, and The Scotsman is restricted to Edinburgh and its environs. While each has suffered from imported competition, neither has ever broken out of its fiefdom.

SMG and The Scotsman's owners, Barclay Brothers, have contemplated a merger. Each owns a daily, evening and Sunday title, and printing presses barely 40 miles apart. Partnership would produce one daily broadsheet and one Sunday title, capable of speaking to most of Scotland – and with a budget large enough to make ambitious journalism possible. SMG sources estimate the synergy savings from advertising sales, distribution and printing at £15m a year. The titles could compete with London's best.

But the consensus among Scottish politicians is that two weak broadsheets are better than one strong one. In addition, Andrew Neil, the publisher of The Scotsman titles, is loathed by Scotland's dominant political parties. Much of what he says about the incompetence of devolved government is true, but his stewardship of The Scotsman group has demonstrated that his editorial prowess is not matched by commercial acumen.

And there is the regulatory hurdle. SMG wants cash fast. A bid by the Barclays would be tied up for months by an automatic referral to the competition commission. The vendors have made it plain that the Barclays will not emerge as preferred bidders for the Herald titles. In Scottish parliament, every group longs for The Herald and Sunday Herald to be independent and Scottish-owned. Among the potential trade bidders, only Johnston Press, the Edinburgh-based local newspaper publisher, can meet those criteria. The other newspaper groups who have expressed interest are London based. Sale to existing newspaper proprietors is the most likely outcome, but it involves referral, ruling out completion before April or May 2003. SMG will look at financial bidders who could avoid regulatory delays.

So, the campaign to retain independence and Scottish ownership at The Herald is under way. It will gather momentum as Scottish politicians put the Department of Trade and Industry under pressure to "play the Scottish card" and block bids on national interest grounds.

But the best defence of the national interest would be accomplished by the thing MSPs fear – merger of The Scotsman and The Herald groups. Two years ago, I was involved in a failed attempt to lead a merger. I still think it is crucial. The alternative to consolidation in the Scottish newspaper market is domination by imported titles.

If The Herald is bought by a British newspaper proprietor, it may lose its Scottish identity. If it stays independent, its market and that of The Scotsman are likely to be eroded. If Scotland's political development is to be matched by a properly resourced media, it needs a quality national paper. It can be created only by merging the two city-state regionals that have claimed national status without justifying it.

Tim Luckhurst is a former editor of 'The Scotsman'