Mirror Group Newspapers Plc Business Information, Profile, and History

Company Perspectives:

Mirror Group is transforming itself into a broadly based media company using innovative techniques to maximise efficiency. As well as increasing the profitability of its core brands in a crowded and competitive newspaper environment, it has expanded the product base intelligently into television, regional newspapers, news agencies and new media. Each move to diversify and expand the business, whether by investment, acquisition, joint venture or start-up, leverages the Group's existing talent and resources through the principle of collegiality.

History of Mirror Group Newspapers Plc

In an era of intense competition and media consolidation, Mirror Group Newspapers plc (MGN) is one of four major conglomerates (along with News International, United Newspapers, and Associated Newspapers) that among them control almost 90 percent of the newspaper circulation in the United Kingdom. For much of the 20th century London's Daily Mirror has been one of the world's most popular newspapers, a pioneer of what has been characterized variously as New Journalism, the popular press, or, less charitably, the scandal sheet. Founded in 1903 by Alfred Harmsworth (Lord Northcliffe), "unquestionably the greatest journalist of his time" in the words of The Times of London, the Daily Mirror is today the anchor of the Mirror Group's holdings. The Group also includes several other tabloids, including The People and Sporting Life, and other British dailies such as the Scottish Daily Record and the Birmingham Post. Mirror Group also owns a variety of printing, leasing, and graphics companies, as well as a popular cable television channel, Live TV. Until 1991, the Mirror Group was a part of a media conglomerate owned by Robert Maxwell. Upon his mysterious death in November of that year it was discovered that the Group's bank accounts and pension funds had been pilfered for use by Maxwell and his sons in a last-ditch attempt to save their tottering financial empire.

Early History

The creation of the Daily Mirror was only one episode in the revolution in British journalism wrought by Alfred Harmsworth and his brother Harold (later Lord Rothermere). Until the end of the 19th century, British newspapers and magazines had been written by and for the aristocracy and professional middle class, a relatively small percentage of the country's total population. Compared to most of the industrialized nations, Britain had developed a vigorous and often vitriolic press, but not until the last half of the 19th century did anyone propose seriously to publish a newspaper for the lower-middle and lower classes. Alfred and Harold Harmsworth, born to the family of an impoverished schoolteacher, would eventually amass fortunes, wield enormous political power, and become members of the House of Lords.

Alfred Harmsworth exhibited his gifts for writing and self-promotion at an early age. As a grammar school student outside London he founded and edited the school newspaper. The young man pursued a career in journalism and began to contribute short pieces to the popular periodicals then coming into their own. From minor journals such as Comic Life and Young Folk Tales Harmsworth soon graduated to Tit-Bits, a hugely successful national magazine composed of excerpts from other, longer works. In 1887 he founded his own popular periodical called Answers to Correspondents. The magazine's title suggested its format, a collection of letters to the editor and his answers.

The title also suggested the nature of New Journalism as a whole. England's advanced economy had created a large middle class whose members, such as Alfred Harmsworth himself, were literate and curious about the world at large but uninterested in the higher arcana of politics, theology, and belles lettres. These readers, Harmsworth felt, hungered for publications that reflected and commented on their own middle-class lives, free of cultural pretensions, informative but simply written, and spiced with stories of love and violent crime. Such were the "Answers" that Alfred Harmsworth would return to the growing number of "Correspondents" in fin de siecle England.

In 1894 Harmsworth bought the moribund London Evening News for £25,000 and completed the triumph of popular daily journalism, aided by a talented young editor named Kennedy Jones and by his brother Harold, who would remain the financial and administrative director of the Harmsworth syndicate. Two years later the Harmsworth brothers founded the Daily Mail, the first of the "halfpenny" morning papers in England and an astonishing success from its initial publication date, when it already boasted the world's largest daily circulation. The secret of Harmsworth's success was summed up in his phrase, "explain, clarify, simplify," or perhaps more frankly in the formula articulated by Kennedy Jones: "crime, love, money and food." In truth, the Mail (and later the Mirror) did not seem to follow any particular editorial philosophy. It did combine elements of ultranationalist politics, sex and violence, sports, cartoons, and advice columns, all written in brisk humorous prose and framed by bold black headlines.

These were papers for the plain-speaking common man, a market long associated with the United States but largely unrecognized in England until Harmsworth provided the "daily mirror" in which they could recognize themselves. Nor were women excluded from this democratic awakening; the Daily Mirror owed its origin to Alfred Harmsworth's rare sensitivity to women as a newly emerging force in the political and cultural life of England. In 1903 Harmsworth established a paper written entirely by and for women. This "enlightened" experiment lasted about a year, the women of England for unknown reasons failing to rally around the Mirror as anticipated. The Mirror's weekly losses of £3,000 soon convinced Harmsworth that "women can't write and don't want to read." He dismissed the female staff, replacing them with the usual gang of cigar-smoking men and relaunched the paper in 1904 with a lead story entitled "How I Dropped £100,000 on the Mirror."

The success of the new Mirror was not predicated on the gender of its editors, however. Harmsworth took advantage of recently evolved technology to make the Daily Mirror the first halfpenny paper in England illustrated with photographs, which until that time had appeared in newspapers rarely and at substantial cost. The Mirror's photographs were sharp and clear and inexpensive, and the paper was soon known for its front-page photos of the royal family, war scenes, and famous criminals. The liberal use of photographs, combined with the usual Harmsworth mix of letters, gossip, contests, and short news articles, proved to be a powerful lure for the English working class. Circulation shot upward to 350,000 in 1905 and six years later topped the one million mark, making the Mirror the world's first daily to reach that figure.

The Mirror was edited in these years by Alexander Kenealy, an Irishman whose instinct for sensational news had been honed by years of work with publishing magnate William Randolph Hearst in the United States. Under Kenealy, the Mirror took a further turn towards the journalism of titillation and sensationalism, eventually going too far to suit Alfred Harmsworth himself. The publisher, who was made a baronet in 1905, wanted to exercise power in the political as well as commercial sphere and he found the Mirror something of an embarrassment. In 1908 Harmsworth bought The Times of London and rapidly lost interest in the Mirror, which he sold to his brother Harold in 1914. The elder Harmsworth went on to a career of frustrated political campaigns and a growing megalomania; he was remembered by Lloyd George, the distinguished Prime Minister, as "far and away the most redoubtable figure of all the Press barons of my time. He created the popular daily, and the more the other journals scoffed ... the more popular it became." More typical of upper-class feelings, however, were the words of Lord Salisbury, who charged that Harmsworth had "invented a paper for those who could read but could not think, and another for those who could see but could not read."

The World Wars

Harold Harmsworth (Lord Rothermere) was a businessman of talent, and for some years the Mirror prospered under his ownership, helped especially by the public's hunger for photographs of the fighting in World War I. By 1917 the Mirror was the most popular daily in Great Britain, but Rothermere's obsessive criticism of governmental waste eroded the paper's circulation base in the 1920s. Like his brother, Rothermere could not resist trying to play the power broker in his nation's political life. The Mirror remained essentially conservative, as it had always been, but Rothermere used the paper as a vehicle for voicing his private feelings about the leaders of the Tory Party, for years attacking the government for alleged inefficiency and corruption. The culmination of this campaign was Rothermere's founding of the United Empire Party in the late 1920s, a short-lived far right wing party whose jingoistic statements presaged Rothermere's later support for fascism.

Rothermere's fulminations were politically ineffectual and eventually proved to be bad for business as well. With the Mirror's circulation sinking quickly Rothermere sold his shares in 1931, his reputation permanently damaged by the rebukes of fellow conservatives such as Stanley Baldwin. "What the proprietorship of these pages is aiming at," said Baldwin in a famous 1930 speech, "is power, and power without responsibility--the prerogative of the harlot through the ages."

The politically turbulent 1930s witnessed the birth of a new, radical Daily Mirror. While Lord Rothermere formally adopted the fascist philosophy of Hitler and Mussolini, his former paper became one of England's leading advocates of democratic rights and armed resistance to Hitler's growing power in the east. Of the four men chiefly responsible for the new Mirror, three of them--editors H. G. Bartholomew and Hugh Cudlipp, and columnist William Connor (pen name "Cassandra")--were by birth and temperament sympathetic to the working classes; the fourth, Cecil Harmsworth King, was the nephew of founder Alfred Harmsworth. Together these four men created the Daily Mirror of which historian A. J. P. Taylor would later remark, "The English people had at last found their voice."

It was an irreverent, loud voice, in which could be heard elements of both high principle and low culture, semi-pornographic cartoons side by side with early and accurate warnings about the menace of Hitler. In 1934, years before most of England's high-brow papers gave up the rhetoric of "appeasement," the Daily Mirror characterized the German dictator with startling prescience as "the hysterical Austrian, with his megalomania, based on an acute inferiority complex, his neurasthenia, his oratorical brilliance." The Mirror's enthusiasm for confrontation would vary in the years following, but from 1937 onwards it was England's leading proponent of the rearmament needed to deal with "the gangsters" of Europe.

In this sentiment it found an ally in none other than Winston Churchill, one aristocrat whom the Mirror supported during the 1930s and the first years of war. As the symbol of embattled Britain, Churchill could rely on the applause of the Mirror, which if nothing else had always identified itself with the interests of England. The Mirror, though, was an essentially iconoclastic journal with leftist leanings and soon it was criticizing the coalition government for various failings, in 1942 nearly suffering censorship for publishing what Churchill believed were demoralizing statements. By war's end the Mirror had fully resumed its prewar support for the Labour Party, helping defeat Churchill in the 1945 election. As always, the Mirror reflected and amplified the beliefs of its two million-plus readers, who in 1945 were overwhelmingly pacifist and neo-Socialist in their feelings.

Postwar Influence

In 1951 Cecil Harmsworth King deposed H. G. Bartholomew as chairman of the Mirror. The paper was probably then at the peak of its influence, the leading daily in all of Great Britain (possibly in the world) and the voice of the New Left that would dominate the country's politics for the next 30 years. Cecil King took the paper several steps further, however; it was under King's leadership that the Mirror expanded from newspaper to "Group." For years the Mirror had published a successful weekend edition called the Sunday Pictorial, and to this core King added a vast collection of magazines by taking over the Amalgamated Press in 1958 and Odhams Press a few years later. The holdings from the latter deal included a leading Labour newspaper, the Daily Herald. Along with the Daily Record and Sunday Mail, both of Glasgow, Scotland, the Mirror and its newly acquired magazine empire were all merged in the early 1960s into the International Publishing Corporation (IPC), described by Hugh Cudlipp in his 1962 book At Your Peril as "the greatest publishing operation the world has ever seen."

IPC owned the leading publications in virtually every category of British journalism, its power so great that in 1961 a parliamentary committee was formed to determine whether the Mirror takeover of Odham should not be prohibited by the government for reasons of free trade and the general good. The merger went through anyway, and IPC became one of the world's first "media conglomerates," as they would later be called, and Cecil King, like his uncle Alfred Harmsworth, established himself as a "media baron."

King's long and remarkable career ended abruptly in 1968 with his resignation under pressure from the board of directors. IPC's profits were apparently suffering from the entrenched power of its printing unions, power fought for and won with the help of newspapers like IPC's own Daily Mirror. The English printers union was a strong one, and it adamantly opposed new technologies that would cut costs at the expense of union jobs. Cecil King despaired of the situation, and two years after his departure IPC was merged with Albert E. Reed & Co. Ltd., one of the largest paper products companies in Europe. IPC had long been the largest shareholder in Reed (the Harmsworth brothers became involved in the Canadian paper business as early as 1906) and in 1970 the two firms banded together in the interests of vertical integration under the name of Reed International.

Changes in the 1970s

Reed had no more luck with the printing unions than had IPC, and one by one the pieces of its publishing empire were sold off during the 1970s, starting with the magazines. Last to go were the Mirror newspapers, which then as now consisted of the Daily Mirror, Daily Record, Sunday Mirror, The People (a glossy Sunday spread), the Sunday Mail, The Sporting Life, and The Sporting Life Weekender. Reed could find no buyer for the Mirror newspapers, however, and a plan to float the group on the public exchange was ruined when Price Waterhouse discovered gross union laxities and described them in its prospectus statement. At the last minute an unlikely white knight appeared in the form of Robert Maxwell, Czech-born business dealer extraordinaire, who purchased the Mirror papers for about £90 million in 1984.

The Maxwell Years

Mirror Group Newspapers Ltd. (MGN) became a pillar of Robert Maxwell's incredibly tangled business empire, a mysterious world in which the distinction between private and public companies was regularly ignored by Maxwell and his sons Ian and Kevin. A former MP for the Labour Party and a professed friend of the working man, according to many critics Maxwell in truth had little regard for anything beyond his own insatiable desire for fame, and he had long coveted a public platform such as MGN offered. He took over MGN editorial policy while denying that he would even be interested in doing so, and by threat of company closure persuaded the unions to cut their employee levels and relinquish a host of archaic union rules.

For the same reason, Maxwell did not hesitate to break the law when his financial network began unraveling in the late 1980s. His 1988 purchase of Macmillan, Inc., the American publisher, and Official Airline Guides, Inc., for which he borrowed a combined $3.35 billion, pushed his empire further into precarious territory. The anemic economy in 1989 sent the price of stock at Maxwell Communications Corporation (MCC) spiraling downwards. MCC was the holding company for Maxwell's American interests and the collateral for many of the huge loans made to Maxwell's private holding companies at the top of the pyramid. To bolster MCC's falling share price Maxwell engaged in a blur of desperate transactions, including the use of Mirror Group pension funds and other cash accounts to buy MCC shares and provide collateral for further new loans. Shortly after the first signs of imminent personal bankruptcy appeared in November 1991, Maxwell's body was found floating off the stern of his yacht, at which point his conglomerate fell to pieces in a welter of bankruptcy filings and criminal investigations.

Of all of Maxwell's holdings, MGN was probably the soundest at the time of his death, but the company sustained serious losses due to Maxwell's illegal business dealings. In its 1992 annual report MGN noted a one-time extraordinary loss of £421 million to cover the cost of repairs, but the company also showed a healthy operating profit of £91 million on revenues of £460 million.

Expansion in the 1990s

After years of litigation, Mirror Group recovered a portion of its lost pension funds, and the shaken company seemed on its feet again. Hopes for economic security were based on further expansion. In 1994, the Mirror Group led a consortium of media interests in the takeover of the Independent. The Independent was founded in 1986 as a nonpartisan London daily. The paper at first prospered, as it was perceived to offer respectable and unbiased reporting, in contrast to the London Times, which was regarded by many as having declined in quality since being taken over by media magnate Rupert Murdoch. But financial losses in the early 1990s, coupled with gradual ebbing of circulation to its wealthier rival paper, eventually led the Independent to solicit a buyer. The consortium led by Mirror Group paid an estimated $110 million for the paper, and MGN was to have a 25 to 30 percent share. Its share was later upped to 46 percent.

Mirror Group's other significant expansion at this time was its launch of its cable television channel, Live TV. MGN put £2.9 million into the cable channel, which featured an irreverent take on the news. One of its most popular innovations was the News Bunny, nothing more than a broadcaster delivering the news while dressed as a rabbit. After a rocky start, Live TV gained a significant share of the British cable market.

By 1995, Mirror Group seemed to have put its financial troubles behind it. Profits that year were up 12 percent, and circulation of its flagship Daily Mirror inched up almost two percent. Meanwhile its rival the Sun lost almost three percent of its circulation. The Group's other titles also showed increasing circulation. Management claimed it had bolstered its papers by editorial improvement and strong marketing, not by cutting cover prices.

Further expansion came in 1997, when Mirror Group paid £297 million (US$502.1 million) for Midland Independent Newspaper plc, publisher of the Birmingham Post and the Birmingham Evening Mail. This purchase was expected to boost MGN's presence in the Birmingham area, where its Live TV station was already popular.

Mirror Group was constrained from further television expansion by antimonopoly laws, and competition among the top newspaper conglomerates made every tenth of a percentage point fluctuation in circulation a battle. In 1998, the company reshuffled top management, bringing Live TV's managing director, Kelvin MacKenzie, in as managing director for the whole group. MacKenzie had formerly managed the Sun, the main competitor to the Daily Mirror. This shake-up came as the director of the Group's Scottish papers resigned, and circulation of the Group's Sunday papers appeared to be falling.

When the Group announced its 1997 fiscal results in March 1998, profits were up 12 percent, and sales had climbed just under four percent, to £559 million. Nevertheless, circulations at its papers were now declining, and the Group was forced to drop its cover prices in response to its competitors lowering theirs. The flagship paper Daily Mirror, long number two to the Sun, was in danger of losing its place to the Daily Mail. Also the Independent, which Mirror Group had acquired four years earlier, was suffering greatly in response to price cuts and promotions by its two main rivals, Rupert Murdoch's Times and the Daily Telegraph. Losses at the Independent had approached £10 million for the past several years, and Mirror Group announced in March 1998 that it would sell its stake in the ailing paper. This bad news overshadowed the rosy fiscal picture. It seemed clear that competition among rival papers was too intense for any long-term prediction of fiscal stability for the Mirror Group.

Principal Subsidiaries: MGN Limited; Scottish Daily Record & Sunday Mail Limited (Scotland); Mirror Colour Print Limited; Mirror Group, Inc. (United States).