The IT-Enabled Transformation of the Newspaper Industry: The Role of IT Competencies at News International Newspapers Ltd.

 
Chapter 5

  The IT-Enabled Transformation of the Newspaper Industry:
      The Role of IT Competencies at News International
                      Newspapers Ltd.
5.1 INTRODUCTION
The newspaper business is the archetypal knowledge industry. The raw material of newspaper
organizations is information, gathered as it is from multifarious knowledgeable sources and
processed using the experiential knowledge (explicit and tacit) of newspaper journalists,
editors, copy editors, printers, sales staff etc. It is this experiential knowledge, enabled and
enhanced as it is by information and communication technologies (ICT), which determines a
newspaper’s commercial success in terms of its circulation and market share. However, it is
apparent that IT-related competencies in the development, application, and use of information
technologies are key ingredients in enabling and empowering ‘knowledge workers’ in
newspaper organizations. Still, many newspaper businesses still rely on craft-workers such as
compositors and printers to manually construct their products. Accordingly, the core business
processes of these organizations lag far behind those of their competitors in terms of
efficiency and the ability to reconfigure and transform process and product in what is a
dynamic industry. Because of their inability to adapt, the competitive positions of
technologically incompetent organizations is in question. Nevertheless, organizations that
embrace ICT to reconfigure and transform their core business processes are in a position to
leverage technology to ensure their future profitability in a turbulent media industry.

        Up until the mid-1980s, compositors and printers constituted the most powerful
worker group in the newspaper industry; these craft workers and their unions were so
influential in the day-to-day running of newspapers that they had operational control of most
businesses. Being in such a position of power, these ‘communities-of-practice’ constituted
local sources of influence that took full advantage of the particular external and internal
institutional frameworks, which then characterized the industry, to influence organizational
policy on the adoption of technology and related issues of change. Resistance to technological
change was the order of the day. ‘Communities-of-practice’ constituted by journalists, copy-
editors and their unions were also quite resistant to change of any form and supported their
blue-collar colleagues. In many observers’ eyes, these newspaper workers were similar in
many respects to the ‘Luddites’ of the textile industry in the 19th century, where for example,
in the face of the introduction of new technology, craft workers wished to maintain pre-

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industrial manual work practices and resisted, for a time, the advance of the industrial
revolution in their industry.

        As indicated, ICT play a pivotal role in the manner in which successful newspaper
firms now gather, process, store, and embed their informational resource in newspaper
products. More importantly, it is the IT-related competencies of a new breed of newspaper
worker—the IT professional—which constitute the core capabilities in the design,
implementation, and delivery of IT architectures and services, that enable and empower
‘knowledge workers’ in leading newspaper organizations. In keeping with this study’s
research objective, this chapter examines how the organizational character of one of the
world’s largest newspaper businesses was fashioned in order to develop a distinctive
competence that bestowed on it a competitive advantage. In addition, this chapter explores the
pivotal role that organizational commitment and IT competencies played in this process.

        The remainder of the chapter is structured as follows: Section 5.2 focuses on the
historical contexts of the case and provides an in-depth appreciation of the paths taken by
News International Newspapers Ltd. as indicated by the microanalytic attributes of path
dependencies and technical opportunities. Also described are the past organizational and
managerial processes and asset positions of the firm before its transformation. Section 5.3
describes how News International’s organizational and managerial processes were
reconfigured and transformed through new, innovative, and firm specific ICT that enabled the
tight integration of these processes. It also illustrates how organizational learning resulted in
the development of firm specific, unique knowledge and associated competencies in the
application of ICT which bestowed a distinctive competence on the organization. Section 5.4
then examines the structure and process of the company’s IT function in order to provide
insights into the how and why of the development and application of IT competencies. The
final section offers some preliminary conclusions on the case and discusses how different
elements of this study’s conceptual framework help explain and understand the empirical
findings.

5.2 TRANSFORMING ORGANIZATIONAL IDENTITY AND BUILDING
    DISTINCTIVE COMPETENCE AT NEWS INTERNATIONAL
    NEWSPAPERS LTD.
Perhaps the most controversial case of technology-enabled organizational change in recent
times was that of Rupert Murdoch’s News International Newspapers Ltd. News International
saw not only a physical change and centralization of Murdoch’s publishing interests in the
United Kingdom, but the radical transformation of the process, structure, and content of its
entire newspaper publishing enterprise. In essence, the IT-enabled transformation of News

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International’s Fleet Street-based publishing business not only heralded the end of an epoch,
but also played a pivotal role in the transformation of the newspaper industry in the British
Isles.

          The first British daily was published at Fleet Bridge in 1702. Until the late 1980s,
when the entire British publishing industry had been transformed, all of Britain’s national
newspapers were edited and printed in the Fleet Street area.             Prior to the radical
transformation that occurred in the mid-1980s, the process by which British national daily and
Sunday publications were produced in Fleet Street had not changed since the late nineteenth
century. As a result, British newspaper organizations were considered to be grossly over-
manned, labour-intensive, and inefficient (Baistow, 1985; Tunstall, 1996; McNair, 1996). The
Marxist perspective on the economic organization of firms argues that a power asymmetry
exists between the owners of capital, their agents and labour. Certainly, developments in the
British publishing industry since the mid-1980s seem to support this contention. However, as
Tunstall (1996; p. 23) has illustrated, "up until 1986 the trade unions…did much of the
effective general and personnel management [in the British Newspaper industry] and insisted
on the preservation of Victorian technology and working practices." (This is not the type of
power asymmetry commonly associated with the Marxist point of view.) A similar situation
prevailed in the Irish newspaper industry where the same trade unions—chiefly the National
Graphics Association (NGA) and the National Union of Journalists (NUJ)—held the balance
of power. Although new technologies, and in particular, information technology, played a
major role in the transformation of the British and Irish newspaper industries, a range of other
factors—managerial, political, social and cultural—account for the significant difference in
the manner in which the change was manifested in both countries and in the outcomes
observed.

         The existence of a highly-paid workforce, consisting in the main of powerful,
unionized journalists and craft workers, coupled with the antiquated business and production
processes, meant that the British newspaper industry lagged behind those in Europe and the
US in terms of its efficiency of operation and cost competitiveness. British and Irish
newspapers cost more to produce, due specifically to the high cost of labour, and were
characterized by low rates of labour productivity (see for example, McGregor, 1975; Report
of the Commission on the Irish Newspaper Industry, 1996; Tunstall, 1996). Throughout its
history, the industry was also plagued by industrial unrest, as any effort to introduce change
was met with stiff resistance by powerful labour unions, particularly the print unions
(McNair, 1996). Evans (1983) reports that Thomson, owner of The Times newspaper, lost
upwards of £40 million in a strike that closed the paper for almost a year in 1978/79; other
newspapers suffered similar bouts of industrial unrest throughout the 1970s and 1980s until

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events at News International’s Wapping plant helped change the face of the industry.
Baistow (1985, 1989) lays the blame for the decline of the British newspaper industry
squarely at the feet of the unionized workforce. This, perhaps, is the major reason why
newspaper organizations, which are essentially information-intensive, and which have
traditionally displayed many of the characteristics of the so-called ‘knowledge-intensive’
enterprise long before this term was coined, were unable to adopt information and production
technologies that would enhance their capacity to acquire, create, store, and diffuse their
information resource more efficiently and effectively. The following sections explore an
insightful case of technology-enabled organizational change with reference to the contextual
backdrop within which it occurred.

5.2.1 FROM FLEET STREET TO WAPPING: REALIZING PATH DEPENDENCIES AT
      NEWS INTERNATIONAL
What happened at News International Newspapers Ltd. in 1986 is perhaps one of the most
notorious examples of the visible hand of management leveraging ICT to transform the
identity of an organization; the consequences of this change were felt throughout the entire
newspaper industry in Europe. News International’s move from Fleet Street to Wapping was
much more than a geographical change in address; the structure and process of its entire
operation were transformed.

5.2.1.1 A HISTORICAL OVERVIEW OF NEWS INTERNATIONAL’S PUBLISHING BUSINESS
In 1968, Rupert Murdoch purchased The News of the World, and in 1969 he took control of
The Sun; both newspapers were Fleet Street-based and both were significant loss-makers.
Under his control, both titles moved into profit and came to dominate the British tabloid
market in the early 1970s. The Sun is a popular daily and The News of the World is a Sunday
newspaper. Both of these titles are tabloid publications aimed at the mass market of
predominantly working-class readers in the UK and Ireland. In 1981, News International
acquired The Times and The Sunday Times, titles which are inarguably Britain’s best-known
quality broadsheets; the readership of both Times newspapers hail from the middle- and
upper-classes in British and Irish society. While the staff at both News International’s Fleet
Street operations shared a common industrial background, that was reinforced by their long
association with the ‘Street’, journalists and printers at The Times’ Gray’s Inn Road operation
saw themselves as catering to an intellectual market and, therefore, ‘above’ their colleagues at
the Bouverie Street plant who produced sleazy tabloids that catered for, what has been
described as, the lowest common denominator in British society. Nevertheless, many of the
journalists and editorial staff at both newspapers would have come from mainly middleclass
backgrounds (lower and upper), while print workers (craft workers whose role was to typeset

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and compose the printing plates, and others who ran the printing presses) would have come
from predominantly working class backgrounds. Hence, influences from the British class
structure would have been at play in determining the attitudes and values of organizational
actors.

          It must also be noted that both of the Times newspapers possessed a strong historical
affiliation with the British Conservative Party, while Murdoch’s political leanings had steered
the editorial stance of The Sun and The News of the World in much the same direction.
Belfield et al. (1991) maintain that Margaret Thatcher’s Tory Government rewarded Murdoch
for the support shown to the Conservative Party, by The Sun and The News of the World
during the 1979 election campaign, by not referring his purchase of the Times newspapers in
1981 to the Monopolies and Mergers Commission. It was business law at the time to have
new acquisitions by newspaper owners with sales in excess of 500,000 copies per day,
referred to the Commission. Thatcher fudged the issue by accepting Murdoch’s claim that the
Times titles would never be profitable. This was a weak excuse, as within four years not only
were the papers in profit, but between them, his four newspaper titles gave Murdoch a 33%
share of the British market. This alliance allowed Murdoch to conduct his business unfettered
by political intervention and wider institutional control, as events at Wapping bear testament.

          What confounded the class-based, political bias at News International during this
period was the strong affiliation that journalists, printers, and ancillary workers at both
newspapers had towards their labour unions. It must be noted that the labour unions in Great
Britain have very strong historical and political links with the British Labour Party, whose
policies were, at this time, diametrically opposite to those of Thatcher’s Conservative Party.
It is, perhaps, paradoxical that these workers participated in producing titles that adopted an
editorial position which was anti-union, pro-market, and pro-Conservative, while actively
supporting the labour cause when it came to their own interests. However, much the same was
said of the British press in general with its concentration of ownership and right-wing
political bias (see Evans, 1983). This contradiction also operated at a wider societal level as
McNair (1996) illustrates. He (Ibid., p. 139) reports that the readership of pro-Conservative
tabloids, such as The Sun and The News of the World, then proclaimed political support for
the British Labour party, but saw nothing contradictory in consuming a “steady diet of anti-
labour and pro-conservative propaganda in their newspapers.” Thus, a web of influences—
social and political—was at play in shaping the destiny of News International’s Fleet Street
operation. The issues touched on here reflect elements of Selznick’s (1949, 1957) theory of
commitment and its role in the shaping of organizational identity viz. commitments
‘enforced’ by the social and identity of the personnel, the social and cultural environment, the
centres of interest generated in the course of action, and by organizational imperatives. The

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following sections provide further evidence of the aforementioned web of socio-political
factors and the role of commitment in fashioning the organizational identity of News
International Newspapers Ltd.

Figure 5-1 A Generic Model of Core Business Processes in the Newspaper Industry

                                                          Reporters’
                                                            Copy

                                                                                      Copy and
                                                                                     photographs
           Advertising         Photos from               Information
                                                                                      from wire
          Copy from Ad          Staff and                 Gathering                 services/news
            Agencies            Freelance                  Process                     agencies
                              Photographers                                  News,
                                                                            Features,
                                              Photos                       Sports Copy
                                                                               etc.

             Advertising                       Imaging                  Editorial
              Process                          Process                  Process

                                      Pre-processed                        Edited Copy
                                       Images and
                     Advertising
                                           text
                       Copy
                                                         Composition
                                                           Process

                                                                Typeset pages

                                                         Production
                                                          Process

                                                                 Newspapers

                                                         Distribution
                                                           Process

5.2.1.2  BUSINESS PROCESSES AND TECHNOLOGY INFRASTRUCTURES IN THE
         PUBLISHING INDUSTRY: AN OVERVIEW OF CORE BUSINESS PROCESSES IN
         NEWSPAPER ORGANIZATIONS
There exist several core business processes in newspaper organizations: the newsgathering,
editorial, imaging, advertising, composition, production, and distribution processes. Briefly,
the first three involve gathering of news and feature items by journalists/reporters, making
editorial decisions regarding newspaper content and ‘final copy’, editing copy and integrating
photographs and advertisements into the product which is then printed—this process involves

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the editorial and print departments. The advertising process involves the complex procedure
of taking customer requests for advertisements (ads) and then pricing them. Advertising staff
process high volumes of classified ads, as well as responding to the needs of advertising
account holders, which range from small and medium sized enterprises (SMEs) to corporate
customers. Finally, the distribution process deals with the circulation of the various titles to
wholesale and retail outlets, nationally and internationally. The accounting and finance
function perform support processes here, while the other major organizational function,
human resource, has, since the mid-1980s, developed a significant role in ensuring that
newspaper businesses possessed a competent workforce. Figure 5-1 therefore represents the
‘core business’ processes in a typical newspaper business. These are generic processes and are
very much firm non-specific. The figure acts as a suitable point of departure for a discussion
of the both the News International case study and the Examiner Publications Ltd. case study
described in Chapter 6. The processes illustrated in Figure 5-1 are now discussed in detail.

        During the 1970s and early 1980s, technologies appeared which were to radically
alter the face of the publishing industry. In terms of the information gathering process,
newspaper businesses relied on the telephone, telex/telegraph, and wire services offered by
Reuters and Associated Press (AP) to obtain up-to-date information on news events and other
items from both national and international sources.

        Concerning the editorial process, copy (an industry-wide term for news items,
features etc. to be included in a newspaper) was typed or handwritten by reporters—both staff
and freelance—or editorial staff. Newspaper editors—news editors, features editors, sports
editors etc.—conducted daily meetings to decide the content of upcoming issues based on up-
to-date copy/news items (e.g. on current national and international affairs, sport etc.),
associated photographs, previously written feature articles, and also the major advertisements
to be placed in each publication. Editorial staff also designed the format of each newspaper
edition page-by-page, story-by-story, taking into consideration such issues as the layout and
positioning of copy, photographs and advertisements. This was a manual, labour-intensive,
paper-based process.

        Sub-editors were then assigned the task of preparing the final copy, hardcopies of
which would be passed to the typesetters who performed the composition process. Typesetters
then keyed in the various news items, articles and advertisements using a special Teletype
keyboard called a linotype. The output of this activity was fed into the ‘hot metal’ line caster
machines and solid metal lines of text were produced using the technology of the day. These
metal lines of text were then physically arranged by compositors to make up a page of copy
for printing.

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A special imaging process called engraving converted photographs and other
graphical images such as advertisements onto photographic plates that were then integrated
with associated text unto the metal printing plates used by the printing presses. The completed
plates, one per page, were then vetted by compositors and editorial staff prior to publication.
The plates were then sent to the printing presses (production process) to run off the first
edition, and this would then be subjected to a quality analysis by editorial and print staff alike.

        There are two other major business processes in newspaper organizations—the
advertising process (sales and marketing) and the distribution process. Newspapers
traditionally generated much of their revenues through advertising; telephone sales of
advertisements as well as over-the-counter direct placement have been the two dominant
approaches to operationalizing the process of taking classified advertisements. However,
classified advertisements aside, the taking, positioning and layout of an advertisement in a
newspaper was, and still is, a complex process. Complex, because the page and page position
where an ad is to appear will determine the price of the ad, as do factors such as the font size
used and the inclusion of graphical images such as logos, artwork and photographs. Before
the introduction of IT, salespeople had to be familiar with sophisticated algorithms in order to
properly price and place an ad. Of course, there was also the issue of communication and
liaison with accounts/credit control to vet particular customers, with graphics artists etc. on
the content and makeup of a particular advertisement, and also, with editorial staff in order to
ensure that the ad size and placement was feasible and appropriate for particular editions, and
so on. In addition, advertisements were, and still are, placed by external entities such as
graphics design studios and advertising agencies on behalf of customers. Depending on the
size of a newspaper’s geographical market the distribution process is either complex or
simple. Up until the mid-1980s, distribution of newspaper products was by road and rail.

        As indicated, it was not until the late 1980s and early 1990s that these processes were
supported by ICT. Despite the widespread adoption of computers to support business
processes in many industries, the development of computer-based systems that performed
basic transaction processing for newspaper businesses was still a long way off—at least in the
British Isles. For example, ICT that would enable advertising sales staff in the newspaper
industry to capture on-line a customer’s classified advertisement, pass it to the sub-editing
function for inclusion in a particular edition or editions of a publication, automate the pricing
and accounting of such transactions, perform credit control operations, and also allow
graphics artists to create advertisements, or work with those from external agencies, and then
integrate these into a newspaper page were required. Similarly, ICT that would: (a) enable and
automate news gathering; (b) support the group-based, work practices of journalists and
editorial staff through the provision of on-line page make-up, image and graphics processing;

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(c) integrate pre-press and production processes; and (d) automate distribution, were much-
needed.

5.2.1.3 PRODUCT DISTRIBUTION AT NEWS INTERNATIONAL NEWSPAPERS LTD.
While the foregoing process descriptions mirror the core business processes in place at News
International’s Fleet Street operations, a detailed discussion of one of these processes will
shed further light on the challenges facing newspaper businesses and of the potential of ICT
to transform the industry.

          News International’s distribution process involved managing the sales and
distribution channels for its various titles. This began at the output of the printing process
where newspapers were batched and dispatched to various external sales and distribution
outlets both locally and nationally. Until the mid-1980s, this process also tended to be
manual, labour-intensive, paper-based, and relied heavily on rail and road transport.
Expensive air transport was used to distribute daily and weekly editions of the various titles
internationally.

          Depending on rail as a transportation medium was especially troublesome and
undependable due to labour unrest in the rail industry. The problem facing News
International’s sales managers was not only to ensure that its distribution channels were
effective in delivering its product, but that the optimum number of copies were distributed to
sales outlets. If the number of copies exceeded sales, then a loss was incurred not by retailers,
as would normally be the case with most products, but by News International itself. It was,
and still is, standard industry practice for retailers to return the title section of each unsold
newspaper to the distributor/wholesalers so that their accounts reflected actual copies sold.

          The distribution dilemma is exacerbated by two important factors: (a) the number of
copies demanded by customers fluctuate on a daily basis (due to factors that range from
competitor story scoops to the prevailing weather conditions); and (b) the half-life of
information and, correspondingly, the shelf life of newspapers is only a matter of hours. This
posed and still poses a serious challenge to News International’s sales and marketing function.
Not only does the company incur a lost opportunity to make profits if it underestimates and
under-supplies its distribution channels/retailers, but it also operates at a loss if it
overestimates demand and over-supplies the market. Matters are further complicated in the
case of under-supply, because advertisers miss out on opportunities to influence customer
demand for their products or services, thereby losing potential sales.

          Clearly, then, the distribution process was one of the weakest links in the chain for an
organization with a centralized, London-based point of production and distribution, and with
in the mid-1980s, just one other regional printing plant in Glasgow. News International’s

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management realized that it mitigated against the future growth of its titles in terms of market
share and advertising revenues and put the business at risk due to disruption by road and rail
strikes etc.

          The picture painted in this section of extant practice at News International (and in the
newspaper industry in general) prior to the introduction of IT, is one of labour-intensive
business processes that demanded a highly skilled workforce, and long lead times to
production. Many of the activities in the editorial and production process described above
were highly rigid and heavily demarcated, leaving little room for cross-functional cooperation
or flexibility. The manner in which these activities were conducted owed much to outmoded
Victorian work-practices. Over the years, various craft workers and their unions had placed
such an emotional and economic value on what were, perhaps, efficient practices for their
day, that they became impossible to change in later years. Indeed, so entrenched were these
‘communities-of-practice’, (and journalists and editorial staff are here included) that the
metaphorical tail began to ‘wag the dog’ and company strategy and policy was being dictated
by shop-floor activists and union Chapel Fathers (union shop-stewards). Hence,
organizational routines that were part of an effective institutional framework in a previous era,
were now a liability to the economic health of newspaper businesses such as News
International (see for example, McGregor, 1975).

          In the face of steady advances in information technology during the 1970s and 1980s,
it was only a matter of time before cost and efficiency pressures, coupled with opportunities
to increase market share and profitability, forced newspaper businesses to automate and
informate their core business processes. This was the case with News International and its
Fleet Street-based operations. From an institutional perspective, while issues of economic
efficiency were paramount, the thorny issue of power and ‘core rigidities’ had also to be
addressed. The response of News International’s management team to these issues was to
radically alter the identity of the organization, using ICT—this transformation strategy is
presently discussed.

5.2.1.4  LEADERSHIP AND ORGANIZATIONAL IDENTITY AT NEWS INTERNATIONAL:
         RUPERT MURDOCH’S BUSINESS-LED, IT-ENABLED TRANSFORMATION
         STRATEGY
The role of leadership in the creation and evolution of organizational identity or character is
described by Selznick (1957). Selznick argues that senior management achieve this by
defining the organization’s mission, setting its goals, outlining the various roles to be played,
integrating policy into the organization’s social structure, defending the integrity of the
institution, and by controlling internal conflict. Certainly, Rupert Murdoch paid especial

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attention to how News International’s social structure affected the evolution of strategy and
policy at the company, as the following narrative testifies.

        Since first entering the British newspaper business in the 1960s, Rupert Murdoch was
confronted with the power of the labour unions in the print industry. For example, the strike
by printers at the Times newspapers—then owned by the Thomson Group—in 1978/79,
incurred such high losses for its owners that it resulted in the sale of the newspaper to News
International in 1981—this is one of the more graphic illustrations of the power of the print
unions (see Evans, 1985). Union power grew because the unions who represented the printers
and typesetters—the National Graphics Association (NGA) and the Society of Graphical and
Allied Trades (SOGAT)—had, through threat of militant strike action, forced newspaper
companies to retain outmoded means of production which were craft-based, labour-intensive,
highly skilled, highly demarcated and highly paid. In addition, the NGA had negotiated a ‘one
in three’ deal with some newspaper owners, which saw three workers getting paid while only
one was actually on-shift; as a result, print workers were effectively working one week in
three while getting paid in full for three weeks work. It is no wonder then that four of the
national dailies and six of the seven national Sunday newspapers in the UK were operating at
a loss (McGregor, 1975).

        Because of the dynamics of the newspaper business, a loss of production could prove
fatal to hard won market share and advertising revenues. This point was brought home to
News International when industrial action at The Times caused the loss of 11.4 million papers
in 1984, and led to the loss of a further 23.5 million papers at The Sun and The News of the
World. Hence, most newspaper owners were fearful of taking on the unions in case it led to
prolonged industrial action with concomitant financial disaster; they therefore endured the
status quo as each business suffered in equal measure. It must also be noted that many
newspaper owners were keen to retain existing profit margins, however slim, and pressure by
the unions provided them with a ready excuse for not diverting existing revenues into
investment in expensive editorial systems and new printing plants. Nevertheless, while first-
movers in the industry bore all of the risk, they would also reap the benefit–this point was not
lost on Rupert Murdoch.

        Advanced information and printing technologies became available in the 1970s;
consequently, large newspaper organizations in North America and elsewhere began
modernizing their plants and transforming associated business processes. Rupert Murdoch
was a global player in the media industry in the 1980s; hence, News International’s
management was only too aware that the payoff from such investments would be significant,
in that new technologies would allow News International to reduce its staff cost base, while at
the same time increase workforce productivity, efficiency, and product quality. Clear

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economies of scale and scope would also accrue in the production and distribution of its
newspaper titles. Labour resistance to change was not the only obstacle Murdoch faced,
however; there was also the very practical reality of physically implementing the new
technologies while maintaining production.

        One solution to this problem, which had been employed by several US-based
newspaper businesses, was to set up a new base of operation at a Greenfield site and then
switch production from existing plants to the new location. The booming property market in
the UK in the early 1980s made this an attractive option for News International as its titles
were based in the Fleet Street area of central London—The Times/Sunday Times was situated
on the Gray’s Inn Road and The Sun/News of the World in Bouverie Street—where property
prices were at a premium. Establishing a new site of operations in an area where property
prices were significantly lower would help finance the move; indeed this was one of the major
factors influencing News International’s move to Wapping in the Docklands of East London.

        Rupert Murdoch knew from bitter experience that the power of the unions had to be
countered or broken if what threatened to become a loss-making business could be turned
around. Three events bear mention here: the first is Murdoch’s support for Margaret
Thatcher’s Tory Government of the day; the second is her government’s anti-trade union bias;
the third was the lessons he learned from Eddie Shah’s successful use of the Thatcher
government’s new anti-labour laws in beating the NGA’s power at Warrington in 1983.
Whether or not it was part of his overall plan, forming a political alliance with the Tory
government had a great impact on the outcome of News International’s strategies. For
example, it is widely held that Murdoch was a significant influence on Margaret Thatcher’s
stance on the issue of curbing the power of Britain’s trade unions—this eventually led to the
introduction of employment laws in 1980 and 1982. These laws proved to be the pivotal
factor in News International’s battle to break the power of the print unions—the successful
move to, and operation of, the Wapping plant would not have been possible without them
(McNair, 1996). Given the level of industrial unrest in the print industry throughout the
1970s, it is unlikely that Murdoch would have begun his heavy investment in the new plant at
Wapping in 1980, or bought out The Times in 1981, without some insurance policy. Hence,
with the support of the government of the day, Murdoch must have felt reasonably secure in
embarking on his strategy of transformation.

        Therefore, in compliance with the tried and tested US model, and in order to execute
Murdoch’s strategy, News International built a new centre of operations at Wapping. The new
plant was suitably remote from the existing plants in Fleet Street, and in an area where
property prices were much less than those in the commercial heart of London. New printing
presses were purchased along with a computer-based editorial system from Atex Publishing

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Systems, a major US supplier to the industry. Unlike some of his competitors, Murdoch
favoured proven and established technologies to untried state-of-the-art systems; hence, the
selection of Atex Publishing Systems of Bedford, Massachusetts, USA. Atex had been
providing text-editing systems for the publishing industry since 1973. Up to the mid-1980s,
Atex been involved in the transformation of and supplying computer-based publishing
systems to more than 800 customers in 57 countries. In pursuit of his overall objectives,
Murdoch availed of this vendor’s wide experience in the industry to help implement his
change strategy (see Tunstall, 1996).

        The fairly cautious approach adopted by Murdoch is to be contrasted with that of
Eddie Shah, who in March of 1986 employed much the same strategy as News International,
but was singularly unsuccessful. Shah’s Today newspaper had frequently missed production
deadlines due to problems with new and untried editorial and pre-press computer technologies
and teething difficulties with his advanced colour printing presses. In addition, Shah, unlike
Murdoch, did not believe that the experiential knowledge of high-quality journalists was
worth paying for. Hence, four months after their launch, Today and Sunday Today were
effectively disposed of by Shah. (Shah’s approach bore all the hallmarks of the failed retreat
to technology commented on by Selznick, 1957). Interestingly, News International acquired
Today in 1987 and closed it down in 1995 for financial reasons. Murdoch’s interest in Today,
was not the title, but the technology at the production plant. Several of News International’s
future IT experts cut their teeth by ironing out the technological problems at the plant—the IT
competencies developed there would bear significant dividends at the parent plant in Wapping
in the years ahead.

INSTITUTIONAL INTEGRITY AND INTERNAL CONFLICT: THE DEMISE OF UNION POWER AND
INFLUENCE
Although work on the Wapping plant in East London began in 1980, and was completed in
1983, the labour unions representing the majority of News International’s employees refused
to enter into an agreement to have their members work there (Tunstall, 1996). Hence, when
the equipment was installed in 1984/85, News International recruited new staff to man and
operate it. Meanwhile, Murdoch’s problems at his Fleet Street plants continued. As indicated,
a stoppage at the Bouverie Street plant meant that sales in the order of 23.5 million copies of
The Sun and The News of the World were lost, and a strike at The Times in Gray’s Road saw
11.4 million copies lost. In 1985, the unions prevented News International from using
facsimile technology to transmit copy to its new plant in Glasgow; the plant remained idle as
a result (McNair, 1996). Such events lend support to the view that the management team at
News International had adopted a covert strategy from the outset and concealed their true
intentions vis-à-vis Wapping. For example, in a move to divert attention from its real agenda,

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management let it be known that the new plant would be involved in the publication of new
titles. (More revealing was the fact that the new plant would be operated with only a fraction
of the original workforce, a situation that would be unacceptable for the trade unions.)

            Despite the unions’ refusal to enter into negotiations, Murdoch pressed ahead with his
plans and to circumvent union opposition in their execution. As indicated, Murdoch’s strategy
involved establishing a new plant and equipment at a separate site, something that News
International had already accomplished openly by 1983. Between 1984 and 1985, the Atex
computer-based editorial system and Goss Headliner web-offset rotary presses were installed
and were ready to be put into use (Tunstall, 1996; McNair, 1996). Subsequently, new
production staff were recruited and trained to operate the new plant; again, this was well
known at the time. However, what seemed to have escaped the attention of the Fleet Street
workers was that with a capacity to produce over 20 million copies per week at the new plant,
the old workforce was to be left behind and made redundant.

            The leaders of the major trade unions played little heed to the ramifications of the
Wapping move, such was their perceived power, arrogance, and, according to Tunstall
(1996), stupidity and ineptness. As indicated, the printing capacity of the new plant in itself
should have provided ample evidence that something was afoot. Furthermore, it is difficult to
understand how the union leaders failed to notice the warning signs and take appropriate
action, given: (a) the general anti-union mood of the Thatcher years—as manifested by the
three separate pieces of legislation introduced to curb union powers; (b) the close association
between Prime Minister Thatcher and Rupert Murdoch; and (c) the established international
trend of automation in the industry. The unions were outmaneuvered on all fronts.

            Another problem facing the unions was that the introduction of new technology1 had
led to inter-union disputes. The problem surfaced when IT-enabled publishing systems were
introduced in smaller regional newspapers, where the NGA members lost out to members of
the NUJ. The reason for this was that the introduction of computer-based publishing meant
that the journalists could perform the roles of journalist, sub-editor and compositor
simultaneously, this eliminating the need for compositing and typesetting functions (Tunstall,
1996). The introduction of new technology would have favoured journalists and copy-editors
and their union—the NUJ—over the printers and compositors and their unions—the NGA
and SOGAT. Hence, apart from the fact that the unions were blinded by their perceived
power over newspaper owners and managers, and as such, failed to notice any of the warning
signs, when it came to confronting the challenge posed to them, the major unions failed to
show a united front on the issue of organizational change.

1
    The exact details of which will be described and explicated in a subsequent section.

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VISIBLE HANDS: RESHAPING OF NEWS INTERNATIONAL’S HUMAN AND INFRASTRUCTURAL
CAPITAL
The transformation of News International’s Fleet Street-based newspaper publishing to the
new operation occurred almost overnight. However, planning and preparation occurred over a
number of years. The scope of Murdoch’s plan was significant as he and his team of
managers and senior editors at News International, were taking on three of the most powerful
unions in the UK. The magnitude of the move from Fleet Street to Wapping is evidenced by
the scale of the attendant job losses at News International; one estimate suggests that a cut in
staffing levels of up to 80% was achieved, with thousands of redundancies by print and
ancillary support workers (NcNair, 1996). (Even today, the exact scale of the job losses
incurred is not general knowledge within the organization, or indeed the subject of
discussion.) In contrast, the average number of job losses due to technological change and
rationalization for the industry in this period was around 50% (Tunstall, 1996). News
International recognized and negotiated with one union in all this, the electrician’s union, the
EEPTU, simply because electricians played a pivotal role in the installation and general
maintenance of the Wapping plant. The group who suffered most were the printers and
typesetters, all 600-plus of whom lost their jobs. The task of producing the 20 million-plus
newspapers per week at the new plant was now performed by just over 35 printers on two
shifts.

          Journalists and editorial staff who worked on News International’s four titles were a
vital element in the planned transition to the Wapping Plant, due in no short measure to their
competence and experiential knowledge as some of the industry’s leading professionals. The
importance of possessing the right calibre of journalist was not lost on Murdoch and his
editors as it was on Eddie Shah, whose Today newspaper failed in July 1986, four months
after its launch, primarily, though not exclusively, due to this fact. The problem facing News
International’s management was to get the journalists on side, prior to the commencement of
production at Wapping in January 1986, preferably without involving their union, the NUJ.
However, because of the magnitude of change to their role-related responsibilities and place
of work, a carrot-and-stick approach was adopted by News International to entice the
journalists to make the desired and necessary transition from Fleet Street to Wapping. This
strategy proved effective as some 675 of the 750 journalists made the move. Those that did go
to Wapping received a significant salary increase (upwards of £2,000—a generous amount by
the standards of the day). Those that did not, quit or were sacked. A mixture of adherence to
tradition, to ideological positions, and/or an expression of solidarity for those workers who
were not allowed to make the move, all appeared to be reasons for their reluctance to commit
to the ‘new’ News International. In any event, the News International team retained its most
competent editorial staff and journalists.

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While certain workers availed of redundancy compensation, the majority entered into
a lengthy dispute with the company on becoming redundant. Hence, not only did printers at
News International loose their jobs; they were one of the few groups who did not receive
redundancy compensation or pension payments. The reason for this state of affairs was that
Murdoch’s management took full advantage of Thatcher’s new anti-union legislation, and
formulated a strategy that forced the unions, particularly the most powerful—the NGA—to
enter into an illegal dispute, the upshot of which was a loss of all legal benefits and
compensation (Tunstall, 1996; McNair, 1996). Thus, the yearlong picketing and associated
civil unrest that led to riots outside the Wapping plant during 19986/87 was evidence of the
upheaval associated with transformation of the British newspaper industry. In many ways,
this was a major turning point in the identity of the newspaper business as a whole and of
individual businesses in particular. This issue is later explored within the context of the
general theoretical model proposed earlier.

        The move to Wapping saw IT employed to enable News International’s core business
processes. However, the extent to which IT underpinned these processes is generally
overestimated. One of the major benefits of the new editorial system was that copy could be
input directly and sub-edited on-line; another was that classified advertisements could be
entered on-line. The key benefit here was that double-keying was replaced by single-keying.
Double-keying resulted when journalists/sub-editors first typed newspaper copy onto standard
paper pages and then passed these to printer/compositors who then typed the copy into the
‘hot-metal’ press. With the new system, journalists and copy-editors directly keyed copy into
the Atex system the output of which was printed on galleys—that is, column-width strips of
bromide paper. The bromide strips were then manually cut and pasted by compositors onto
page boards with accompanying photographic and other images in order to make up
individual pages. While these processes were an improvement on those in operation at Fleet
Street, they were still pretty much labour-intensive, as over 200 compositors performed page-
makeup functions on all titles. Nevertheless, as Belfield et al. (1991) report, the move to
Wapping cut News International’s annual wage bill by £45 million and boosted pre-tax profits
from £39.1 to £165 million by 1988. The super-normal profits generated at News
International were crucial to Murdoch’s wider commercial interests at the parent News
Corporation whose finances were in a questionable state at this time. Indeed, as Belfield et al.
maintain, the cash surpluses generated at News International financed Murdoch’s highly
successful move in satellite TV broadcasting.

      In 1986, News International had a fledging IT function. By 1994, there was just 20 IT
professionals working at Wapping; however, by 1999, the IT function had a complement of
over 200. The next section gives account of the role of IT and the related competencies of

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News International’s IT professionals in taking the organization into the new millennium as
industry leader in the application of IT for the attainment of sustainable competitive
advantage.

5.3 FROM HOT METAL AND ROLLING STOCK TO ICT: IT-ENABLED
    CORE BUSINESS PROCESSES AT NEWS INTERNATIONAL
The previous section dealt with social and political factors surrounding the change in News
International’s organizational identity, while this section puts a specific focus on the
information and communication technologies that to a certain extent drove and enabled such
change. Post-Wapping, News International established a reputation within the industry as a
leader in the innovative use of IT to enhance and improve both its process and product.

        The newspaper industry is unique in many respects, as few businesses have
developed in-house bespoke information systems to support their core business functions. As
indicated, these processes were outmoded, labour-intensive, costly to operate, and grossly
inefficient. In the late 1960s and early 1970s, companies such as Comtec of Norway and Atex
of the USA pioneered the use of computer-based solutions for pre-press production. All
through the 1970s, organizations across the publishing industry began to adopt new pre-press
computer-based editorial systems and web-offset press technologies in order to reduce labour
and other costs, improve product quality, and introduce efficiencies in their entire production
process. For reasons already delineated, established newspaper companies in the British Isles
were slow adopters. With Rupert Murdoch’s help, the stranglehold that the unions had on the
print industry was effectively broken. His success at Wapping changed the face of the
industry, so much so that within three years all the major players in the UK had implemented
similar systems. The following sub-sections describe the technological dimension to the
transformation of News International’s operations. Also described is the role that the
competencies of IT professionals played in enabling a significant change to the organization’s
identity and the concomitant development of a distinctive competence that underpins its
ongoing commercial success.

5.3.1 TECHNOLOGICAL SUPPORT FOR GATHERING AND PROCESSING INFORMATION
Whereas in-house journalists provide the primary interface with the raw informational
resource employed in the production of News International’s titles, other journalistic sources,
both national and international, also provide editorial workers with newspaper copy. In the
mid-1980s, copy was obtained from geographically dispersed locations by national and
internationally-based ‘staffers’ and freelance journalists mainly by telephone and teletype.
Copy editors transcribed these telephone conversations into a printable format. Telex and fax

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machines were also used. Additional telecommunications media such as leased analogue data
circuits were employed to connect to national and international news agencies such as Reuters
and Associated Press to News International’s newsrooms. As the decade progressed, new
technologies like mobile telephony and personal computing began to emerge. As a result,
journalists could send copy in via modem from home, or in the case of feature items, by
floppy disc.

         By the mid-1990s, laptop computers were in widespread use and copy was now
transmitted from any location on the globe directly into News International’s databases. Aside
from the clear advantages new technologies had in terms of the communication of raw data,
the simple advantage of journalists keying and editing the data only once in preparation for
publication was a major labour-saving device. Computer hardware, modem technologies, and
communication software made it possible to transfer files directly into the editorial system’s
database without human intervention. The ability to capture and digitize photographs and
transmit them electronically via modem, again into a central database, also greatly improved
image quality and introduced efficiencies in terms of time and labour costs for the image
processing function in the organization. Image management staff also began to use
sophisticated scanners to digitize photos and other graphical images. In the late 1980s,
satellite communications made it possible for companies like Cable Network News (CNN)
and, later, Murdoch’s own SKY News (of British SKY Broadcasting Corporation) to transmit
live sporting and news features from across the globe into the newsroom at News
International. By 1997, the Internet also began to play a role in the information gathering
process not only with its ability to allow staff to transfer company-related information via
email, but also to allow journalists and editors to generate copy from web-sites across the
globe.

         In 1998, the IT department chose to consolidate its information-gathering systems and
improve its capabilities in this area by introducing a state-of-the-art system called WireCenter
from Unisys Publishing. The screen-shots in this section provide an indication of this
systems’ user interface. This system provided for integrated management of incoming data
that included wire stories and photos, reporter copy, and e-mails. The system also featured an
intelligent agent facility for ‘hunting’ web-site content on the Internet. More importantly, it
also provided uniform PC and Web client interfaces for information retrieval. The ability of
News International to have speedy access to a wide range of data and information increased
its competitiveness in an industry where time to market with groundbreaking news is a
sustainable competitive advantage. Capturing and preprocessing the raw material is the first
critical step in this complex process; the remaining links in this chain are now described and
discussed.

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5.3.2 INFORMATING AND AUTOMATING THE EDITORIAL PROCESS
In the Fleet Street days, copy gathered from reporters and other sources was typed/printed in
hardcopy format, edited (if chosen for inclusion in a particular newspaper edition or
supplementary journal), forwarded to the print room typesetters who keyed it into the linotype
keyboard used to typeset copy onto the hot metal caster machine where printing plates were
formed. Each item of copy came with particular font size and style instructions and an
indication of where it was to appear in the newspaper layout. A similar process was adopted
with classified and other advertisements, as well as photographic and other graphic images,
such as drawings and cartoons etc. This labour-intensive process had several weak links that
often led to delays in publication caused by the reworking of typeset copy. For example,
typesetters would often misread the guidelines provided by editors for copy font size and
style, or were sometimes provided with incorrect guidelines. Experienced typesetters usually
spotted the mistakes, but not always. News International’s management sought to radically
change this process through the introduction of new editorial system.

        The editorial system chosen was, as previously indicated, sourced from Atex
Publishing Systems. On the hardware side, it consisted of a UNIX-based mid-range computer
with several hundred VDU terminals. The core application software took full advantage of the
UNIX operating systems’ multi-user/multitasking environment to integrate the activities of
journalists/copy editors who would concurrently use the text-based terminals to perform
everything from word-processing both copy and classified advertisements, to basic page
layout functions on the newspaper editions being prepared for publication. The text-based
terminals of the day did not possess the WYSIWYG capabilities of later editorial systems;
hence, laying out and integrating news and feature items with photographs and advertisements
posed a challenge to copy editors, sub-editors, and journalists alike. The experiential
knowledge of these individuals, gained while working with the previous manual-based
processes, coupled with placement algorithms embedded in the editorial system, proved to be
an effective combination in laying out editorial copy and advertisements. In editing a news
item or inputting an ad, the editor/sub-editor or telesales person used special codes,
recognizable to the application software, to specify font style and size for headings, sub-
headings and body text etc.

        In order to appeal to specific regional/national markets and maximize market
penetration and circulation, News International provided regional editions of its titles. The
ability to support the positioning and layout of common and regionalized items of copy was
an important feature of the new editorial system. The old process of manual layout made this
task almost impossible to perform with any degree of efficiency or effectiveness. Hence, the
capabilities offered by the new system allowed News International to automatically maintain

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‘news-hole’ requirements, manage common pages, and regional editions with relative ease. In
addition, the new editorial system allowed for parallel production; that is, sub-editors etc.
were able to work in a cooperative environment on the same page at the same time.
Unfortunately, the system did not possess workflow capabilities, so the chief sub-editor had to
manually assign editing of news/feature items to sub-editors typically based on a particular
page or pages. The system was of some help here as UNIX’s directory structure allowed
directories to be associated with both individual pages of an edition and copy editors alike.
This system feature eased the task of allocating work to individual and groups of sub-editors
based on their individual experience and competences. The items to be edited had already
been input into the system by journalists or editorial staff and/or captured electronically from
news services. Of course, the flexibility of the system meant that late-breaking news items
were always accommodated. Thus, the role of copy editors was (and still is) chiefly to
optimize the word length and placement of these news items/features, in line with editorial
decisions and policies, in order to maximize page content and/or maintain what is referred to
as the ‘house style’ (see Section 5.2.2.1, below).

            Once the new editorial system had performed pre-press processing it transferred the
copy electronically to the Linotron equipment,2 which output the text in column-width strips,
called galleys, using a photo-sensitive substance called bromide. These bromide strips or
galleys were then used to compose a page by cutting and pasting them together on a page-
sized board. About two hundred compositors performed this process in an area called the
Caseroom. Photographs and graphic display advertisements were also converted into the
bromide medium and integrated with the text in order to make up an individual page. A
photographic negative was then made of the bromide page; once evaluated for quality, this
was used to make an individual printing plate using ultraviolet light to effect the image
transfer. Once the plate was produced, the printing process could begin.

            In the early 1990s, News International’s pre-press technologies received significant
upgrading. First, a local area network was installed to provide the necessary interconnectivity
between new UNIX-based application and ORACLE servers and the editorial clients.
Second, the original proprietary terminals were replaced by Windows-based PCs. Third, and
most importantly, the editorial system was augmented to include page makeup functionality
by introducing a MAC-based system called LAMA, which gave copy editors WYSIWYG
capability. News International’s IT people had OEM’ed3 or customized proprietary editorial
software from Quark X-press to produce the a system that, while not tightly integrated with

2
    Linotron is a proprietary name for a range of image setters.
3
    A technical term used in the IT and electronics industry. OEM is an acronym for Original Equipment
     Manufacturer. To OEM an item of equipment means to customize a proprietary product for a specific purpose.

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