Newspaper giant Daily Mail & General Trust (DMGT) this morning confirmed that its regional newspaper business, Northcliffe Newspapers, will be put up for sale, marking what finance chief Peter Williams described as a “turning point” for the company.
The decision to go ahead with a sale of Northcliffe was made following a strategic review of the business revealed the need for restructuring in order to compete with competitors such as Trinity Mirror and Johnston Press.
The company stated in its full year results this morning that a sale would deliver “a substantial portion of the net proceeds to shareholders,” after allowing for the firm’s continuing acquisition and investment programme, as well as maintaining its current credit rating.
Explaining the decision, Williams said: “We’ve come to the rather sad conclusion that there may well be better value for shareholders from a sale rather than retaining the business. This is a major turning point for the company.”
Northcliffe, which currently owns over 100 regional titles, could be worth around £1.6 billion to a competitor or private equity firm, according to analysts. The publisher has substantially lower profit margins than rivals Johnston Press and Trinity Mirror, and will continue to trail behind rivals even after a proposed restructuring , according to Williams.
DMGT claims Northcliffe’s performance has been impeded by industry consolidation, forcing prices to rise for the remaining independent titles. “We’re not willing to pay the prices that others have paid,” Williams told reporters on a conference call this morning. “There are better opportunities elsewhere to grow our business.”
Elsewhere, DMGT reported a rise in underlying profits in its full year financial results, citing a recent spate of cost cutting exercises and a rise in market share at its national titles. The company also reported improved performance for its business information arm.
DMGT’s pretax profits rose to £253.4 million from £234.1 million last year, topping the firm’s £248.9 million estimate. The company’s revenues for the period were £2.138 billion, up 1% year on year.
Related Links
