Telegraph’s £50 Million Profit Could Push Up Bids
The Telegraph Group is expected to report a pre-tax profit of between £45 million and £50 million this year, in a move that could push up the price that bidders are willing to pay for the company.
It is understood that a number of parties interested in taking control of the newspaper group have been given access to its financial figures by Lazard, the investment bank that is handling the auction.
According to press reports, the Daily Telegraph and its sister titles have survived the advertising recession better than many analysts had expected. This could force bidders to raise their offers to above the £700 million in an attempt to secure control of the company.
Media assets can often sell for up to twenty times their annual earnings, which in the Telegraph‘s case would make it worth almost £1 billion. The spiralling price tag attached to the Hollinger-owned publisher has already forced Richard Desmond’s Express Newspapers and USA Today publisher Gannett to pull out of the race (see Gannett Confirms Plans To Swoop On Telegraph Titles).
The new owner could also be hit by a large tax bill and potential legal action from shareholders trying to recover money they claim was wrongly paid to former owner Lord Conrad Black. However, this week’s profit projection may encourage bidders, which could make savings by cutting back office costs in the company’s marketing and advertising departments.
It is understood that US venture capital group KKR and German publisher Axel Springer are bidding for all the assets of Hollinger International, which also include the Jerusalem Post, the Chicago Sun-Times and the Spectator magazine.
Bidders for the Daily and Sunday Telegraph include the Barclay brothers and Lord Rothermere’s Daily Mail & General Trust, which reportedly plans to sell the papers on to private equity firm Cinven should its bid be accepted by Hollinger but rejected by Ofcom on regulatory concerns.
Hollinger International is off-loading the titles after a fall-out at the company over payments to a number of high-level executives, including former chief executive Lord Black. The company has told bidders to submit a third round of bids by 10 May.
The latest ABC results for the six months to March 2004 reveal less than impressive news for both the Daily and Sunday Telegraph, which saw their circulation decline by 3.7% and 6.7% respectively in year on year analysis.
Telegraph Group: 020 7538 5000 www.telegraph.co.uk
Recent Related Stories from NewsLine Times Newspapers Restructures Commercial Division Newspaper Advertising Momentum To Continue In 2004 Telegraph Holds Key To Europe With Property Supplement
Subscribers can access ten years of media news and analysis in the Archive