A local newspaper group in Berkshire has reported a £3m loss in its first eight months under new ownership, after a costly investigation by the Office of Fair Trading.
The Dunfermline Press paid £10m for Trinity Mirror‘s 14 Berkshire titles in July 2007, including the Reading Chronicle, but the sale was investigated by the OFT because it already owned titles in the area.
The enquiry was finally called off after the group agreed to sell two titles, the Windsor and Slough Express, to the owner of the rival Maidenhead Advertiser in April 2008.
Newly filed accounts at Companies House, covering the year to the end of March 2008, reveal that Dunfermline Press incurred £371,960 in costs as a direct result of the OFT investigation.
It has also written off the value of the two papers it was forced to sell – a total of £3,527,265. The proceeds from the sale did not arrive until May 2008 and are not included in this year’s accounts.
The Berkshire Media Group division reported a loss after tax of £3.18m. Excluding the impairment charge on the two sold papers, it made an operating loss of £96,660 on revenues of £6.1m.
“The company has operated satisfactorily in a difficult marketplace,” Dunfermline Press said in the preface to its Berkshire accounts.
At the time the accounts were prepared, the titles employed 152 staff, including 52 journalists, with a total wage bill of £2m a year.
The competition watchdog’s keen interest in two small local newspapers in Slough – at a time when regional newspapers are facing wider problems as a result of the economic downturn – was questioned by media commentators at the time.
Times media editor Dan Sabbagh wrote last May: “The fear arose that Slough residents would be brainwashed into zombie-like inertia by the concentration of weekly newspapers at the same time as trying to choose between more than 300 channels of television, umpteen radio stations including BBC Radio Berkshire and Time 106.6, multimedia and good old word of mouth.
“But, thanks, to the pointy heads at the Office of Fair Trading, the bombs have been averted. Slough is free again to read newspapers from publishers who may lack the synergies to afford good journalism for years to come.”
Trinity Mirror has campaigned for an urgent review of the regional media ownership and merger laws that it says are preventing further consolidation in the newspaper industry.
Giving evidence to the Lords communications committee last year, Trinity Mirror chief executive Sly Bailey said the group had closed eight free newspapers in Derby and Peterborough after a sale to Johnston Press in 2001 was overruled by the Competition Commission.
Last week’s interim Digital Britain report by communications minister Stephen Carter made no firm recommendations on media ownership, but instead asked the OFT and media regulator Ofcom to carry out an “exploratory review” of whether there might be a case for relaxation, and report back before the final report in May.
“Frankly time is running out,” Bailey said last week. “Regional newspaper publishers are facing the most challenging times in their history. Mergers and combinations of newspaper groups offer the only chance of survival for some titles.”
The sale of the Berkshire titles to the Dunfermline Press was part of a series of sell-offs by Trinity Mirror following a four-month strategic review in late 2006. Trinity Mirror said at the time that the £263m raised would allow it to invest in its national newspapers and digital operations.
Tindle bought 27 weeklies and nine niche titles for £18.75m, including the Essex-based Yellow Advertiser series, the South London Press, Streatham and Mitcham Post, Bexley Mercury, Barnet Press and the Enfield Advertiser and Gazette.
A further 25 titles in Trinity Mirror South were sold to Northcliffe Media for £64.15m, including the Croydon Advertiser, Surrey Mirror, Dover Express and Medway News. And the Racing Post was sold to Irish private equity group FL Partners for £170m.
But an attempt to sell off Trinity’s Midlands titles, which include the Coventry Telegraph and Birmingham Post and Mail, was shelved after the group received lower-than-expected offers that it felt did not reflect the value or the earnings potential of the papers.
Group accounts for the Dunfermline Press, published at the same time as the Berkshire figures, reveal an operating profit of £5.4m on total turnover of £29.6m. The group employed 549 staff, with its highest-paid director earning £760,000.