Evidence of changed priorities chez Rothermere: finance director Peter Williams tells the FT he doesn’t understand all of the fuss about Mr. Lebedev.
It’s ‘simply a commercial transaction, equally as if we had a loss-making B2B business,’says Williams. He adds: ‘To be honest, we don’t see this [proposed Evening Standard deal] as a hugely significant event.”
Any ’emotional stuff’was worked through long ago, says Williams. The decision to put Northcliffe up for sale in 2005 marked the point at which the company ‘crossed that Rubicon”.
The FT‘s Ben Fenton also notices that the order in which DMGT discusses the results of its businesses changed in its recent annual report. Associated Newspapers now ranks last among the company’s four divisions. “We are so much more than a newspaper company,’says Williams.
There’s even the suggestion of a name change for DMGT. As Fenton puts it: ‘Being called the Daily Mail & General Trust will always label it a newspaper company, while the board is keen to change that image.”
If the board is keen to change that image, what does it think about the underlying assets that encourage everyone to view DMGT as a newspaper company?
When it comes to the Daily Mail and the Mail On Sunday, Williams tells the FT: ‘Why would we want to sell them? We think [they] are wonderful businesses and we will invest.”
But for how much longer? Two years more? Five years more? There’s a curve that plots declining profitability against potential purchase price. Get on the wrong side of line and you’ll limit your ability to invest in the future.
Business units that sit at the bottom of a list of corporate assets are usually held in an opportunistic fashion. For so long as they continue to generate profits, investors tolerate them.
If someone comes along with an offer that’s too good to ignore, there’s a required response. You make like the chairman of a Premier League club, mouthing the words: ‘Everything has its price.”
Williams hasn’t quite put the Mail and the Mail On Sunday up for sale. But he’s come reasonably close.
At the very least, the assumption that DMGT is a dyed-in-the-wool newspaper company has becom unreliable.