SMG is expected to announce this week it is selling The Herald, Sunday Herald and Evening Times to US company Gannett for £215m.
It will mean two Glaswegians, Jim Brown and Paul Davidson, non-executive chairman and executive chairman respectively of Newsquest Media, Gannett’s British subsidiary, taking over their hometown papers.
It will also mean Newsquest, bought by Gannett in 1999, will be running national newspapers for the first time, although it has regional dailies such as the Northern Echo and The Argus, Brighton.
It was Gannett’s surprise £5m raised offer that made it the preferred bidder in a long battle at the end of last week, with Independent News & Media, together with Providence Equity, out of the running.
Determined not to be the bridesmaid once again – Gannett narrowly lost out on buying Regional Independent Media and the Belfast Telegraph Group – Newsquest made a bold move.
It was unlike its normal, canny approach to acquisitions, which is based on never paying over the odds. Insiders suspect Gannett was pushing its UK company for more expansion.
But in this case, that move is likely to have brought it a rich prize — SMG titles made around £17m this year.
Along with finance director John Pfeil, Brown and Davidson have made a formidable buyout team. After completing their own management buyout of Reed regional newspaper titles and forming Newsquest, they led regional consolidation by acquiring Westminster Press and Newscom, among other companies.
Competition minister Melanie Johnson has already referred Gannett’s desired purchase to the Competition Commission. It will look at whether the proposed transfers will operate against the public interest, looking at the need for accurate presentation of news and free expression of opinion.
The application falls under mandatory reference provisions but the referral is not expected to meet with any obstacles since Newsquest owns no Scottish newspapers.
The commission will report by 10 March 2003.
Independent News & Media, preferred by SMG’s journalists for its hands-off approach to editorial, had been anxious to meet editors and discuss the company’s vision. Newsquest had not made a similar request.
Both the journalists and Scottish politicians are anxious to know what Newsquest intends to do with the newspapers. SMG has invested a lot of money in the titles, building a state-of-the-art press and backing the launch and development of the three-year-old Sunday Herald with £7m, attaching value to the titles’ content.
Newsquest is the second-largest regional newspaper publisher in the UK, with 315 titles.
By Jean Morgan