Industry stunned as Rothermere sells 'crown jewels' of regional press

By Jon Slattery

Northcliffe is to press on with its plans to axe journalists’ jobs
and its cost-cutting programme – despite the shock decision by owner
Daily Mail and General Trust to put the group up for sale.

The country’s third biggest regional publisher – with daily titles
concentrated in the East Midlands, across the West Country, Stoke,
Swansea and Aberdeen – is estimated to be worth up to £1.5bn. They have
been described by a Northcliffe editor as the “crown jewels” of the
regional press.

DMGT finance director Peter Williams told Press
Gazette the Aim Higher cost saving programme would continue, despite
Northcliffe being up for sale. Northcliffe is now targeting annual
savings of at least £30m a year by 2007 – £10m more than envisaged when
the programme was announced in the summer.

Already up to 47
journalists’ jobs are facing the axe in Bristol and Plymouth if, as
expected, subbing, photographic, features and sports departments are
pooled across morning and evening titles.

Williams told Press
Gazette: “This is business as usual as far as Northcliffe is concerned.
In terms of running the business everything carries on as is. The only
proviso is that we’ve put on hold the new plant in the Northeast.” He
said the consultants who are looking at Northcliffe’s operation at the
moment would continue their work.

Williams denied DMGT had lost
confidence in the regional press: “This is a sad day. This has been a
business in our group for more than 70 years. Our problem is that we
can see other people may well be willing to pay more for this business
than we think we can justify it being worth to us.

“We have seen
it happening when there have been businesses coming for sale in the
regional press. We have been unable to justify the prices that other
people have paid because we have opportunities elsewhere in our group
where we can invest the money.

“You go from there to a logical
conclusion that it is in the interests of our shareholders to see if
there is a better price to be got.”

Williams forecast there would
be three types of potential purchaser: “One would be an existing player
in the regional press; one would be a new media player coming into the
regional press, say one of the big continental groups; and the third
would be private equity investors who have been there before. We are
looking for offers for Northcliffe as a whole.”

Staff were told
in a memo that the DMGT board had approached “a limited number of
selected parties” and invited them to make an offer.

Williams
said he did not believe classified advertising was drifting away from
the regional press to the internet. “Recruitment is about 20 per cent
down but that is because people are not recruiting. We don’t think
there has been a migration [to the web] in the regional press to any
dramatic extent.

Maybe it will, but over a long period of time.

The
regional press will have every opportunity to create alternative
vehicles to keep all that advertising. We are not depressed about the
future of the regional press at all.”

In its preliminary results
on Wednesday, DMGT stressed that it remains “fully committed” to the
continued growth and development of Associated Newspapers, publisher of
the Daily Mail, The Mail on Sunday and the Evening Standard, and said
the titles are “at the heart of the group”.

DMGT chairman Lord
Rothermere is well known in Northcliffe and worked on titles within the
group. Williams said: “He is intimately involved in this, very much our
executive chairman, utterly behind the decision – as much as he regrets
it.”

Northcliffe managing directors were told the company was
going to be offered for sale in a conference call from group managing
director Michael Pelosi on Tuesday at 5pm.

Editors were informed at 7am on Wednesday.

The NUJ has claimed the Aim Higher programme was a “cynical exercise” aimed at increasing the bid price of the company.

An
emergency meeting of 100 journalists at the Evening Post and Western
Daily Press on Wednesday unanimously declared a vote of no confidence
in Pelosi. Some staff are bitter, believing a top quality, profitable
business has been undermined in a bid to push up profit margins in the
short term.

One said: “We feel gutted, let down and saddened that
a once-great newspaper group is now to be disposed of because the
margins are not good enough, even though it is still making £100m
profit. Rothermere has betrayed his family legacy.”

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