Johnston Press, embroiled in a prolonged Competition Commission inquiry into a buy-up of six free newspapers, will not have to face another when it swallows up the UK’s fifth biggest regional group, Regional Independent Media, for £560m in April.
The Department of Trade and Industry gave consent for the deal as long ago as November 2000, after an inquiry into a Johnston bid in partnership with Newsquest and Guardian Media Group. That consent was renewed a year later but the consortium bid for titles including the Yorkshire Post and five evening news-
papers was abortive.
Johnston chief executive Tim Bowdler told Press Gazette: "We started talking to RIM in the middle of last year, separately from the consortium.
"We had reached a point where it was clear to all of us that the consortium was unlikely to be successful.
"We had exclusivity. We did extensive due diligence and we were close to doing a deal when September 11 intervened. The stock market fell out of bed and our share price went down to 239p, so we had to kill the deal.
"It wasn’t until late January that we felt confident enough to resume discussions." Bowdler, who didn’t get to bed until 3.30am on Tuesday when the deal closed, said it will extend his company’s share of the regional newspaper market to 14.3 per cent, up from 9 per cent.
Bowdler commented: "RIM is a great fit with us. We publish in Yorkshire and RIM is a natural complement geographically extending into Lancashire." RIM’s Scottish titles will also fit a company whose first paper was published in Scotland in the 18th century.
Johnston has applied for consent to buy RIM’s recently-acquired Scottish titles. If it doesn’t come in time for the deal deadline on 12 April, it will leave the titles with RIM and try again later. Johnston turned in good results last year, with profits before tax and exceptionals rising to £73.6m from £65.5m in 2000.
Bowdler says Johnston is not about to sell or close any RIM titles nor make big redundancies.
"We are buying fabulous newspaper titles. We are not buying them to strip them but to invest and build on a strong portfolio.
"Keeping the journalistic resource in place is part of that," he stated.
RIM chief executive Chris Oakley says he has mixed feelings about the deal. He would have liked to take the company to flotation.
"But we are venture capital-backed. Venture capitalists look for an exit and if they have got to choose between the certainty of a good offer now and the uncertainty of the markets in a year’s time, it’s pretty tempting to take the money," he said. Whatever our personal feelings might have been, this is the best exit for investors."
Oakley is to continue to work with those backers, Candover, looking for opportunities for them in media in Europe. But he says he will not retire or sever his links with newspapers.
l In three of RIM’s centres, Wakefield, Leeds and Preston, journalists are balloting on industrial action over pay.
By Jean Morgan