Auckland suggests more dailies could go weekly under Local World
Chairman hints at a return to town centre offices
Montgomery: 'We are going to grow the business and invest in people'
Seven years ago the Daily Mail & General Trust put Northcliffe up for sale with bids starting at £1.2bn, but withdrew the offer after it failed to get the price it was looking for.
On Wednesday it accepted just over £52m for its regional newspaper arm and a 38 per cent stake in new owners Local World, in what signals one of the biggest shake-ups of the local press in recent years.
The writing had been on the wall for almost two years.
In February 2011, DMGT finance director Peter Williams opened the door to offers for Northcliffe by saying consolidation was needed in the regional press but that “we are not going to be the consolidator”.
Nine months later it reportedly appointed Ernst & Young to value the company ahead of a potential sale.
In June managing director Auckland told staff he could not rule out the business being sold “in the near future”, and on 9 October Press Gazette quoted sources saying DMGT was on the verge of a sell-off.
When the details were finally unveiled last week, it emerged that Yattendon, owners of Iliffe News & Media, had sold its regional titles to Local World in return for a 21.3 per cent shareholding and that DMGT received £52.5m cash and a 38.7 per cent stake in the company.
Trinity Mirror has acquired a 20 per cent stake in the company for £14.2m, with the remaining shares purchased by investors including Artefact Group (a company associated with Lord Ashcroft) and Odey Asset Management.
Local World will operate 110 newspapers including 16 dailies, 36 paid weeklies, 40 free weeklies.
Titles include the Bristol Post, South Wales Evening Post and the Leicester Mercury.
'We are going to stop the trend of cost reductions'
The company is led by chairman David Montgomery (pictured left), the former Trinity Mirror boss, and chief executive Steve Auckland (pictured right), the ex-managing director of Northcliffe.
Figures released last Thursday revealed the extent to which Auckland had transformed the business since his arrival from Metro last year.
Accounts for the year to 30 September show that year-on-year profit was up 54 per cent to £26m despite revenue dipping from £236m to £213m.
This was largely down to a £33m cost-cutting exercise that saw 324 staff leave the business in the last year, and the conversion of four of its regional dailies – including the Scunthorpe Telegraph and Exeter’s Express & Echo – to weeklies.
Doing the media rounds last week, Montgomery and Auckland were keen to emphasise Local World’s commitment to digital, announcing a £10m investment into its online operations over the next 18 months.
Journalists at Iliffe and Northcliffe may also be cheered by Montgomery’s insistence that the new venture was not simply a way of cutting further costs out of the two businesses.
“We are going to stop the trend of cost reductions for the sake of cost reductions,” he told journalists yesterday.
And despite the emphasis on digital, Montgomery maintained that “we haven’t lost faith in print… we’re passionate about newspapers”, adding: “Newspapers will survive for generations to come”.
Auckland, meanwhile, described Local World’s mantra as: “Local content, local sales, local management.”
The pair were less emphatic when asked if there were plans to close any of the print titles, with Auckland commenting only that “we don’t envisage that at this stage”.
'We’re the type of people that like proving people wrong'
His later comments suggested other daily titles are likely to follow in the footsteps of the Lincolnshire Echo, which switched to a daily last October.
Asked if there were any immediate plans, Auckland replied: “I think we will always keep an open eye with that”, noting how the four titles that converted had “all done extremely well”.
The Torquay Herald Express, said Auckland, has quadrupled its profits since making the move in July 2011. “We know that’s a strong formula,” he added.
Both men also stressed how the new business was starting with a “completely clean slate”, minus the “industrial baggage” of onerous property commitments, printing presses, largescale distribution and high levels of debt.
And as part of the deal, DMGT took on the existing pension liabilities for Northcliffe. According to reports, this is estimated to be approximately half of the £325m pension deficit the company reported in its accounts today.
Last week's announcement was anything but lacking in ambition, with Montgomery declaring that “I have had a vision for some time that the newspaper industry in the regions of Britain needed to be resuscitated in a way that would equip them for the future”, and repeatedly vowing to transform the sector.
Auckland said the aim was to turn Local World into an “inspirational media company” and to “reshape this industry”.
He added: “We’re the type of people that like proving people wrong.”