Sale could be agreed by Christmas
SMG is selling off the most profitable parts of its business: The Herald, the Sunday Herald, and the Evening Times, Glasgow and there are already many covetous eyes on the titles.
Chief executive Andrew Flanagan said: "Certainly we think we’ll get a good price for them." Media analysts are already valuing the three newspapers plus magazines at between £120m and £250m. Flanaghan had 10 approaches before announcing the sale on Tuesday.
"We expect more," he told Press Gazette. "When you think how few newspapers of this calibre and size are available for sale in the UK, naturally all the big newspaper groups will be interested and then you have the financial buyers and we have had some interest from abroad.
"A lot of venture capitalists have quite big funds at the moment and are looking to invest in good-quality opportunities," he added.
One of the latter could well be Candover, a big backer of Regional Independent Media titles before they were sold to Johnston Press in April. Former RIM chief executive Chris Oakley still works for Candover, looking for European publishing opportunities for the company.
Flanagan said he had never seen SMG, which owns Scottish TV, as a newspaper consolidator but thought some of the much larger newspaper groups "could apply a lot of economies of scale in our business and get a lot of synergies that would enhance the value".
Even the still lossmaking Sunday Herald is due to break even in the first part of 2004 and could be seen as an opportunity rather than a risk for a buyer, he maintained, since it was one of the few Sunday papers growing circulation and advertising revenue.
Northcliffe Newspapers’ managing director Kevin Beatty said: "We’ll definitely have a look at it. These are very interesting publishing assets. In terms of competition issues, there are not too many hurdles for us to jump over."
A Trinity Mirror spokeswoman said: "There are significant regulatory issues but we’ll keep a watch." Independent News & Media (UK)’s new chief executive, Ivan Fallon, commented: "It’s interesting. We would look at it."
"The news is hot off the press," said Johnston Press chief executive Tim Bowdler. "It’s so fresh that it’s genuinely too early to say whether we would bid. But it is an interesting development."
Scotsman owners the Barclay brothers and Newsquest will be tempted but Flanagan said he expected that "political resistance might be a significant barrier" to the latter.
Selling the newspaper division will give SMG cash to pay off substantial debt and a chance to bid for Scottish Radio Holdings, in which it holds a near 30 per cent stake, next year.
Flanagan said he could have a deal by Christmas but a referral to the Competition Commission could put back completion until spring.
The division employs 250 to 300 journalists and in a public policy statement SMG made when it bought the titles in 1996, it gave its editors, currently Mark Douglas-Home, Andrew Jaspan and Charles McGhee, complete editorial freedom.
By Jean Morgan