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February 10, 2011

DMGT: Mergers needed for regionals ‘brave new world’

By Dominic Ponsford

Daily Mail and General Trust finance director Peter Williams has said greater consolidation is needed to make the transition to a “brave new world” in the regional press.

Williams said DMGT‘s regional press division, Northcliffe Media, would not look to lead any consolidation process but that consolidation was needed.

In a management statement yesterday, DMGT revealed that Northcliffe – which is the UK’s fourth biggest regional newspaper publisher – was still struggling to emerge from the recession.

The statement said in the three months to January, Northcliffe axed more than 200 jobs (eight per cent of its workforce) while revenue was £59m – a six per cent year-on-year drop.

On the job cuts, Williams told Press Gazette that they had been across the business – covering admin, sales and editorial roles.

He said: “There hasn’t been any big redundancy programme. It has been across the board, we haven’t replaced people that have left.”

Yesterday in a conference call following the management statement, DMGT chief executive Martin Morgan said: “As far as local papers are concerned we’ve been quite clear that we are not interested in putting fresh capital into that sector…

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“We are open to any worthwhile approaches concerning consolidation if they were to occur.”

Asked by Press Gazette to expand on this, Williams said: “Our attitude is we think it [consolidation] is worthwhile and a good thing for the industry because it will create bigger businesses who are more able to make the transition to the brave new world.

“There’s obviously going to be a further transition…We are not going to be the consolidator. We are not going to be acquiring other regional newspapers companies to consolidate with Northcliffe.

“I think we have other opportunities in the group for investment. But we are very content to go on operating Northcliffe, it makes good cash flow and so on.”

He added: “If in due course somebody comes to us with a compelling argument to put two businesses together, obviously we will consider it.”

Williams said DMGT would continue to invest in Northcliffe, citing the network of Local People community websites which the company has launched.

DMGT says it has launched 83 such sites since December 2010 making a total of more than 120 covering communities in the South West and South East of England. The sites are largely based on user-generated content.

Last year Northcliffe Media recorded operating profit up 24 per cent to £30m on revenue down ten per cent year on year to £294m.

Between September 2009 and December 2010, a further 242 jobs were cut across Northcliffe.

The UK regional newspaper market is currently dominated by four major players: Johnston Press, Newsquest, Trinity Mirror and Northcliffe.

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