DMGT receives £52.5m cash and 38.7 per cent stake in new company
Local World valued at £100m and will employ more than 2,800 people
It said the company will have 16 daily titles, 36 paid weeklies, 40 free weeklies, two Metro franchises and a number of niche products including magazines.
Trinity Mirror acquires 20 per cent stake for £14.2m
Montgomery made chairman and Auckland new chief executive
The sale of Northcliffe Media and Iliffe News & Media to a new joint venture called Local World was confirmed this morning.
Yattendon, owners of Iliffe, will receive a 21.3 per cent shareholding in Local World, becoming the second largest shareholder behind Northcliffe owners DMGT, which received £52.5m cash and a 38.7 per cent stake in the company.
Regional rival 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.
Former Trinity chief executive David Montgomery is chairman of the new company and Northcliffe managing director Steve Auckland is its new chief executive.
The board will include Yattendon CEO Edward Iliffe, COO Lisa Gordon, Trinity chief executive Simon Fox and finance chief Vijay Vaghela.
On a pro forma basis, Local World would have reported revenues of £273m and operating profit of £21m for the twelve months ended 30 September 2011, and would have had gross assets of £38 million at that date.
The transaction is expected to complete around the end of the year after “employee consultation procedures” have taken place.
Local World claims that it will be valued at around £100m on completion and will employ more than 2,800 people.
It said the company will have 16 daily titles, 36 paid-for weeklies, 40 free weeklies, two Metro franchises and a number of niche products including magazines.
Titles include the Cambridge Evening News, Leicester Mercury and Hull Daily Mail. The combined print portfolio is said to have a weekly reach of six million people.
It will also run a combined portfolio of 63 local websites with a monthly audience of more than 7m unique users.
The company said it was “committed to accelerating digital audience growth” and that it will invest £10m into its online operations.
The new company will rely on digital for 8.4 per cent of total revenue and 11.2 per cent of advertising revenue at launch, and said it aims to more than double its digital revenues to 20 per cent of the total.
Montgomery said: “This is an entirely new type of media business. The value of Local World will lie in its people, its franchises and its IP. It will be unencumbered by the infrastructure of the industrial past such as property, printing presses and large scale distribution or any legacy issues such as high levels of debt. Local World signals the fightback in Britain’s regional media industry.”
Auckland said: “Local World is a new beginning with a team dedicated to growing the local markets they serve. Our plans give us a real opportunity to produce a business that is positive, engaging and a pleasure to work with. This takes time, dedication and brilliant execution, and is somewhere everyone in media would want to work.”
Simon Fox, Chief Executive of Trinity Mirror, commented: “Alongside our continued focus on the creation of One Trinity Mirror, our investment in Local World reinforces our commitment to local media and enables us to participate in a compelling business opportunity with the consolidation of two strong local media businesses.
“In addition, the investment builds on Trinity Mirror's existing commercial services for the provision of contract printing and national advertising sales to Northcliffe. We look forward to working with the Local World team.”
Northcliffe has been part of the DMGT-owning Rothermere's family's media empire since 1928. DMGT last tried to sell Northcliffe in 2005 with bids expected to start at £1.2bn. That process was abandoned in 2006 after failing to achieve a high enough price.
Northcliffe is current the fourth biggest regional newspaper publisher by total weekly circulation – with 84 titles and combined weekly circulation of 4.5m. Iliffe is ranked 11th and has 42 titles with a combined weekly circulation of just of 840,000.
Local World will still rank fourth in terms of overall circulation behind other regional press giants Trinity Mirror (9.6m weekly circulation), Newsquest (6m) and Johnston Press (5.5m).