By Jon Slattery, Dominic Ponsford and Sarah Lagan
The Daily Mail and General Trust’s move to abandon the sale of Northcliffe Newspapers has met with mixed reaction from the group’s journalists.
For some there is relief that the paper has not fallen into the hands of a new company determined to strip out costs and break up the group.
Others believe that DMGT will have a hard job rebuilding morale within Northcliffe, after showing it was willing to dispose of the group for the right price. There is also suspicion and anxiety among journalists about whether the extra savings DMGT says it has identified within Northcliffe will put a financial squeeze on editorial.
One Northcliffe journalist said: "Some feel better the devil you know, but a lot of people think that we’d rather be owned by a company that really wanted us.
"A statement [to the stock exchange] said that a restructured Northcliffe ‘will deliver greater value to shareholders than a sale’, so I think we can look forward to more cost cutting, more redundancies and, we would say, more serious implications for the editorial quality of the papers that Northcliffe produces."
In the stock exchange statement, DMGT said it had received three "substantial offers" to buy Northcliffe as a whole and other proposals to buy specific titles. It said the bids did not "fully reflect the long-term value of the business".
Northcliffe’s value had been estimated at around £1.5 billion, but bids for the company are said to have not been more than £1.3 billion.
DMGT said a strategic review of the Northcliffe division meant it had identified "further significant cost and revenue opportunities" in the group.
DMGT finance director Peter Williams told Press Gazette: "We had three substantial bids, which we regard as an affirmation of the regional press, but trading is soft at the moment and that gave bidders the opportunity not to be as aggressive as they might have been.
"From day one we said we were not necessarily going to sell this business; no one believed us, but that was the truth.
We went into this saying we have to get better returns out of this business for our shareholders one way or another.
"As we’ve gone through this we’ve seen lots of ways that we can. Our assessment of Northcliffe’s value to us has gone up at a time when its value to outside parties seems to have gone down because of short-term trading."
Williams said it was "too simplistic to say that we are just going to slash the costs". Two of the savings Northcliffe is making are not to proceed with a major new printing plant in North Lincolnshire and to close the one in Lincoln.
Williams told Press Gazette that he could not "rule out" that parts of Northcliffe could still be sold.
"We said we only wanted offers for the whole business and we have said we received offers for part of it. If there are individual parts of it that other people value more highly than us, then we have an obligation to consider those offers.
"We are not going to make any kneejerk reaction here. I have never ruled out that possibility and nothing has changed."
He confirmed that the company’s Aim Higher cost-saving programme would continue.
Some observers believe that a complicating factor for any bidder was that Northcliffe still has a final salary pension scheme with a deficit.
Media analysts believe Northcliffe felt the price offered didn’t reflect the cost savings already made by the company through Aim Higher.
One who spoke to Press Gazette said that a lot of work was done with prospective bidders and that while doing this, Northcliffe may well have discovered further cost savings that it believes make the company worth hanging on to.
One expert told Press Gazette: "It is probably disappointing for them because they were looking to develop the business or exit it. They took the decision to sell after finding that the opportunities to expand the business weren’t offering the sort of value they were looking for."
The NUJ criticised Northcliffe for the impact the on/off sale has had on staff.
NUJ national organiser Barry Fitzpatrick said: "I think it’s deplorable that Northcliffe has created such uncertainty among the staff.
"They picked the worst possible time to dispose of the company, given the conditions in the market at the moment, and they probably overpriced it."
NUJ general secretary Jeremy Dear added: "Now, after months of uncertainty, staff have to look forward to yet more uncertainty as managers try to find further cuts to reward shareholders."
The decision to put Northcliffe on the market last November was a shock for the regional newspaper industry.
Northcliffe makes profits of £100 million a year and has been part of the Daily Mail group for more than 70 years.
One insider described the Northcliffe titles as the "crown jewels" of the regional newspaper sector. The fact that DMGT is hanging on to Northcliffe rather than selling it cheap has been interpreted by some as a vote of confidence in the regional press.