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Summary:

The industry has been ravaged by cutbacks and an ad downturn. Now three UK local news publishers confirm they are coming together to improve digital news. But can they deliver on the promise?

The UK’s local news super roll-up is on. Three publishers on Wednesday announced their formation under the “Local World” banner, promising to improve historically underwhelming online offerings, inject social media in to print and profit from a post-banner “content-and-commerce” mix.

The long-awaited consolidation could be game-changing. DMGT’s Northcliffe Media and Yattendon Group’s Iliffe News & Media are merging in to the new entity, in which Trinity Mirror’s regional papers are also taking a stake.

Local World will comprise 107 newspapers and 63 news portals, chaired by former Mecom CEO David Montgomery (pictured left) and led as CEO by current Northcliffe CEO Steve Auckland (pictured right). Speaking with journalists, Montgomery declared:

“We’re going to stop the trend of cost reduction for the sake of cost reduction in the local and regional business. We’re going to grow our business and invest in people. It will be more efficient but there will be more people doing content and sales. We’re preparing for a fightback.”

That’s fighting talk. So how will he “re-invigorate” local publishing?

  • Local World is promising a £10 million investment in digital, though the exact investment areas are not specified, and that figure may still be significantly short of what is necessary to improve local newspaper websites that have often been lacklustre.
  • Auckland speaks of being “a one-stop shop for content and commerce”: “That is not just a glib line. It’s key that we get scale. We’ll not do it through banners and buttons, that’s not going to get us where we need to get through.” He is keener on online “directory services”. Yet that is exactly the kind of business which is so troubling Yellow Pages publisher Hibu.
  • The outfit wants to double its digital revenue from 8.4 percent of the total today to 20 percent — but in an unspecified time period.
  • Local World says it will bring better audience targeting to bear for advertisers.
  • There is no mention of online classified ad sales at all. Trinity Mirror’s extensive network of online property, recruitment and motors sites will not form part of Local World because Trinity Mirror is not being sold to Local World. But Northcliffe’s own equivalent classified sites will continue to operate after Northcliffe’s absorption in to Local World.

The local newspaper market has been a bloodbath in recent years. At the height of the downturn, I reported how the main UK local publishers lost a quarter of their revenue within a year, responding by cutting 15 percent of their costs including a fifth of their staff.

Given Montgomery’s reputation for cutting, many will wonder if this won’t continue to be the way he makes Local World leaner and fitter for purpose. Speaking to journalists, Montgomery was upfront about the need to change further, but wielded no axe:

“That will involve changes in how people go about publishing. Jobs are going to change fairly dramatically in this industry. I fervently believe the quality of people is increasing all the time. The response will be devolved to individuals at the local level. Individually, they will be doing much more self-publishing, there will be a re-organisation to facilitate that.”

Auckland said the entity does not plan to close papers, merger papers in to regional roll-ups or alter publication schedules within the next six to 12 months:

“These titles in maybe 10 years time, a lot will be weeklies or monthlies. But … not at this stage.”

On mergers: “Not at all, completely the reverse. We really want to concentrate on local areas. The clue is in the name.”

The deal structure:

  • DMGT is receiving £52.5 million in cash and shares for its Northcliffe Media, comprising 80 papers, and a 38.7 percent stake in Local World.
  • Trinity Mirror is paying £14.2 million for a 20 percent stake whilst putting in its regional portfolio.
  • Iliffe News & Media owner Yattendon Group will get a 21.3 percent share, cash component not disclosed.
  • Odey Asset Management and the Artefact Group fund are also putting money in.

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  1. “We’re going to grow our business and invest in people.” They all say that. That is why it is called a ‘cliche’. 12 months down the line employee numbers will have dropped around 30% and many will be made freelancers – if they are lucky. Tip: if you haven’t heard what is happening to you in three months, find another job.

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