By Steve Busfield: The Daily Telegraph today quotes Numis analyst Lorna Tilbian as saying that Trinity Mirror‘s deal to buy Guardian Media Group‘s regional newspapers as “the deal of the decade”.
The sale – which ends a 142-year association between The Guardian and the Manchester Evening News – was also described as a “win-win” by Douglas McCabe of Enders Analysis: GMG focuses on core business, while Sly Bailey’s Trinity Mirror (LSE: TNI) makes synergies and savings. In due time the staff and readers of the MEN and the other papers will make their own judgment.
The Telegraph highlights the “just £7.4 million” cash Trinity Mirror paid for the 30-or-so regional newspapers. (GMG also pointed to the £37.4 million it would no longer have to pay over 10 years to print its regional papers)
As the decade is only six weeks old, I guess there is a very good case for describing this as the “deal of the decade”. In media terms at least. In a wider business sense it was certainly a lot cheaper than Kraft’s £12 billion acquisition of Cadbury in January (although the 830p per share offer in that deal was significantly under the £10 per share some hoped for).
As Jon Slattery points out in a handy list of recent regional news newspaper deals, it is certainly a lot cheaper than past acquisitions. Just eight years ago Johnston Press bought Regional Independent Media’s 53 titles, including the Yorkshire Post, for £560 million. Given that Johnston Press last year agreed a £485 million refinancing deal as pre-tax profits fell 56%, what are those newspapers worth now?
In 2005 DMGT contemplated selling its 100-plus regional and local newspapers, estimated to be worth up to £1.5 billion. A deal never happened, partially because the group would have had to be broken up to avoid Competition issues. Given that DMGT today reports revenues down 15 percent to £73 million at Northcliffe Media, what would they be worth today? And if Trinity Mirror wanted to buy them, would the Competition Commission allow it?
This article originally appeared in © Guardian News & Media Ltd..
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