Trinity Mirror has agreed a £126.7m deal to buy a portfolio of titles from Richard Desmond’s Northern & Shell, including the Daily Express and the Daily Star.
The Daily Mirror publisher will also make a one-off cash payment of £41.2m to Northern & Shell’s pension schemes as part of the deal and takes a 50 per cent stake in the Irish Daily Star.
Northern & Shell chairman Desmond described it as a “transformational transaction” and “a logical and natural next step in the evolution and consolidation of the media sector”.
In total, the deal includes four national newspaper titles – the two dailies as well as the Sunday Express and the Daily Star Sunday – and celebrity magazines Ok!, New!, and Star, as well as their associated websites.
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The deal is expected to be completed by 28 February, pending approval by shareholders who have been recommended to pass it.
Trinity Mirror chief executive Simon Fox said: “This deal is a really exciting moment in Trinity Mirror’s history, combining some of the most iconic titles in the UK media industry.
“It is good for our readers, good for our customers and good for our shareholders.
“Northern and Shell’s titles have a large and loyal readership, a growing digital presence and a stable revenue mix and offer an excellent fit with Trinity Mirror.”
Trinity Mirror has said the acquisition will deliver £20m in cost savings by 2020, largely through reduced duplication and improved content sharing.
Fox told the BBC: “There will over time be job cuts, because we are going to remove duplication, mainly in back offices functions. We are bringing two very similar businesses together and when you do that, inevitably there is a certain amount of duplication.”
He said, however, that the publisher’s more than 100 regional newspaper titles will not be affected by the deal, adding: “Trinity Mirror, as a group, makes over £120m and we are absolutely committed to continuing our investment in our great regional titles both in print and digitally”
The Daily Express and Daily Star newspapers have a combined daily circulation of more than 750,000, although Fox acnowledged that circulation figures were “under pressure”.
He said: “That’s exactly why consolidation is a necessary part of our strategy and we have always said that we will be stronger by being bigger, we will be stronger by coming together.”
Fox added: “From the journalism perspective, by pooling our resources, instead of, for example, sending two reporters from two titles to the same football game, we can send them to two different games and get more breadth of coverage.”
He said that editorial decisions would be left “entirely in the hands” of editors and that the titles would retain their editorial independence, adding: “The Daily Express is not going to become left-wing, the Mirror is not going to become right-wing.”
The Express.co.uk and Dailystar.co.uk websites achieved 280m page views in December 2017 compared to 649m for Trinity Mirror websites (excluding apps and galleries).
Following the buyout, the new group will have a combined digital audience of 234m monthly unique browsers (excluding apps), Trinity Mirror has said.
Northern & Shell’s titles were said to have “performed well in 2017 despite continued pressure on its print advertising revenues” with total revenues (after separation adjustments) estimated to have “marginally increased” for the year, according to a statement announcing the deal.
Northern & Shell’s adjusted earnings before interest, taxes, depreciation, and amortization (after separation adjustments) is estimated to be about £34m.
Desmond said: “The Express Newspapers and our celebrity magazine titles have been a key part of the Northern & Shell portfolio for many years, and I am immensely proud of building them into one of the largest newspaper and magazine groups in the UK.
“Today’s transformational transaction is a logical and natural next step in the evolution and consolidation of the media sector and will create a larger and stronger platform serving all stakeholders.
“In Trinity Mirror we have a great partner, who will be an excellent steward of the business going forward and I am delighted to be able to retain an ongoing interest in the combined group.”
Trinity Mirror’s board has said the acquisition of Northern & Shell titles will “create a media business of scale” to better serve readers and advertisers.
It said this would allow the group to “improve its print and digital editorial propositions by reducing duplication, sharing content and widening the breadth of editorial coverage with larger combined teams”.
It said the deal is “financially compelling” and will “deliver attractive returns to shareholders” as the enlarged group will “have a more robust revenue mix” and “less reliance on print advertising”.
Desmond will continue to be a 10 per cent shareholder in the group, but Fox told the BBC he would have “no ongoing involvement in the business” other than that and no say on editorial matters.
Trinity Mirror settled a phone-hacking claim with Hugh Grant on Monday, apologising for intercepting the actor’s voicemails and procuring private information about him over a ten-year period. Grant received a six-figure sum in damages.
Fox told the BBC that this illegal activity was “fortunately long in the past” but that it had been a “dark period” in the publisher’s history.
He said: “I’m pleased to say the editorial standards today are completely different to what they were some time ago. I wasn’t part of the company then. The consequences are clear. We are working our way towards the end of the civil cases.”
Read Press Gazette’s thoughts on the buyout.
Picture: Yui Mok/PA Wire
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