‘Regional newspapers need to change their business models and they need to do so quickly’

David Elms is head of media at KPMG

The long expected consolidation of the UK’s regional newspaper market might finally be on its way.

Last month, Yattendon, the media and property group, confirmed it is in talks with the DMGT to acquire its regional newspaper division Northcliffe.

The deal, led by David Montgomery, the former Mirror CEO, would reportedly value Northcliffe at about £100m. The transaction would establish a new company, called Local World, bringing together Northcliffe’s 84 regional titles with more than 30 titles from Yattendon’s local media business.

Nothing is cast in stone yet and both sides have warned the deal might still fall through. However, the talks show that the pace of consolidation in the sector is accelerating and that today alliances and partnerships are being discussed that would have been unthinkable a few years ago.

The fast growing competition from digital combined with the recession has forced media businesses into challenging their business models and making tough choices. The UK’s regional newspapers have been particularly under pressure.

Their traditional generators of income – classified advertising for cars, property, and jobs – have largely migrated on-line.

Add to this the cyclical impact of the recession and the overall outlook is not a good one.

Regional newspapers need to change their business models and they need to do so quickly.

The proposed deal could be a step into the right direction. However, in my view, future successful deals may need more scale.

Up until now regional newspapers have tended to react to the structural and cyclical challenges facing them with cost cutting measures.

I think a real step change and way forward would be the formation of a larger regional newspaper group, that covers the major UK conurbations and is therefore ‘national’ in its coverage and perspective.

A group of that scale would have the power to attract national advertisers as well as local advertisers.

It would be able to emulate developments in the UK radio industry where Global Radio has sought to develop national brands through its Heart and Capital networks.

A regional newspaper group of such scale could also share costs and streamline processes at an unprecedented level which will hopefully give it more capital and more options to invest into new business ventures.

As consumers continue to evolve their habits, this model is unlikely to be fully future-proofed, but it is a step in the right direction.