Local World was launched by David Montgomery three years ago with a promise that it signalled the start of “the fightback in Britain’s regional media industry”.
And while much else that Monty has said since then was pretty much barking mad, he was right about that to a certain extent.
The deal which created Local World, out of the merger of the Northcliffe and Iliffe regional newspapers groups, valued the new entity at £100m.
Today, Trinity Mirror’s take-over makes it worth £220m.
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The figures do not lie, there is a growing value in local press journalism and we should be grateful for that. We are probably in a much better place today in regional newspapers than many had expected us to be back in 2008 when the classified advertising market collapsed.
But I fear that lovers of the regional press should not be doing cartwheels over today’s deal.
The purchase price is 5.5 times the annual operating profit of Local World. It is not the price tag of a trophy asset which Trinity Mirror expects to grow, but a realistic figure based on short-term profit return.
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By contrast, Financial Times Group made considerably less profit than Local World last year (£24m) but commanded a purchase price from Nikkei of £844m (35 times annual operating profit).
Trinity Mirror has already announced its intention to shave £12m a year off Local World’s annual running costs, with £3.2m to come out of journalism budgets (referred to as content creation).
Local World’s chief David Montgomery promised to revolutionise local newspaper journalism through new technology. He said there would be a 20-fold increase in the amount of content produced by individual journalists, he said newspapers would be created by "individuals skimming online content", he said “we will harvest content and publish it without human interface”.
As it turned out most of Montgomery’s ideas to turned out to be the far-fetched whimsy of someone who had been away from the coalface a little too long.
But Local World did relaunch the unremittingly awful Thisis…wherever network of Northcliffe regional press websites and replace them with sites produced under the mastheads of the group’s local newspapers. It is also modernised and made the sensible changes that most regional publishers are now making, with increased focus on digital, social media, metrics and content optimisation for online.
Unlike Trinity Mirror, Newsquest and Johnston Press – Local World has not made drastic cutbacks over the last three years. Instead it mainly appears to have cut editorial costs through non-replacement of staff, rather than redundancies.
Sadly, Trinity Mirror’s early announcement of planned cost savings at Local World suggests more drastic measures may be on the way.
While Montgomery deserves credit for building Local World into a dynamic, growing and profitable regional media organisation in a tough market – far from revolutionising the regional press, his project has ushered in yet more of the same old consolidation and cost-cutting.
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