There was only going to be one winner in the dispute between National World chairman David Montgomery and its major shareholder, Media Concierge owner Malcolm Denmark.
The background is top line figures showing National World underperforming in profit terms relative to its peers Reach and Newsquest.
But more consequentially there has been an ugly dispute over commissions paid by National World to Media Concierge’s UK national sales operation Mediaforce. This resulted in National World moving its national sales operation to a partnership with Reach.
Then there was Montgomery’s ambition to buy The Telegraph at a premium price that would add little to shareholder value.
Denmark had little choice but to react. And with the National World share price on the floor, Denmark made his move in December proposing buying all the shareholders out for 23p a share, 8p higher than where the share price stood.
The £65m purchase price is just over two-thirds annual revenue and seven times annual profit at the UK's third largest regional news media group.
The move comes at a time when Reach, the UK’s largest national/regional publisher, has seen an increase in its share price of 26% due to better-than-expected profits.
Meanwhile Henry Faure Walker, the chief executive of the UK’s other major regional media player, is “more confident than I ever have been in the last 22 years about the prospects for publishers".
David Montgomery career pre-National World
Montgomery enjoyed a successful career as a journalist, rising through the editorial ranks of Mirror Group and News Corp ultimately becoming editor of the News of World. He later became an executive at News Corp and then chief executive of Mirror Group.
I encountered him there when I was responsible for the introduction of digital services across the Mirror Group’s regional titles. In my 48 years in the industry, I have rarely met such a difficult leader.
It was only a couple of months after our encounter that “after an acrimonious boardroom battle during which he lost the confidence of major shareholders” and its chairman Victor Blank, he left, opening the doors for a takeover by Trinity led by the infinitely more affable Philip Graf.
Montgomery then went on to concoct pan-European publishing company Mecom backed by the American private equity firm Veronis Suhler Stevenson, buying up titles in Germany, the Netherlands, Poland and Norway. But in direct parallels with National World, after initial excitement among shareholders, the value of the business started to decline.
Time and again, at international news media events, I would hear Mecom executives complain about Montgomery. Then he lost the confidence of shareholders and left the Mecom board before it was sold to the Belgian company De Persgroep.
Malcolm Denmark: A MED 1 A man
Malcolm Denmark’s track record couldn’t be more different. Back in the mid-eighties, as a sales manager at a regional publisher, he pioneered the concept of a disparate regional press coming together in terms of their national sales representation, in the shape of Mediaforce. His timing perfectly coincided with a parallel consolidation of advertising agency media buying operations.
It wasn’t long before his BMW boasted the registration MED 1 A.
Having established the newspaper advertising sales operation, he went on to launch The Insert Company which exploited the newly found ability of newspapers to insert supplements and leaflets into their main newspaper jacket.
The Leaflet Company was launched in 1986 and is now the largest distributor of unaddressed mail in the UK, with a comprehensive database of household information enabling precise targeting with data benefiting from both generic and news-media clients’ databases.
More recently Denmark has been acquiring local media companies across Ireland, establishing Iconic Media as one of the largest news media players in the Irish market, with 20 local newspapers, 23 websites and 5 million unique users. The acquisition of National World will add the Belfast News Letter to its Island of Ireland portfolio.
Along the way he has become a successful racehorse owner in both the UK and Ireland including wins at the Cheltenham Festival.
National World takeover will prepare it for 'more successful and competitive environment'
Today Media Concierge’s turnover is £113m, compared with National World’s £88m. Denmark has created a new vehicle, Neo Media Publishing Ltd, wholly owned by Media Concierge, to facilitate the purchase of National World.
The takeover by Media Concierge brings a range of opportunities. The most significant relates to Media Force’s experience with household data. This, combined with the skills and experience of National World chief operating officer Mark Hollinshead and head of strategy Alan Renwick, is where the opportunity for value creation lies. Aside from my feelings about Montgomery, National World is stacked with talented executives.
Media Concierge’s acquisition takes the company into private ownership, relieving it of the day-by-day pressures of the stock market. Then there is the issue of culture. Malcolm Denmark has always aggressively defended the interests of his company externally, but internally he is a popular leader who has encouraged a happy and loyal workforce.
This move will could for a positive workforce in a more successful and competitive environment - at a time when the news media industry is experiencing a new-found confidence.
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