For GMG, though, it’s less clear. Does the disposal allow the group to concentrate on the march towards digital dominance spearheaded by the Guardian brand? Or perhaps GMG has just decided that the ‘cash cow’ role of the regionals simply doesn’t work any more in the new media economy, and it’s better off without the distraction. Whatever the case, my money is on a rise in the number of deals amongst the major publishers following the TM-GMG shuffle, as more try to optimise the geographical ‘sense’ of their sometimes disparate and accidental portfolios.
The acquisition of the Manchester Evening News by Trinity Mirror – publishers of my old paper the Birmingham Post – has baffled some of my former colleagues.
Why would Guardian Media Group, MEN’s owner, sell the very cash cow that existed only to keep the venerable – and loss making – Guardian newspaper alive?
Moreover, why would Trinity Mirror embark on yet another bout of corporate indigestion as they attempt to swallow yet another acquisition, with all the financial, cultural and managerial angst that goes with it.
I remember (yes dear reader, because I was there) spending many of the early years of this century as part of the team that was charged with incorporating the old Southnews group of weekly newspapers in London and the Home Counties into Trinity Mirror’s southern business.
That October 2000 acquisition came with a £285m price tag for around 60 free and paid-for newspapers (no one bought websites then – don’t you remember the dotcom bubble?). The deal announced this week, in which Trinity Mirror gets the Manchester Evening News, the Reading Post and a stable of other regional titles and websites for less than a fifth of that price. The Southnews deal came back to bite Trinity Mirror, as the early noughties advertising slump forced it to post a considerable write-down against the acquisition just a few years later.
Of course, the very economic foundation of the regional newspaper industry has shifted irreversibly since then, so comparisons are probably unfair.
However, back to the key questions: what do GMG and Trinity Mirror get out of the deal?
For the latter, I think it’s pretty clear. With declining revenues and circulation, another round of consolidation is probably an inevitable strategy for the biggest groups, whose scale demands that de-duplicating resources and cutting costs are required to counter the exodus of readers and advertisers. There’s also a very handy strategic regional fit for the Manchester titles alongside Trinity’s existing Merseyside titles.
For GMG, though, it’s less clear. Does the disposal allow the group to concentrate on the march towards digital dominance spearheaded by the Guardian brand? Or perhaps GMG has just decided that the ‘cash cow’ role of the regionals simply doesn’t work any more in the new media economy, and it’s better off without the distraction.
Whatever the case, my money is on a rise in the number of deals amongst the major publishers following the TM-GMG shuffle, as more try to optimise the geographical ‘sense’ of their sometimes disparate and accidental portfolios.