Local Press Merger Talks

Media analysts have focused on the prospect of further mergers and acquisitions in the still highly fragmented regional and local newspaper market, as Trinity Mirror confirmed this week it was in talks to buy the shares in Local World which it did not already own. Trinity Mirror and Local World each publish around 100 newspapers in print and digital.

Local World was founded in 2012 through the merger of Daily Mail and General Trust’s local news media division Northcliffe with Iliffe News & Media. Trinity Mirror currently owns 20% of the shares.

A statement from Trinity Mirror said: “The board of Trinity Mirror plc notes the recent media speculation and confirms that it is in discussions with Local World Holdings Limited for the potential acquisition of the shares not already owned by Trinity Mirror plc. There is no certainty that any agreement will be reached.”

It is widely recognised that creating publishing organisations with greater local scale is the single most effective way to sustain a healthy local newspaper sector and maintain editorial plurality. 

Media consultants Oliver & Ohlbaum Associates (O&O) said in their recent report on UK news provision: “The local and regional news sector is arguably one of the most uniquely valuable parts of the overall UK news ecosystem and one of the areas most under economic pressure. Generating news coverage across a network of c.1,100 print titles and a larger number of associated websites requires a commitment to newsgathering resources and journalism that is hard for other parts of the UK news market to effectively replicate. 

“The main players in local and regional news have all had to respond to significant commercial headwinds over the last 10 years, but they continue to be profitable and continue to publish a wide range and diversity of output on a daily basis… While the model is under pressure it is not demonstrably broken. The number of published titles and scale of print paginations continue to be maintained, the number of online news sites has increased and consumers are more engaged with local news media than has been the case for a long time. The challenge is to find a sustainable ecosystem for local news that maintains all its traditional strengths while recognising that the internet is creating a much more diverse and vibrant local market in news and information provision.”

In a report last week, the Sunday Times said: “More tie-ups are seen as a necessity for local journalism to prosper in the era of smartphones and ubiquitous internet access.”

Advertisers were pouring money into social media sites such as Twitter, Facebook and LinkedIn, part the £2.3bn spent on online display ads by businesses last year. “Grabbing a larger slice of this bounty will determine whether news publishers thrive in the future.”

The report said: “Armed with deep knowledge of their communities, local news providers have a powerful weapon to wield in the fight against the digital interlopers. ‘When consumers go to Facebook, they are thinking about their friends, not where they live. This is something that local publishers can use to their advantage,’ said [Douglas] McCabe [of Enders Analysis].

“Increasingly, they are selling print and online packages to local businesses. Digital ads can be tailored to readers, based on assumptions about age, location, marital status and income gleaned from their web surfing habits. ‘We may not have the deep insights that Facebook is able to garner from its traffic, but we do have a very powerful data capability we’re starting to harness,” said [Henry] Faure Walker [of Newsquest Media Group].

“Johnston Press has gone even further, offering local companies a ‘smorgasbord’ of digital services, said chief executive Ashley Highfield. These include building websites and bidding for search terms on Google on behalf of local businesses.”

The Sunday Times noted that local media operating profit margins had halved over recent years but still averaged at a respectable 13%. “That’s a level that Amazon and Tesco could only dream of,” said McCabe. 

O&O said: “Local media have had to cut costs and adapt to a competitive landscape… but the sector remains profitable and there are strong signs that revenues are stabilising.”