Trinity Mirror agrees to buy Express newspapers, profits seen higher

Daily Mirror publisher Trinity Mirror has agreed to acquire a portfolio of newspaper and magazine titles from Northern & Shell, including the Daily Express, Daily Star and OK! magazine for a total of £200m, including payments to pension schemes.

FTSE-listed Trinity Mirror and N&S owner Richard Desmond have agreed a total purchase price of £126.7m, with £47.7m of cash up front, £59m to be paid between 2020 and 2023, and the balance of £20m issued in new shares.

Trinity will also make a one-off cash payment of £41.2m to the Northern & Shell pension schemes and a recovery plan through to 2027 has been agreed with total payments of £29.2m.

The deal will be put to a shareholder vote on 27 February and if approved it is expected to complete on 28 February. It could also be referred to the Competition and Markets Authority on media plurality grounds.

Media plurality and the future of newspapers have been in the news this week, the prime minister’s decision on Tuesday to launch an inquiry into “the sustainability of Britain’s printed press”.

TRADING IN LINE

Trinity also issued a trading update on the past calendar year's trading, saying directors anticipate adjusted results for 2017 will be "marginally ahead" of consensus forecasts for adjusted operating profit and adjusted earnings per share of £121m and 34.6p respectively, with group like-for-like revenue expected to fall 9% year on year.

But total profits will be hit by higher than expected costs from setting phone hacking claims, in particular the legal fees, leading to a £3m increase in provisions for settling these historical claims by a further £3.0m to £10.5m for the full year.

"Although there remains uncertainty as to how these matters will progress, the board remains confident that the exposures arising from these historical events are manageable and do not undermine the delivery of the group's strategy," the company said, adding that 2018's trading performance is expected to be in line with current market expectations.

LEFT WING, RIGHT WING

Focusing on the N&S acquisition, Trinity chief executive Simon Fox said: "This deal is a really exciting moment in Trinity Mirror's history, combining some of the most iconic titles in the UK media industry. It is good for our readers, good for our customers and good for our shareholders. Northern and Shell's titles have a large and loyal readership, a growing digital presence and a stable revenue mix and offer an excellent fit with Trinity Mirror."

Speaking to the BBC later, Fox assured Express readers that "the Daily Express is not going to become left wing, the Daily Mirror is not going to become right wing".

As well as being 'right wing' and vehemently anti-EU, pro-Brexit and anti-immigration, the Express front pages have long looked to attract older readers with a constant stream of stories about new scientific developments in the fight against dementia, arthritis, Parkinson's and cancer or the best foods to eat to avoid or delay those diseases. Fox did not address this issue.

Desmond, who bought the Express newspaper titles for £125m in 2000 from UBM's former guise of United News & Media, added: "The Express newspapers and our celebrity magazine titles have been a key part of the Northern & Shell portfolio for many years, and I am immensely proud of building them into one of the largest newspaper and magazine groups in the UK.

"Today's transformational transaction is a logical and natural next step in the evolution and consolidation of the media sector and will create a larger and stronger platform serving all stakeholders. In Trinity Mirror we have a great partner, who will be an excellent steward of the business going forward and I am delighted to be able to retain an ongoing interest in the combined group."

UNIONS RAISE CONCERNS

One single pay increase in the past decade meant journalists working under Desmond "have been desperate for a new owner to provide the resources needed to help increase the readership and the success of the titles", said Michelle Stanistreet, general secretary of the National Union of Journalists.

"However, the NUJ is concerned that Trinity Mirror, with its long record of making cuts to its newspapers, will not be the knight on the white horse they were hoping for."

Consultations on the job implications of the deal are a priority, agreed trade union Unite.

“There is, no doubt, that Richard Desmond was one of the worst and most tight-fisted of the many Fleet Street proprietors over the decades," said Louisa Bull, Unite's national officer for the print industry. "His withdrawal from newspaper and magazine publishing won’t be mourned.

She said she had spoken to both groups on Friday morning but still had "real concerns that the merger of these two newspaper groups could have an adverse impact on the jobs of workers" and so requested urgent meetings with the new management for assurances on job security.

Stanistreet added that as the government starts an inquiry into the sustainability of the press, this takeover will have a dramatic effect on the national newspaper landscape and called for the Trinity not close any titles or remove independence of titles or choice for readers.

A spokesman for the Express Newspapers NUJ chapel said: "Our titles employ some brilliant journalists, but they have been starved of investment and pay rises in the past few years. If this takeover means that the papers and websites are going to be able to compete with rivals on a more equal footing, then we will welcome it.

"It is vital that Trinity Mirror gives cast-iron guarantees that there will be no editorial cuts or merging of editorial resources to ensure that the titles and their websites retain separate voices."