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Trinity Mirror to take full control of Local World in £220m deal

Simon-Fox-2-croppedTrinity Mirror is to take full ownership of rival publisher Local World in a “transformative” deal which will make it the biggest local newspaper company in the UK.

The deal, which values Local World at £220m, will see the newly-merged operation control local newspaper publishing in most of the biggest UK centres of population.

Trinity Mirror already owned the Manchester Evening News, Liverpool Echo, Birmingham Mail, South Wales Echo and Newcastle Chronicle as well as several other big regional dailies.

Now it will add the Leicester Mercury, Hull Daily Mail, Nottingham Post, Bristol Post and Derby Telegraph to its portfolio of big-city titles – giving it 13 of the top 20 selling regional dailies in the country.

But the deal will not include the Cambridge News and other LW-owned weekly titles in Cambridgeshire and Hertfordshire, which are to be returned to their former ownership under Lord Iliffe.

Iliffe is to pay Trinity Mirror £15.8m to re-acquire the titles, which were originally sold to Local World in 2012.

Trinity Mirror has owned 20pc of Local World since the company was created from the merger of Northcliffe Media and Iliffe News and Media three years ago.

It is now paying £154.4m to buy the remaining 80pc shares, valuing Local World on a debt-free cash-free basis at £220m.

Trinity Mirror will also take on debt, capital and debt-like items of around £27m and will incur some £6m of transaction costs at completion, which is expected to take place on 13 November.

The deal will see Local World chief executive David Montgomery leave the business, but chief operating officer Rachel Addison will stay on in a new role of managing director, Local World, reporting to TM chief executive Simon Fox.

In a statement, the TM board said the deal would transform Trinity Mirror into the UK’s largest regional news publisher, create a “stronger and more resilient organisation,” enhance its digital reach and deliver “cost synergies” of asround £10-12m.

It said it expected the purchase to be “earnings enhancing” in the first full year following the acquisition.

Simon Fox, pictured, said: “This is a good day for local media. Local World is a business we know and respect and by combining it with Trinity Mirror we will create an organisation of scale, with the talent and financial capacity to invest and adapt to the rapidly changing media landscape.

“It is a vote of confidence in local press and its future.”

David Montgomery added: “Local World was founded three years ago with a clear vision to reinvigorate regional media with an unrelenting focus on our content, audience and advertisers. I am proud of what we have achieved.

“Local World is full of energy and talent and Trinity Mirror is acquiring a vibrant business with a strong future. I want to take this opportunity to thank everyone who has made Local World the success it is today.”

Trinity Mirror is funding the deal from a variety of sources including cash resources, borrowing and issuing new shares.

The overall costs of £187m – including the purchase price and the transaction costs – will be met from £80m borrowing, £67m in cash resources, and £40m in share issues.

Local World’s print portfolio comprises 83 print publications including 16 dailies, 2 Metro franchises, 36 paid-for weeklies and 29 free weeklies.

Its portfolio of websites attracted 24m monthly unique browsers and approximately 167m monthly page views in June 2015.

The disposal of LW to Trinity Mirror has largely been driven by DMGT, the biggest shareholder in the company with a stake of 38.7pc.

It has long wanted to see consolidation in the UK regional newspaper market, while making clear that it would not be the consolidator.

In a statement to shareholders today, DMGT said:  “DMGT has been a shareholder in Local World since its formation on 30 December 2012. During that time, Local World has generated positive returns for its shareholders. In the year to 30 September 2014, DMGT’s share of Local World’s operating profits was £15m.

“The combination of Trinity Mirror’s and Local World’s assets will create the largest regional news publisher in the UK. The enlarged business will benefit from Trinity Mirror’s track record of successful cost management, creating scope for cost synergies.”

59 comments

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  • October 28, 2015 at 8:47 am
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    What next Newsquest and JP ?

    Lord L must have more money than sense to buy back , he should have taken the money and ran.

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  • October 28, 2015 at 9:02 am
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    Simon Fox said: “This is a good day for local media”

    Yeah, giant monopolies squeezing competition out of the market is always good, isn’t it?

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  • October 28, 2015 at 9:11 am
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    Must be right terrified in Cheltenham this morning. Chins up, folks!

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  • October 28, 2015 at 9:16 am
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    Does this now pave the way for Iliffe to sell off to Archant, which has always cast an envious eye over Cambridge?

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  • October 28, 2015 at 9:27 am
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    “Cost synergies” presumably means getting rid of staff where their duties overlap. Hope, though, I’m wrong about that.

    Happy New Year, everyone.

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  • October 28, 2015 at 9:44 am
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    and the transfer to happen on Friday the 13th! Ominous, Prophetic or by Design???

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  • October 28, 2015 at 9:52 am
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    Cannot see the point in Iliffe buying back Cambridge…for vanity maybe, but not profit.

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  • October 28, 2015 at 9:56 am
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    I can think of one person who won’t be affected by “cost synergies”.

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  • October 28, 2015 at 10:02 am
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    This buyout is just a money making move to net those in the know millions. It will do nothing for newspapers, communities, or the UK economy as a whole.
    This is corporate capitalism which will destroy the United Kingdom unless people wake up to what is going on across all sections of the economy.

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  • October 28, 2015 at 10:07 am
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    From the full press release via the Local World site.

    “The Enlarged Group will benefit from Trinity Mirror’s track record of successful cost management, creating scope for cost synergies. Cost synergies are expected to arise through the implementation of Trinity Mirror’s tight management of the cost base, by deploying know-how learned during the delivering of historic structural costs savings in Trinity Mirror’s own regional businesses and through the integration and future operation of certain activities on a group-wide basis across the Enlarged Group. It is anticipated that cost savings will be achieved following the Acquisition, amounting to an annual recurring £12 million before tax from the second full year after the Acquisition (assuming the Proposed On-Sale referred to below does not complete, or £10 million per annum if it does). The cost savings are expected to accrue in the areas of content generation (£3.2 million), advertising cost of sale (£2.3 million), digital costs (£1.6 million), printing and distribution (£1.4 million), and management and central costs (£3.5 million).

    It is anticipated that total non-recurring costs of £11 million will be incurred during the first and second year of ownership in order to deliver these cost savings.

    The synergies identified above reflect both beneficial elements and relevant costs that will arise as a result of the Acquisition. These synergies are contingent on the Acquisition and could not be achieved by Trinity Mirror and Local World operating independently.”

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  • October 28, 2015 at 10:07 am
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    On another note, can we please request a Tera upgrade/replacement?

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  • October 28, 2015 at 10:30 am
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    ‘Cost savings’ usually means redundancies sadly as well as centralisation. But perhaps what is worrying is the digital roll out which started with the loss of the hard copies of the Reading papers. If TM controls so much of the regional press, it’s only a matter of time until actual newspapers disappear from our local shops and streets, particularly in areas that TM considers commercially weaker. Time for subs to start considering their career options?

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  • October 28, 2015 at 10:54 am
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    @I Got Out Alive: I think it’s time for EVERYBODY to start considering their career options.

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  • October 28, 2015 at 11:00 am
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    Archant have enough on their plates already fire fighting the papers and staff they’ve got without crashing into another county
    More like TM will be taking them over in time if they’re really really desperate , two words of warning though TM “Mustard tv”

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  • October 28, 2015 at 11:08 am
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    Talented, hardworking journalists, including executives, at the Nottingham Post, Derby Telegraph and Leicester Mercury start clearing your desks. What price one regional editor for all three and major cost-cutting (redundancies)?

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  • October 28, 2015 at 11:08 am
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    I think I know what a ‘cost synergy’ is: me, an ex-Trinity journalist.

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  • October 28, 2015 at 11:10 am
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    I hope the papers don not lose all their local character as happened when JP squeezed the life out of its papers with truly awful and under-researched re-launches.

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  • October 28, 2015 at 11:12 am
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    Time to bend over and touch your toes, ready to be shafted again. Synergies=redundancies on their way.

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  • October 28, 2015 at 11:32 am
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    I know I’m being thick, but TM already has a pension-fund deficit of several-hundred million pounds and is not fulfilling its requirement in regard to pension contributions. And now it is taking on a further £80m in debt. I don’t understand……

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  • October 28, 2015 at 11:37 am
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    @Geoffrey – Archant already operates in both Cambridgeshire and Hertfordshire, so there wouldn’t be any ‘crashing’ into other counties. Believe it or not, there is a world outside of Norwich.

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  • October 28, 2015 at 11:45 am
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    I have 10 quid on the Western Daily Post & Observer launching by end 2016 – sorry Bath Chronicle; just cannot fit Chronicle or Bath into the masthead!

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  • October 28, 2015 at 11:53 am
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    Trinity Mirror which, at a stroke, destroyed most of the weeklies across Manchester, now intends to do the same to Local World, unless something that I missed has changed!

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  • October 28, 2015 at 11:58 am
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    All the cost-cutting. All those redundancies. All the great papers closed or turned into shadows of what they once were. All those good reporters and editors lain to waste. All the flannel about ‘a multi-million pound bond that needed paying back and we’re only making £20m profit so difficult decisions need to be made’.
    Throughout it all, the bosses were sitting on a £160m pot of gold which they have now used to make Trinity Mirror even bigger.
    But for what purpose? What’s the point in buying up Local World in order to cut it into the same kind of tiny pieces as the rest of the shambles they’ve made of newspapers?
    What good does this do for the industry?

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  • October 28, 2015 at 12:45 pm
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    What track record – they can’t be successful with what they have': It seems to me that decisions are being made by so called senior people who have no experience themselves.
    Just look at what is happening to the ‘Post’ – where’s the experience there, same people keep coming back – it is a further dark day for weeklies…….and the ‘Mail’ is going the same way. Even when there is a chance of improving circulation, nobody bothers, it is left to W.H. Smith and they don’t bother either. As a loyalist I try to get the ‘Mail’ every day but that is hit and miss and in fact I don’t mind the Black Country edition but Smith’s could not care less, even the newsagent is tearing his hair out with them””….waiting for a miracle, Ken Jackson

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  • October 28, 2015 at 12:54 pm
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    Well done “No Fun” for finding the full text of what the cost savings will be.
    You would think Trinity Mirror would be content just to receive 4 times the profit it’s already been getting as part of it’s 20 per cent stake. But then greed is a powerful hungry beast that needs constant feeding.
    It don’t take a genius (although clearly no-one on the TM board) to realise that if you tamper with a profitable business by cost-cutting you risk the very profits you were attracted to.

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  • October 28, 2015 at 1:26 pm
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    They won’t need the number of staff they have and will inherit, it’s obvious so expect restructures and reviews in the coming weeks with announcements before Christmas.

    More centralising of services and facilities will be the way forward but perhaps if they offloaded some of the ad people who don’t seem to be contributing much yet who incur vast expenditure to do so they might make sufficient savings to protect the ones who produce the content yet who usually appear first in the queue when the letters are handed out.
    Good luck all who will be affected by this “transformative ‘ merger

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  • October 28, 2015 at 2:09 pm
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    As a Northcliffe veteran who owes his career to the old group, this is a very sad day.

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  • October 28, 2015 at 2:45 pm
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    £3.2 million of planned cost savings on content generation and an editor of my acquaintance tweets that it’s “a vote of confidence in local media”. Is there a vacancy on Pravda if he becomes ones of the aforementioned cost savings?

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  • October 28, 2015 at 2:48 pm
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    Amid all the posturing Rachel Addison was – and I presume remains – one of the sharpest, soundest execs I know of at LW (admittedly a shallow talent pool). Good to see her at the helm and I wish her well and I hope she is allowed to shape a different strategy for the LW portfolio than was so patently obvious amid all the guff of the past 2-3 years when anyone with half a brain could see what the game plan was.

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  • October 28, 2015 at 2:51 pm
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    A little like it’s obligatory for Private Eye to print regular pictures of Andrew Neil in a vest and baseball cap, I do believe it is obligatory on these occasions to remind ourselves the price Lord Rothermere turned down for these titles not so very long ago. It was a little more than £220m.

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  • October 28, 2015 at 3:48 pm
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    Having seen local papers shrunk to the size of peanuts I cannot see why this has happened

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  • October 28, 2015 at 4:10 pm
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    I think history tells us that Mal Content is likely as not spot on and Archant will be front of the queue to snap up the Iliffe operation.
    Most recently Archant’s designs on the university city were apparent with their abortive attempt to launch a free weekly in Cambridge.
    This resulted in Iliffe bringing out their own free sheet leading to the Cambridge First and Cambridge Now face off, which made both companies look a tad ridiculous.
    Newspaper groups are the first to plead poverty when it suits them, but can always lay their hands on money when they want it.
    I already suspect that Anchant bosses view ownership of a Cambridge portfolio, already slimmed down by Local World, as a far more lucrative option than Mustard TV.

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  • October 28, 2015 at 4:39 pm
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    If two synergies make a good page lead, then we have little to be concerned about with this exciting news
    Unless, of course, you happen to work for Trinity Mirror or local World, where it is two synergies to every redundancy.

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  • October 28, 2015 at 5:49 pm
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    Good luck to everyone. I’m sorry to say there was a great portfolio of TM titles until the last few years. In order to save the pounds to aquire this deal, the papers became stripped back to a glorified facebook page. Less radio 2, more CB radio quality.

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  • October 28, 2015 at 6:20 pm
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    “TM already has a pension-fund deficit of several-hundred million pounds and is not fulfilling its requirement in regard to pension contributions. And now it is taking on a further £80m in debt. I don’t understand”.
    I do. One thing Local World still has is a fat pension fund. OK, they’ve finally closed it to newbies, but it’s still there…

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  • October 28, 2015 at 6:25 pm
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    Although…(thinks) it may be that DMGT kept the fund & just handed over Northcliffe to Monty. Can’t delete the above comment, so I’m qualifying it. Anyone from LW on here to say for certain?

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  • October 28, 2015 at 6:56 pm
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    The TM press release is pretty laughable, its a further nail in the coffin of local newspapers. Also LW actually run some papers into the ground it acquired in the merger (one is on its death bed right now)

    I think Iliffe getting some of its old papers back is a good thing as less of monopoly of newspaper companies and safe guards some of the jobs there. I feel sorry for any LW staff that will get “cost synergies” out of a job.

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  • October 28, 2015 at 9:19 pm
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    So why does Iliffe have to pay How much in Millions to buy back Cambs and Herts Titles when they were share holders in Local World and how many of us loyal workers for years got made redundant in January this year all for what !

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  • October 28, 2015 at 10:42 pm
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    Have I missed something here ? Synergies – this seems to be a recent ‘speak’. A horrible word.
    Also, can anyone explain the complex pension situation regarding all the recent synergies activity (mergers).

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  • October 28, 2015 at 11:08 pm
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    Just when you thought it couldn’t get any worse! Still, on the positive side, no Sly Bailey this time…

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  • October 28, 2015 at 11:33 pm
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    @johnners selling combs to bald men and ice cream to Eskimos is a better proposition than Mustard tv
    Watch it and weep

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  • October 29, 2015 at 7:53 am
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    So many people quick to criticise and fear the worst. Synergies don’t always mean job cuts, they can mean better deals for agency stories, for example.

    And unless i’m mistaken, of all the redundancies Trinity has made over the years, very few have been compulsory. So it’s fair to say most of those on here describing themselves as victims of synergies chose to go, and received enhanced redundancy terms as a result.

    To the doomsayers like Mike Lowe who say this is some sort of dark day for the papers he worked on, I ask this: What do you think is the alternative? And when will yesteryear’s editors start looking at themselves and admitting they were part of the problem when readers began abandoning ship long before the internet took hold?

    There’s a lot of sniffiness on here from people who clearly don’t spent time reading papers like the Coventry Telegraph.

    But of course, we can all hark back to a golden age, wish it was here again, and then pin all our hopes on it coming back. That’s a plan.

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  • October 29, 2015 at 9:32 am
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    It’s like standing in an old newspaper pub here sometimes; gloom, doom, pass me another scotch. Fact is LW was treading water. No real editorial strategy beyond squeezing the life out of a tired and inflexible online platform which was being suffocated by commercial short-termism. The titles are good, the editorial teams strong, albeit pressed. There is scope here to make a major a step forward.

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  • October 29, 2015 at 9:58 am
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    @ronald mc
    Compulsory or otherwise people have left the company/companies in droves,irrespective of whether jumped or pushed which equates to the same thing, less quality staff for less cost overheads.

    Those that remain know it’s only a matter of time before the pendulum swings their way and they become subject to ‘ consultation’ too
    , yes we can’t hark back to the golden days and yes many of the editors across the uk regional press sat back and watched it all implode whilst under their control choosing to do nothing about it or more likely arrogantly ignoring the real state if the budibess believing it was a temporary blip that would soon pass so are as much a cause of the problem than anyone and yes costs need to be controlled, it’s more now a case of where the cost cutting should come from which I’d hazard a guess will be mainly the journalistic side of the business as opposed to the ( lack of ) sales dept.
    Bandy target figures around as much as you like but in making the level of dashing a they state in the piece will not come without sone huge changes to the business which eill mean sever job cuts.
    TM are not interested in trying to revive the dying regional print industry single handedlu, their eyes will be on other forms of media little if any of which will include daily or weekly printed papers that have lost their audiences with no chance of getting enough back to make it viable .
    Interesting times and the start of a much bigger unfolding story

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  • October 29, 2015 at 10:03 am
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    @Glad – the pension fund for existing Northcliffe employees was retained by DMGT. LW staff were given the choice of transferring all their pension funds to a new scheme or staying put with the old one. I stayed put – thank God – but also started a new pension with LW. Hope that helps.

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  • October 29, 2015 at 10:15 am
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    @Ronald:Possibly people are ‘quick to criticise and fear the worst’ through experience. In my experience, synergies do mean job-cuts and not all of them are voluntary. People like Mike Lowe (I don’t think he said anything about dark days) are sad because this was once a worthwhile business to work for. There’s nothing wrong with that.

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  • October 29, 2015 at 2:13 pm
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    I see an ad old ad rep has chipped in which he’s entitled to do but it’s ironic as the ad reps incur vast costs yet fail to produce sufficient revenues to achieve targets are this are a large part of the problem

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  • October 29, 2015 at 2:47 pm
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    Mr Hacker. I confess my sin – being an ad bod, and as you so elegantly describe ‘are this are a large part of the problem’ Mind, you’re a veritable linguistic magician compared to David. Sharpen up chaps.

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  • October 29, 2015 at 10:53 pm
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    Easy to blame ad reps for not bringing in enough revenue, but they can only sell what people want to buy, and there’s a question for journalists to ponder.

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  • November 1, 2015 at 5:23 pm
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    It’s more a question of numbers than content in determining ad sales as with fewer people buying the paper fewer people will see the adverts meaning fewer people will respond = less repeat business due to poor response. It’s a hard pill to swallow it few advertisers care about content and few readers care to any great extent as long as the local news and issues that matter are included.

    Free falling copy sales are a key factor although the smash and grab policies adopted by many ad depts. of getting what you can for it or for having pressure put in the reps to sell digital meaning many print budgets were ‘moved’ to show web sales again, often to hit a target and trigger a bonus,
    it’s frightening to guess what the sales figures would be if the businesses actually found out just how few people are seeing papers they believe are selling what they were years ago, no ad rates have been cut to reflect the thousands of copies lost in the past 2-3 years.
    Content is important once you have an audience but without an audience copy is not a consideration

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  • November 2, 2015 at 8:52 am
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    “Content is important once you have an audience but without an audience copy is not a consideration.” Quite right – and I speak as a journalist. Admananger 123 has just written the epitaph for an entire industry, as succinctly as the best writer. Now, can anyone tell me what I should be charging three-storey townhouses on my soon-to-launch window-cleaning career?

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  • November 2, 2015 at 4:55 pm
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    Over the years I’ve seen plenty of sales staff not caring what the advert is like, as long as the customer is happy in the SHORT term. The trouble is a bad looking advert will not get much of a response and the customer will not advertise again. Also now a lot of newspaper companies use cheap outsourced production the ads look even worse!

    With the high turn over of staff, the good ones don’t stay long

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  • November 3, 2015 at 7:04 am
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    All the best sales people who could sell or understand a business needs and work with them or those experienced commercial people who were respected and had great relationships with business people are long gone leaving copy collectors and sell it late sell it cheap merchants which is why we have the sales figures we have. Short termism in getting rid of this level of staff has resulted in weak ad teams run by equally poor managers( on high salaries and bonus) incapable of developing revenues at the very time its most needed.
    Ironically these good people were snapped up by the competition and are now thriving taking business off their ex employers.
    Short sighted decision making and going for the cheap option and those making these poor decisions has a lot to answer for

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