The launch of Local World this morning brings to an end the 90-year relationship between Northcliffe Media and its parent company DMGT and creates a powerful new player in the regional press industry.
The new company, to be headed by former Mirror Group boss David Montgomery, will bring together the newspaper and digital assets of Northcliffe Media and Iliffe News and Media who will together own 60pc of the company.
A further 20pc will be owned by Trinity Mirror with the other 20pc split between smaller shareholders.
Here are the full texts of the statements from Local World, DMGT and Trinity Mirror that were issued this morning.
Statement from Local World
Local World launches today: a media business dedicated to the optimisation of local content and commerce across all platforms. Created from the newspapers and websites of Northcliffe Media, the regional publishing arm of Daily Mail and General Trust (DMGT), and Iliffe News & Media, the publishing subsidiary of Yattendon Group, Local World intends to transform regional publishing to create a one-stop shop for local content to serve the community and business in every aspect of life.
Artefact Group, an Investment Fund associated with Lord Ashcroft, DMGT, Odey Asset Management, Trinity Mirror and Yattendon Group will be shareholders in the new company.
David Montgomery, one of the most experienced media executives in the UK, will be Chairman of Local World. Steve Auckland, formerly Managing Director of Metro, Yorkshire Post Newspapers and Northcliffe Media, will be Group Chief Executive. Rachel Addison, currently Chief Financial Officer of Northcliffe, will assume the same role at Local World. They will be supported by a management team drawn from Northcliffe Media and Iliffe News & Media.
Announcing the new venture, David Montgomery said: “This is an entirely new type of media business. The value of Local World will lie in its people, its franchises and its IP. It will be unencumbered by the infrastructure of the industrial past such as property, printing presses and large scale distribution or any legacy issues such as high levels of debt. Local World signals the fight back in Britain’s regional media industry.”
The management team led by Montgomery, a former Chief Executive of publishers Mecom and Mirror Group, intends to re-invigorate local newspaper publishing and the digital distribution of local content. The new business aims to build on leading regional media titles, with strong audience loyalty in local communities, and expand Local World’s digital presence with the investment of £10m.
The new investment and the combination of Northcliffe and Iliffe titles will create a strong media business dedicated to the provision of first-class local content and advertising sales solutions. Local World will harness its proven publishing capabilities with new technologies to provide audiences – both print-readers and online consumers – with high quality, reliable and useful content in whatever format they choose.
These plans and the substantial investment reflect the confidence of Local World’s shareholders in the future of local media.
Market leading brands
The combined product portfolio of 63 local portal websites has a monthly audience of over 7m unique users. The print business includes 16 daily titles, 36 paid weeklies, 40 free weeklies, two Metro franchises and a number of niche products including magazines.
First-class local content and sales
Local World has a vision to create comprehensive content for local communities and provide a range of solutions for advertisers to reach a local audience. The business will focus on the provision of content across multiple platforms, targeting opportunities for both digital audience and revenue growth. Print products will remain a prestigious part of the portfolio, complementing the digital offering.
Local World will meet strong demand for local content and commerce. Research conducted in 2011 by NS, the industry body, has shown that people continue to spend most of their time and money locally, that local media is the best way for brands to take advantage of the new ‘rise of local’ and that people act on local advertising.
The research revealed that:
•80pc of people spend half or more time within five miles of home, rising to 93pc for 10 miles
•76pc of people spend half or more of their money within five miles of home, rising to 92pc for 10 miles
•81pc of respondents felt the recession has made supporting their local community more important
•93pc like companies that involve themselves in the local community
•45pc of respondents trust local media content compared to 33pc for national newspapers and 37pc for television
•60pc have acted on local media advertising
Digital audience growth
Local World is committed to accelerating digital audience growth with the provision of rich online content, including relevant local news, information, entertainment and advertising. The overall audience for Local World’s outlets is expected to grow as increased focus is placed on digital distribution, with editorial resources devoted to increasing online traffic.
The new company, which will rely on digital for 8.4pc of total revenue and 11.2pc of advertising revenue at launch, aims to more than double its digital revenues to 20pc of the total. A stronger digital offering will attract a younger audience, which will strengthen the overall offering to advertisers.
Local World aims to increase revenues by driving daily audience growth through enriched content. The investment Local World is making in audience measurement and profiling systems will enable it to create targeted and effective advertising solutions that deliver measurable results for local businesses.
New operating practices
A number of new innovative working practices will be put in place to help transform the business. Technology developments will enable better audience targeting for advertisers and e-commerce across all platforms. Increased use of remote working for staff and use of contributors will enhance online products.
Citing his experience at Mecom, where subsidiary Edda Media in Norway derived a quarter of advertising revenue from online and enjoyed digital traffic almost matching daily print circulation, Montgomery added: “Demand for local content remains as high as it has ever been. The correct strategic approach can transform a local media business focused on that opportunity. We look forward to satisfying this continuing demand and monetising our strategy.”
Incoming Group CEO Steve Auckland added: “Local World is a new beginning with a team dedicated to growing the local markets they serve.
Our plans give us a real opportunity to produce a business that is positive, engaging and a pleasure to work with. This takes time, dedication and brilliant execution, and is somewhere everyone in media would want to work.”
International merchant bank Lepe Partners LLP has acted throughout as sole financial adviser to Local World in relation to the transaction.
Statement from DMGT
DMGT has today announced that it has reached agreement to sell Northcliffe Media, its regional newspaper business, to Local World, a newly-formed media group that will combine the Northcliffe titles with those of Iliffe News & Media Limited.
DMGT will receive consideration of £52.5m in cash and a 38.7pc shareholding in Local World, which will allow DMGT to benefit from the potential upside from the evolution of the regional newspaper industry.
The Iliffe family, owners of Yattendon Group, will have a 21.3pc shareholding in the new business. Trinity Mirror will have a 20pc shareholding in Local World. The remaining Local World shares will be purchased by other investors, including Artefact Group, an Investment Fund associated with Lord Ashcroft, and Odey Asset Management.
Local World will become one of the UK’s leading regional newspaper publishers, online content providers and local advertising platforms, with more than 107 print titles and 60 websites. DMGT will contribute more than 80 titles to the new venture, with another 36 coming from Iliffe News & Media.
Local World, with a combined weekly newspaper audience of 6m readers and 7m online users, aims to revitalise local media by offering fully integrated print and digital media services that focus on relevant content, advertising and local services across the UK.
Steve Auckland, currently Chief Executive of Northcliffe, will become CEO of Local World. Rachel Addison, Group Finance Director of Northcliffe, will assume the same role at the new company alongside a board of directors drawn from the main shareholders. The company will be chaired by David Montgomery.
Steve Auckland has commented: “Local World will be a comprehensive local content provider, offering the best and most trusted source of news, views and advertising in print, online and mobile, to its local audiences in the UK. The new company will be well-resourced, entrepreneurial, and able to respond quickly to the differing requirements of local communities.”
Martin Morgan, Chief Executive of DMGT, said: “This is good news for DMGT, for all who work at Northcliffe and for the future of local news media. With this move we receive cash from the sale and also retain a stake in a business with excellent prospects. Local World has talented people and a clear vision for the future of local media. I think the media industry has been waiting for this logical next step for regional newspapers.”
In a letter to employees this morning, Lord Rothermere said: “For everyone who works at Northcliffe, we believe Local World, with DMGT as its largest shareholder and led by Steve Auckland as Chief Executive, will be a good guardian of these assets. It is acquiring this business to expand it. The new company will also seize new opportunities in the fast-growing world of digital information”.
Statement from Trinity Mirror
Further to the announcement made on 29 October 2012 regarding a possible minority interest investment, Trinity Mirror today announces it has exchanged contracts to acquire a 20pc equity interest in Local World Limited (‘Local World’) – a new company created to acquire and operate the regional publishing assets currently owned by Northcliffe Media Limited (‘Northcliffe’) and Iliffe News & Media Limited (‘Iliffe’).
Local World is acquiring the regional publishing assets of the Northcliffe and Iliffe businesses and will have an agreed enterprise valuation of circa £100m at completion. On a pro forma basis, Local World would have reported revenues of £273m and operating profit of £21m for the twelve months ended 30 September 2011, and would have had gross assets of £38m at that date.
The total consideration payable on completion by Trinity Mirror for its 20pc equity interest will be £14.2m in cash from existing resources.
The investment is expected to be earnings enhancing in the first full year of investment. The transaction is expected to complete around the end of the year after necessary employee consultation procedures have taken place.
Local World will publish 16 daily titles, 36 paid weekly titles, 40 free weekly titles together with two Metro franchises and a number of niche print products including magazines, which together have a weekly reach of 6m people. It will also publish a portfolio of 63 local portal websites, with a monthly audience of over 7m unique users.
Founder shareholders in Local World include Artefact Group, an Investment Fund associated with Lord Ashcroft, Daily Mail and General Trust, Odey Asset Management and Yattendon Group. David Montgomery will be appointed as Chairman of Local World and the business will be managed by Steve Auckland, currently Chief Executive of Northcliffe, as Chief Executive Officer and Rachel Addison, currently Group Finance Director of Northcliffe, as Chief Financial Officer. Simon Fox and Vijay Vaghela will be appointed to the Board of Local World as unremunerated non-executive directors.
Further details on Local World can be found at www.local-world.co.uk.
Simon Fox, Chief Executive of Trinity Mirror, commented: “Alongside our continued focus on the creation of One Trinity Mirror, our investment in Local World reinforces our commitment to local media and enables us to participate in a compelling business opportunity with the consolidation of two strong local media businesses. In addition, the investment builds on Trinity Mirror’s existing commercial services for the provision of contract printing and national advertising sales to Northcliffe. We look forward to working with the Local World team.”