The new group said it “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.”
Northcliffe’s former owner DMGT will become the biggest shareholder in the new venture with a 38.7pc equity stake as well as receiving £52.5m upfront, while Trinity Mirror has paid £14.2m for a 20pc stake.
Iliffe parent company Yattendon will own 21.3pc of the company while the remaining 20pc will be split between various smaller investors including hedge fund manager Crispin Odey and former Conservative Party deputy chairman Lord Ashcroft.
Steve Auckland, the former chief executive of Northcliffe, will continue in the same role with Local World, with Mr Montgomery as non-executive chairman. Northcliffe finance director Rachel Addison will be chief financial officer.
Trinity Mirror chief executive Simon Fox, Yattendon chief operating officer Lisa Gordon, and Kevin Beatty, chief executive of DMGT’s A&N Media division, will all serve on the board of directors of the new company, which will be based in Leicester with an office in London.
The group will own 16 daily titles including the Hull Daily Mail, Cambridge News and Leicester Mercury, 36 paid-for weeklies and 40 free weeklies as well as 63 local websites and a number of niche products and magazines.
Announcing the new venture, Mr 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 fightback in Britain’s regional media industry.”
Early plans for the new venture will include an expansion of Local World’s digital presence with the investment of an additional £10m in a bid to attract a younger audience.
The new company, which will rely on digital for 8.4pc of total revenue and 11.2pc, of advertising revenue at launch, said it aims to more than double its digital revenues to 20pc of the total.
Incoming chief executive Steve Auckland said: “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.”
DMGT chief executive Martin Morgan 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.”
Lisa Gordon said: “The Iliffe family has owned and published newspapers for more than 120 years and are great believers in the ongoing demand for valued local content. We have a shared vision with Local World about the long term opportunities for local media and the need to adapt in a rapidly changing media landscape.
“The commitment of our long-held assets to this venture reflects our belief in the strategy being adopted by David Montgomery, Steve Auckland, Local World management and shareholders.”
And Simon Fox added: “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.”
The National Union of Journalists descried the deal as a “fire sale” and said it intended to hold Local World to its promises in relation to local content.
Deputy general secretary Barry Fitzpatrick said: “Once again a huge swathe of our media has changed hands with little transparency and, some could say, by stealth. The increasing consolidation of the regional press under fewer and fewer owners is a great cause for concern.
“Local World said it has a ‘vision to create comprehensive content for local communities’. Experience shows that large groups soon lose contact with their local communities as they close local and district offices.
“We want to hold Local World to its word that it will protect news coverage for local communities.
Added Barry: “We would like to see hard evidence that the dash to digital can be backed by a solid business case. We want guarantees from David Montgomery that revenues will not be lost in the switch from print to online.
“We also want guarantees that there will be a print option for many in the community who do not get access to local news and information online.
“We would also like to warn the managers of Local World that there is no fat left on these titles to cut. Year- on-year cuts to staffing and resources have left very little to trim. These cuts mean that courts are not being covered and councils are not being held to account.
“This democratic deficit is further increased when large sections of the community, who do not have access to computers or smart phones, are unable to get access to their local news.”