David Montgomery, the veteran UK newspaper executive, who has been bidding for regional news groups, has finally landed a big fish. His listed company National World Plc is acquiring JPI Media (formerly Johnston Press) publisher of the 204-year-old The Scotsman and the 154-year-old Yorkshire Post, for a price of £10.2m, with £5.2m upfront and two further payments of £2.5m in 2022 and 2023.
The deal completes tomorrow (Jan 2). Nice timing. It’s exactly 15 years since Johnston Press paid no less than £160m just for The Scotsman, Edinburgh Evening News, and Scotland on Sunday. That proved to be the peak of the company’s turbocharged acquisition strategy. Within two years, its £60 share price had collapsed to just £1.8. And, now, the whole company has been sold for a tiny fraction of that one deal in January 2006.
JPI is the UK’s third largest local news publisher with estimated 2020 revenue of £85m and EBITDA of £6m. It publishes more than 150 digital and print news brands across much of England, Scotland, and Northern Ireland. It’s not very digital, with just 20% of revenue coming from the web.
In 2018, the company had almost collapsed under the weight of its £220m debt before being saved by its lenders through a managed process of temporary administration under which 60% of its debt was written off and £35m of additional funding was agreed. JPI sold its flagship title the tabloid i to the Daily Mail Group last year for £50m. GoldenTree Asset Management, Fidelity, CarVal Investors and Benefit Street Partners were among the creditors who took control of the company before selling it to National World.
Montgomery has been linked with almost every UK newspaper group in the past few years. He is the former tabloid editor who became CEO of the Mirror Group in the years after the death of Robert Maxwell.
That was after he had helped Rupert Murdoch to force through tech change in the UK’s national dailies in the 1980s, as editor of the now-defunct News of the World. He has been a passionate advocate for newspaper transformation ever since. He was editor of Today, the UK’s first colour tabloid, before becoming Mirror Group CEO.
In 1999, after seven years of pushing through cost-savings and coping with the chaotic aftermath of Maxwell, he quit after a lot of boardroom noise. The Mirror Group’s market cap – ahead of its merger with local news group Trinity Plc – was then £1.4bn. Now called Reach Plc, it is currently worth just £450m – even after some big acquisitions in the intervening years (including from Montgomery himself). More later.
Montgomery is what some Brits call “Marmite” : like the dark, salty spread, people either like or dislike him. Journalists are often negative, perhaps because he was among the first in the UK aggressively to attack the historic costs of newspapers; change almost everything. But that was then.
It is more than 20 years since he started to develop ideas for partnerships between newspaper companies that would facilitate the sharing of technology and back office services. He wanted to put his ideas into practice with Axel Springer which was briefly interested in a break-up bid for the Mirror Group after Montgomery had left in 1999. Six years later, he founded Mecom which acquired, among others: Berliner Zeitung and Hamburger Morgenpost, in Germany; Orkla Media, of Norway; and Wegener, in the Netherlands. In 2014, the ho-hum listed company was sold to De Persgroep, in Belgium.
His next venture was much more successful. In 2012, he formed Local World through a merger of more than 80 newspapers, including 16 dailies, from DMGT and Iliffe News & Media. In 2015, he sold the business to his former company (then called Trinity Mirror) for £220m – some 6 x operating profit. Its 21% growth in digital revenues all but offset the decline in print advertising.
Montgomery had taken unwanted newspapers and more than doubled their value in less than three years. He (and some of the investors who have joined him again in National World) are hoping JPI Media is the opportunity for a repeat performance.
National World IPOd in 2019, with the objective of “creating a leading position in UK news publishing …. by implementing a strategy of consolidation of audience reach, digital focus and modernisation”. Montgomery had last year failed to acquire the former Johnston Press and also the East of England news group Archant. He is also believed to have had abortive talks with would-be backers about a possible bid for one of the country’s largest news groups Telegraph Media. He was itching to get back to work.
Now National World has struck its elusive first deal, stand back for the next chapter in one Brit’s story of news media transformation. Stabilising JPI revenue and finding new digital growth will be no easy task and will take time even for the famously impatient David Montgomery. But he may already be dreaming about the next target: his old company, Reach Plc. Just wait.
