Media Fortune Fame & Folly

UK Daily Mail ‘to go private’

The 125-year-old London-based Daily Mail & General Trust Plc (DMGT) is preparing to sell-off one of its largest businesses and take the news division (comprising the Daily Mail, Mail Online, Metro, the I newspaper and New Scientist) into private ownership after 100 years as a listed company.

The move comes after a previous announcement that two-year-old online car retailer Cazoo will be floated in the US (valuing DMGT’s 20% stake at some £1bn), and this week’s reported £700m offer for RMS, its wholly-owned, California-based catastrophe modelling researcher. The bid for the £250m-revenue RMS (acquired in 1998) is believed to be from the $30bn US-based Verisk Analytics Inc, of New Jersey, whose share price has gained 10% in the last month.

The de-listing sell-off is said to value the core news and data business at some £800m – about one-third of the group’s current market cap. DMGT also owns Landmark and Trepp (property information), trade shows in energy and construction, and a portfolio of 20 startup investments. It has been a great talent spotter of emerging media-tech businesses.

The cashed-up company had sounded just a little bit smug even while reporting a 10% fall in 2020 underlying revenues to £1.3bn and a 78% fall in operating profit to just £15m (£67m in 2019). It actually increased its dividend. Despite having returned £1.1bn to shareholders, it had net cash of some £170m. The cash pile and a calculation that the dividend had a 30-year CAGR of 8% (yes) enabled CEO Paul Zwillenberg to say that DMGT was “very pleased”, despite the effects of the pandemic on a business that is 30% subscriptions, 24% advertising, 24% copy sales, 16% transactions, and 6% events. 

The proposed de-listing is, in some ways, consistent with the management of DMGT over the past 30 years. In the early years of the 21st century, the soaring profits of Euromoney and RMS and the digital shredding of newspapers, were seemingly pushing the group towards B2B where – suddenly – it was making most of its money. But, even then, there was a clear (and financially successful) strategy of buying and selling B2B while maintaining the legacy news business. By 2019 – when DMGT sold its Euromoney shareholding (after 50 years) and RMS’ high margin profits were starting to suffer from under-investment in software – the news business was settling down. DMGT was again becoming focused mainly on B2C.

Executive chairman Lord (Jonathan) Rothermere and his family, who own some 30% of the equity (but 100% of the voting shares), are expecting to make a cash offer of around 250p per share to the outstanding shareholders of DMGT after paying dividends from the disposals.

The Daily Mail & General Trust was founded by the tabloid pioneer Alfred Harmsworth (later Lord Northcliffe), creator both of the Daily Mirror and Daily Mail. He reportedly said about the Mail: “I give my readers a daily hate”. In 1902, it became Britain’s first 1m-selling newspaper (and the Daily Mirror, separately, went on to sell 5m). Northcliffe died in 1922, the year DMGT was floated on the London stock exchange by his younger brother.

The UK’s most successful daily newspaper now expects to celebrate next year’s centenary of its IPO (and the death of its founder) by going private.

Nobody expects a de-listing to reduce DMGT‘s interest in smart-funding the kind of startups (like Euromoney, RMS, Zoopla, and Cazoo) that have been paying dividends for decades. Or its longterm ambition to acquire the UK’s Daily Telegraph. And you can bet that a revitalised 21st century news group – without the costs and constraints of a public company – will also get into broadcast/streaming. Just wait.

DMGT