What next for Daily Mail group?

Alongside Hearst Corp, of the US, the UK’s Daily Mail & General Trust (DMGT) can claim to be the world’s oldest media company. Both were founded as newspaper publishers in the last years of the nineteenth century by head-strong entrepreneurs with a lust for money and power.

More than 100 years ago, at the end of the First World War, W. Randolph Hearst was using his trademark “yellow” journalism to bully US politicians not to get involved in any more European wars. He spent the following 33 years laying the foundations for a privately-owned $13bn corporation which can now claim to be one of the world’s most successfully diversified media groups, with estimated 2024 EBITDA of up to $1.5bn.

Meanwhile, in London’s Fleet Street, Alfred Harmsworth (later Lord Northcliffe) knew all about press power and reportedly said about his Daily Mail “I give my readers a daily hate”. In 1902, it became Britain’s first million-selling newspaper. During the 1914-18 war, the British government had appointed him “director of enemy propaganda”. But Harmsworth died in 1922, the year that DMGT was floated on the London stock exchange by his younger brother. In 2022, exactly 100 years later, DMGT was delisted and taken private by its fifth generation chair Jonathan Harmsworth (the fourth Lord Rothermere).

The momentous event in which the publisher of the Daily Mail, arguably, the UK’s most influential news brand, again became a wholly-owned family business was but the latest in a series of milestones including: its 1969 launch (for a mere £6k) of Euromoney magazine, which generated more than £1bn of profits before being sold in 2019; acquisition of the US risk modelling firm RMS which became DMGT’s most profitable business for many years before being sold, in 2001, for some $2bn (10x its acquisition price); and the pioneering 2003 launch of Mail Online which, arguably, invented celebrity clickbait and continues to be one of the world’s most successful news sites, with 21mn monthly uniques in the UK and 150mn worldwide.

For all the stridency of the Mail’s UK politics, the parent company is best defined by its succession of far-sighted investments. It was an adventurous investor in startups long before most other media groups. Even DMGT’s £2.9bn privatisation in 2022 was boosted by the heady valuation (temporary, as it turned out) of a stake in the Cazoo online car auction site. (Cazoo was later sold out of administration for just £5mn, three years after being valued at £6bn).

The DMGT delisting excited industry observers who knew that – despite the apparent shrinkage of a now-private group with revenue one-third below its peak – DMGT would still be the UK-based media company to watch. It would always be much more than the mere publisher of the Daily Mail and its associated i and Metro newspapers, and New Scientist magazine.

That’s exactly how it has turned out.

First, there has been its reported involvement in the various pitches for the troubled Telegraph Media Group, a company long coveted by DMGT because of the obvious complementarity of the Daily Mail and the Daily Telegraph. The two historic news brands share conservative politics and perhaps even the readership of many British families; the right-wing tabloid and the broadsheet have long seemed a perfect fit.

Nobody can know just how serious was Rothermere’s desire actually to acquire the Telegraph outright, given that the potential £400-600mn acquisition always seemed likely to require funding that would compromise the family-owned company’s prized independence from investors. But the political invective against possible ownership by a “foreign power” (yes) had the unintended consequence of UK legislation that now prevents news companies like DMGT from attracting significant investment from sovereign wealth funds in the Middle East.

But DMGT may have found a way to get the best out of the deal.

DMGT is believed to have negotiated a deal with RedBird (the likely, eventual buyer of TMG) under which it would have a c10% shareholding and a publishing relationship, presumably involving at least joint subscriptions marketing, which would always have been one of DMGT’s reasons for wanting to own the Telegraph. There are obvious overhead cost savings (and printing via DMGT’s JV with News Corp) which might also be available both to TMG and DMGT. It’s an approach DMGT once took with The Independent which also shared its London offices.

If, as expected, RedBird is cleared to acquire TMG (soon?), the 10% deal looks just like the kind of investment coup we have come to expect from DMGT. Just like its continuing board of influential non-executive directors and public company-like reporting, the private DMGT is as surprising and resourceful as ever.

The business is gaining speed.

Our estimates of DMGT trading for the year ending September 30, 2025 show a 5% rise in revenue but a 13% increase in profit and – at 11% – its best operating margin for some years. The expected results show just how the company is mitigating the decline of its newspaper profits by ramping up subscription sales (notably in digital and on both sides of the Atlantic) but also how its remaining B2B operations – which had come to dominate DMGT profits in the first two decades of the century – are doing so again. B2B events and information which, in 2022, accounted for 33% of total revenue, are expected to be 50% in 2025 – and probably at least 60% of EBITDA.

The company best known for its print and digital consumer media is once again dependant on B2B, especially events which have grown revenue by 3.5x since 2022. Even if you discount the post-pandemic bounce for trade shows everywhere, the powering DMG Events will have more than doubled its revenue since 2023 and seems likely to make profit of at least £60mn this year – some 50% of the group total.

In some ways, these numbers (like those of a decade previously) underline the canniness of family owners which (maybe just like their transatlantic Hearst cousins) understand how to maximise their newspaper inheritance while investing shrewdly and patiently in the less cyclical (and certainly much less systemically-challenged) B2B markets.

But DMGT – even more than Hearst which has 10x the revenue – still faces challenges.

Its response to the inevitable difficulty of monetising those Daily Mail Online audiences (especially in the US) has been singlemindedly to chase digital subscriptions. In July, the company said the Daily Mail had more than 325k digital subscriptions including some 200k in the UK, 50k in the US and 20k in Australia. These figures, which include the digital Daily Mail+ and tablet editions of the UK newspaper, are encouraging the company to believe it can achieve 1mn subs by 2028. Naturally, it could find this even more achievable – if it is able to bundle Mail-Telegraph subs in the US and UK. But digital advertising remains a vulnerability.

It might not be the time to wonder whether the phenomenal growth in revenue, profit and margins of the Dubai-based DMG Events can be sustained. But the fact is that many of its major trade shows are in the energy and construction sectors in the Middle East where its global competitors are now concentrating their own firepower. The market leader Informa, for example, now generates more than 13% of its trade show revenue in the Middle East and is targeting the region for rapid growth.

It seems clear enough that as/ when the Daily Mail achieves its 1mn digital subscriptions, it will need to pursue the ‘pick and mix’ approach of the most successful global news publisher of all, the New York Times, where many subscribe only to, say, games, sports or food. In the UK, the Mail’s majority-female readership has been built on distinctive, magazine-like coverage of health, sports, personal finance and travel. They would be perfect for the development of personalised subscriptions, club memberships and eCommerce.

Similarly, we might expect the company, which (lest we forget) now makes 50% of its profit from B2B events, also to build a portfolio of consumer events. UK community businesses like Slimming World and Mumsnet would be perfect acquisition catalysts for the Mail, although these specific examples are unlikely to be available.

In B2B, DMGT’s property information seems to offer the opportunity to create more subscription or transaction-funded business data, presumably including the global energy and construction sectors dominated by DMG events.

Beyond that, DMG Ventures (whose portfolio of digital startups has variously had a valuation of up to £100mn) could play a more comprehensive role in the company’s strategy.

Let me explain.

For all the success of Euromoney, few (if any) of the venture investments have ever become DMGT subsidiaries; they are ‘just’ investments and mostly in B2C. It’s been a winning strategy. But, at a time of soaring B2B returns, DMGT could additionally target investment in information and events startups. It might do this particularly in order to develop the skills and assets of its own B2B portfolio – without having to pay 10-20x acquisition multiples. The new US-based Events Venture Group (funded by some of the most successful trade show creators) shows the potential. There is a ready market waiting for a savvy investor like DMGT.

The virtuous circle of this “new” strategy could be that in, say, 10 years DMG’s consumer and business portfolio would both share the skills, resources and revenue of subscriptions and events. Something for owner Rothermere to ponder as he prepares to celebrate next year’s 130th anniversary of the Daily Mail.