MEDIA STUDIES
I'm making no predictions about the Express, but if you want to know what I think . . .
STEPHEN GLOVER
For sale, one newspaper group. Its main title has lost over three quarters of its circu- lation during the past 25 years. It is barely profitable. It makes Marks & Spencer look like Microsoft. It is not even officially for sale. Many takers? You would think not. The Daily Express and its sister papers do not appear to be a mouth-watering prospect. And yet would-be purchasers are queuing up. The reason is that, however low in the water its titles may be, it is not every day that a national newspaper comes on the market. In fact, it hardly ever happens.
So that explains the interest. Lord Hol- lick, head honcho of United News and Media, which owns Express newspapers, is playing a bit of a blinder. He may not have been much of a proprietor but he knows how to sell a national newspaper. Or per- haps he simply cannot make up his mind what to do. Either way, his passive approach has succeeded in creating a mar- ket. Not all of the possible buyers are happy with his way of doing business. According to one of them, Lord Hollick is `like a second-hand car salesman who wants to sell you a car but won't let you see the log book'.
The interested parties are as follows: there is Hollinger, owner of the two Tele- graph titles, and of this magazine. There is Associated Newspapers, which publishes the Daily Mail (for which, I should mention, I write a column). There are the Barclay brothers, who own the Scotsman, though they have officially withdrawn from this race. There are the Indian-born billionaire Hinduja brothers, Srichand and Gopic- hand, who just happen to be facing possible corruption charges in India. There is David Montgomery, former chief executive of Mirror Group newspapers, who is trying to stitch a deal together. There is Mohamed Fayed, owner of Harrods, though his inter- est seems to be fading. There are one or two other less plausible suitors. And, of course, others may still emerge from the woodwork.
Who will win? That is impossible to say. It doesn't suit any party to appear too eager, as that would have the effect of pushing up the price. As the buyer of a sec- ond-hand car points out all the bumps and scratches, not to mention the smashed headlights, so a possible purchaser of Express newspapers will draw Lord Hol- lick's attention to his property's shortcom- ings. Also, these various groups do not always know their own minds. One moment it can seem great fun to get your hands on a national newspaper. The next you are sud- denly overcome with panic at the thought of all the money you might lose. Some of the interested parties are divided within themselves. There are hawks and doves; those who want to forge ahead and others who have their reservations.
So I can't offer you a forecast. I can't say who is going to buy these newspapers. But I can try to work out what each group might bring to the party, and what might be in it for each of them. On this basis I am tempt- ed to rule out Fayed, if he hasn't already done so himself. He is not an existing news- paper proprietor. That means that he can- not achieve economies of scale. He has no printing plants, no advertising departments and no distribution channels which could swing into action and dramatically reduce the costs of publishing the Express titles. The same is true of the Hinduja brothers. Though they own media interests in India, they have nothing here, and so would find running these papers extremely costly. They also have little or no knowledge of the British newspaper market. Of course they have an awful lot of money — much more than Fayed — and sheer ambition and vani- ty might drive them on. But I have my doubts. David Montgomery, though home- grown and in that respect a more plausible suitor, is another one-man band who could not benefit from great economies of scale unless he found another publisher as a partner.
That leaves the Barclays, the Telegraph Group and Associated. Though they have formally withdrawn in exasperation at not being given access to Lord Hollick's books, the Barclays could re-enter the race. They are not big publishers and therefore would not benefit very much from economies of scale. On the other hand, there are some within the Barclays' camp who are ambi- tious to join the big league. So we shouldn't exclude them, particularly if for one reason or another the Telegraph or Associated do not go ahead.
The Telegraph's interest is, in a way, sur- prising since its proprietor, Conrad Black, was recently quoted as saying that he would like to acquire a big North American news- paper. In this country the group has no experience of tabloids. On the other hand, the Telegraph Group is a huge publisher that could achieve considerable economies of scale. It happens also to co-own a large printing plant in London's docklands with Express Newspapers, and is believed to have pre-emption rights to buy out its part- ner in the event of a third party buying the Express. The plant contributes some 50 per cent of the Express's slender profits. In the- ory the Telegraph could exercise its rights over the plant, which would have the effect of reducing the overall price of the Express titles. My guess — and it is only a guess is that the Telegraph will decide that it has better fish to fry, and not make a bid for the newspapers.
And Associated? Its interest is also sur- prising since it was thought that, as the Daily Mail is the main rival of the Daily Express, a bid would not be practicable. But there are many old Daily Express hands at Associated, and they think they know how to revive the struggling title without turning it into a clone of the right-wing Mail. Asso- ciated has huge resources, and knows this market better than anyone else. It would also enjoy enormous economies of scale, and therefore can justify offering more money than the other parties. On the other hand, given that the Mail and Express share the same market, there would undoubtedly be regulatory hurdles to clear with the gov- ernment. There has been talk of offering a guarantee that, at least until the next elec- tion, the Daily Express would continue to support New Labour if it were acquired by Associated. Surely no independent publish- er, and indeed no government, could enter into a formal agreement of that sort. My feeling is that, if the regulatory difficulties can be overcome, Associated could offer a lifeline for the Express titles. The night- mare would be that — shades of BMW with Rover — even Associated might not be able to turn the Daily Express around. But who has a better chance?
If I am right about the Telegraph, an Associated offer seems the most likely to succeed, with the Barclay brothers waiting in the wings should the bid encounter regu- latory problems. According to one source, the government is not as ill disposed towards Associated as you might think. But I am getting close to offering a prediction, which I said I would not do. All we can say is that the logic of the situation seems to point in one direction.
Previous page
