Magazine article Marketing

Raymond Snoddy on Media: Mail Looks Most Likely Victor in Telegraph Tussle

Magazine article Marketing

Raymond Snoddy on Media: Mail Looks Most Likely Victor in Telegraph Tussle

Article excerpt

Only one topic is exciting the newspaper industry at the moment.

The big questions are who will be the new owner of The Daily Telegraph and what will the implications be for the other players?

Clearly there must be some sort of life left in an industry in which even a newspaper of more mature manifestations and an uncertain hold on sales attracts such interest.

As bidding nears pounds 700m, venture capital group 3i, one of the final three bidders, may find it increasingly difficult to make the numbers add up.

If it does, you can be sure its adviser David Montgomery will not be far behind with a cost-cutting programme.

Existing management and staff might fare better with one of the other two players - the Barclay brothers or Viscount Rothermere's Daily Mail and General Trust (DMGT). Both have a history of investing in editorial through thick and thin.

As we enter the final cut-throat stage of the auction, even DMGT executives admit privately that if Sir David and Sir Frederick Barclay really want The Daily Telegraph as a pinnacle for their career, they can have it.

They are private businessman beholden to no one, apart from their banks, and can choose to pay an irrational price if they wish. They could even reduce the pain by selling The Scotsman and merging The Business with The Sunday Telegraph.

However, throughout their career the twins have always liked a bargain and it is not certain they will be prepared to throw aside the habit of a lifetime and pay trophy prices.

Rothermere, who enters the final straight in the lead, could yet pull off a coup. Conventional wisdom says the government will never let the owners of the nasty, Labour-baiting Daily Mail get away with it, but the government would still have to provide a regulatory rationale for its actions.

If the Office of Fair Trading and Ofcom were to recommend that such a merger be allowed - with conditions - it would be very difficult for DTI secretary Patricia Hewitt to block the deal.

In any case, it is not entirely obvious why a Telegraph-Daily Mail tie-up should be blocked. The merged companies' share of the national newspaper market would be considerably smaller than that of News International, owner of The Times. ITV plc is allowed to control 51% of TV advertising in the UK and the government has decreed that all commercial radio cannot be owned by less than three companies. …

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