Newspaper article The Evening Standard (London, England)

As Newspaper Share Prices Plunge, Don't Rule out a Trophy Bidder; Surprise Purchase: Malaysian Mogul Ananda Krishnan Bought 20% Stake in Johnston Press

Newspaper article The Evening Standard (London, England)

As Newspaper Share Prices Plunge, Don't Rule out a Trophy Bidder; Surprise Purchase: Malaysian Mogul Ananda Krishnan Bought 20% Stake in Johnston Press

Article excerpt

Byline: ROY GREENSLADE

JUST four months ago, I devoted this column to my frustration at thelack of faith shown by investors in media businesses, especially in thosecompanies running regional newspapers. "These are dark and depressing days formany media owners and managers," I wrote.

They have become much darker and a great deal more depressing since,culminating in last week's stock market devastation for two particular shareprices, those of Trinity Mirror and Johnston Press. Both have suffered furtherfalls this week, with the former dropping to 73 1/2 p yesterday and the latterclosing on 30 1/4 p.

Even by the standards of stock market variations during this volatile period,these are very worrying declines. To put the figures in some perspective, itmeans that Trinity's market capitalisation has plunged within a year from [pounds sterling]1.3billion to less than [pounds sterling]200 million. Johnston has experienced a similar fate,falling from [pounds sterling]700 million to [pounds sterling]196 million.

But why is this happening? Is the market behaving irrationally? Or do theanalysts, and the people who consume their notes as if they are new additionsto the gospels, know something we don't? These are big companies that, despitethe advertising downturn, are still able to generate healthy cash flows. Itwould not surprise me if Trinity ended the year with [pounds sterling]150 million in operatingprofit, and Johnston came in close to that too. Despite the warnings, those arehandsome returns the City appears to be ignoring.

Look a little closer at these companies.

They are anything but small beer. Trinity is Britain's largest regionalpublisher by circulation. It has 186 titles, including 14 paid-for dailies and52 paidfor weeklies. In January this year, the total weekly circulation of itspapers was estimated at 12.5 million. (Its national titles, the Daily Mirror,Sunday Mirror and The People, boost this by a further 10.9 million).

Johnston Press is the third-largest regional chain, with 295 British titles,including 19 paid-for dailies and 147 paid-for weeklies, and an overall weeklysale of 9.4 million. It is also Ireland's largest publisher of paid-forweeklies.

With their joint regional sale of 21.9 million a week, it means that Trinityand Johnston together account for almost a third of the total 63.5 millionpapers sold every week across Britain.

Trinity employs more than 9000 people in more than 150 centres and operatesnine major printing plants while Johnston employs about 8000 people (includingsome 2500 journalists) and runs 11 printing centres.

So these are substantial businesses and they have not stood still. Both havetaken steps into the digital future by investing substantial amounts in onlinepublishing. Between them, they run more than 600 news websites and have triedto attract as much online classified advertising as possible in the face offierce competition from non-newspaper rivals offering free ads, such as gumtreeand Craigslist. …

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