Johnston Press expects bidders will move to break up the owner of British newspapers the i and the Scotsman after the company with its roots in the 18th century was pushed to the brink by tumbling circulation and looming debt repayments.
Johnston Press, originally a Scottish family printing business that moved into newspapers in 1846, made a series of debt-funded acquisitions in the early 2000s, just before the industry’s business model was gutted by the shift online of classified advertising and news.
This included 14 regional newspaper titles in the Republic which in 2014 were sold to Iconic Newspapers, a company run by British advertising executive Malcolm Denmark for £7.2 million (€8.7 million) in cash.
The figure was just a fraction of the sum it spent on buying the newspapers during the boom. In 2005, it spent €139 million on the Leinster Leader group of titles alone, while its total outlay in Ireland arrived at more than €200 million.
Johnston Press chief executive David King on Thursday said the board's ideal outcome was to sell it in one piece. Edinburgh-based Johnston Press is one of Britain's most important newspaper groups, with 2,100 employees and about 200 national and local titles.
Sales at its national ‘i’ tabloid have grown since it began in 2011, even as the wider industry went into reverse.
“There is a very strong likelihood that some people will attempt to bid for particular assets they have a particular interest in,” King said by phone. “We will obviously take that on board, consider those things.”
Johnston expects the formal sale process triggered on Thursday to last four to six weeks. The arrangement waives some of the company’s usual obligations to disclose certain details of negotiations to the market.
Rothschild and Co. is managing the sale. The company is also talking to the UK’s Pensions Regulator to shift pension liabilities to the government’s Pension Protection Fund, King said. This could guarantee its employees’ pensions, but often means lower payments.
Other newspaper companies have been making acquisitions, including Reach and US group Gannett Co, but no bidders for Johnston Press have yet come forward and acquirers would have to reckon with the company’s £220 million ($291 million) bond due in June, which it has failed to refinance.
Two of its largest investors are activists - Custos Group AS and Crystal Amber Fund. As its liabilities have drawn into view, the company’s market capitalisation has evaporated from a high of £1.6 billion in 2004 to just £3.4 million. – Bloomberg
