Trinity Mirror and Express Newspapers: Death, taxes and media consolidation

When news broke last week that Express Newspapers and its titles the Daily Express, the Daily Star and their Sunday editions were back up for sale, the sense I had was that the other shoe had finally dropped. The only linked buyer, Trinity Mirror, had been in talks with Richard Desmond’s media empire-ette about the acquisition three years ago, only for the discussions to collapse over a dispute about pensions.

Although a Trinity Mirror spokesman hedged about the exact date the £127m takeover bid would go through, saying “there’s still some way to go. This is not yet a done deal”, the reality is that those titles, plus celebrity title OK! magazine, will almost certainly be helping to prop up Trinity Mirror’s business very shortly (Friday if you believe the reports). There’s too much synergy between the two companies’ strengths and their needs for it to be otherwise.

Trinity Mirror (which happens to also be in the news this week for another, less savoury reason) still needs to make savings. At the same time it is very keen to expand its portfolio and create a genuine national-to-local appeal to advertisers, as can be seen by its acquisition of regional newspaper group Local World. And just as with Local World, a big part of the appeal of the Northern & Shell assets is that it can conduct significant backroom synergy while retaining the coverage and scale.

From Richard Desmond’s perspective, the sale will complete his ongoing divestment of his media assets. More specifically, The Express and The Star are both exposed to the ongoing erosion of revenue from print as any other title (see Martin’s blog last week), and their demographics mean it will be difficult for those titles to launch any big ticket supplementary revenue strands, such as a Telegraph-esque travel vertical. Consequently their sale to Trinity, which has the infrastructure to build products across its combined portfolio, is as good a way of ensuring their future as any.

The Trinity Mirror-Express Newspapers marriage is only the latest in an ongoing trend of seemingly-inevitable media acquisitions of that type, which speak to a major media trend of the past five years, one that will only accelerate over the next few years. In an interview at the end of last year Ben Lerer, CEO of Group Nine Media, said:

“When we did Group Nine a year ago, it was a positive story because we were looking at how being a solo publisher without a whole lot of scale is tough and is going to get tougher. Scale always ends up mattering. We’re entering a period of consolidation, and if you’re a small [or] medium-sized publisher, it’s tough out there. You’re always a nice-to-have, never a must-buy.”

But the reality is that even large scale publishers are now a target for buyers. Look at the planned Disney acquisition of Fox, which was ascribed to the fact that in 2018 even the hegemonic Fox empire wasn’t big enough to jostle successfully for space with the really big players in the industry.

And before that, Meredith’s historic desire to own Time Inc. was reignited and came to pass, putting some venerable brands out to pasture in favour of scale and synergistic cuts. A series of reports out this week about how thoroughly Time Inc. had been screwed over by the AOL debacle years earlier have been widely disseminated, and in some cases make for harsh reading:

“Rick Stengel remembers Bewkes discussing with him the idea that Time Warner would spin off most of Time Inc. and put those magazines in a fresh news division with CNN. “I really liked that idea,” says Stengel. So did several other people who spoke with CJR, who say it might have helped those titles solve their problems with video, scale, and even branding.

“But the talks with Meredith collapsed, and by March, Time Warner had finally washed its hands of its problem child by spinning off the publishing company as a separate stock.”

In that Columbia Journalism Review article, author Howard R. Gold effectively lays out the difference between healthy and unhealthy consolidation of media assets, by means of detours through corporate culture and missed opportunities. The Trinity Mirror-Express Newspapers deal is hardly on the scale of those huge acquisitions, and on the face of it seems to be more of extension of Trinity’s success to date with Local World, but only time will tell if it is simply more kicking the can down the road for Trinity, or whether it will be able to build some genuinely impressive new products with that scale.

One thing that is absolutely certain, however, is that 2018 will see more consolidation, with more and more titles going under the aegis of some of the few big players left out there. Writing for The Conversation Margot Susca, lecturer at the American University School of Communication and member of the Online News Association, says:

“When journalist and media critic Ben Bagdikian wrote his 1983 book “The Media Monopoly,” 50 companies controlled a majority of what Americans watched, read and heard…

“By the time he wrote his sequel in 2004, Bagdikian’s predictions had largely come true. But even he didn’t think that 90 percent of American media outlets would fall under the control of just five big media corporations. He wrote that these conglomerates operated as a kind of cartel that controlled our “most important institutions,” from newspapers to film.”

Susca’s article essentially sets out the ethical argument against monopolistic media ownership, and the abuses that could come from a lack of true media plurality. On social media, some people have joked that TM are buying the Express titles to kill off their pro-Brexit voices: while this is clearly a nonsense, and would be vigorously opposed if it were to be suggested, it does illustrate the dangers inherent in a consolidated media landscape. There will most certainly be more consolidation in 2018, and some of it might even save media businesses – but potentially at too great a cost to society.

 

[email protected]

Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.

 

Header image via Rob Monkey on Flickr.