Desmond Said in Talks to Sell U.K. Papers to Trinity Mirror

  • Companies said to be near agreement on sale of newspapers
  • Deal would unite Brexit-backing Express, left-leaning Mirror

Richard Desmond

Photographer: Dan Chung/Camera Press via Redux

Richard Desmond is in talks to sell his U.K. tabloids to rival Trinity Mirror Plc in a deal that would mark the billionaire media baron’s departure from British newspaper publishing, according to people familiar with the matter.

An agreement is close but isn’t guaranteed, said the people, who asked not to be identified discussing private information and declined to provide financial terms. Trinity Mirror is expected to confirm the talks in an official statement to the London Stock Exchange on Tuesday, one of the people said. One option is for Trinity Mirror to buy a minority stake rather than outright control of the publications, one of the people said.

Desmond’s Northern & Shell Media Group Ltd. owns four national newspapers -- the Daily Express, Sunday Express, Daily Star and Daily Star Sunday. Trinity had disclosed previous interest in some of Northern & Shell’s assets in 2015.

Newspaper publishers are battling declines in circulation and advertising revenues as well as large debt and pension liabilities by selling assets and focusing more on digital publishing. By acquiring Desmond’s daily titles, Trinity might be able to combine resources and continue wringing efficiencies from its businesses.

A Trinity Mirror representative declined to comment. A Northern & Shell representative couldn’t immediately be reached.

Desmond, previously known for publishing pornographic magazines, became a major U.K. newspaper owner in 2000 when he bought the Express group from United News & Media Plc for 125 million pounds ($152 million). He focused on cutting costs but wasn’t able to revive sales of the Express papers. He had more success with the Daily Star, a racier tabloid.

Star, Express

With a Monday-Friday circulation of 452,415 in November, the Star was the sixth-largest U.K. newspaper, while the Daily Express was eighth, according to Audit Bureau of Circulations figures compiled by Bloomberg. Trinity’s Daily Mirror had 733,543 and ranked fourth behind the Sun, Daily Mail and Metro, the data showed.

A purchase by Trinity Mirror would bring together newspapers with contrasting editorial stances on issues like Brexit. Under Desmond the Express has veered in a conservative direction, splashing stories critical of immigration and urging the U.K. to quit the European Union. The Mirror has long supported the left-leaning Labour Party, and it endorsed a vote to remain in the EU in the June referendum when Britons opted out.

Trinity, the U.K.’s biggest regional publisher, has been selling office space to reduce debt while investing in its online business and making selective acquisitions. In 2010, Trinity acquired most of the regional papers and websites of Guardian Media Group Plc -- publisher of the Guardian daily -- including the flagship Manchester Evening News. Its digital group had about 8.9 million unique subscribers in November, up from roughly 7 million in July, according to ABC data.

Debt Reduction

While Trinity’s revenues and adjusted earnings have been falling, it won favor with investors last month for reporting a larger-than-expected decline in net debt and forecasting that full-year adjusted earnings would be marginally ahead of expectations. The shares have climbed 12 percent over the past month.

In March 2015, Trinity said it was at an early stage of evaluating certain Northern & Shell assets. That followed reports by the Times and Daily Mail that the company was in talks about acquiring some of Desmond’s national papers.

(Updates with possibility of minority stake in second paragraph.)
Before it's here, it's on the Bloomberg Terminal.