After years as the unloved runt of Fleet Street, Express Newspapers is suddenly in demand. Three different bidders are looking to rescue the company’s three national newspapers from United News & Media.
Although the Barclay brothers’ initial bid of £75 million has been rejected by United chief executive Clive Hollick, the publicity surrounding the unofficial talks has flushed out a pair of potential rivals.
Former Mirror Group chief executive David Montgomery is believed to have teamed up with venture capitalists 3i and HSBC to form a bid worth £90 million while the Hinduja brothers are understood to be topping the first round of bidding at £100 million.
All three bids fall within the £74 million to £105 million value put on the business by United’s broker Merrill Lynch but well short of the £150 million price tag that Hollick is understood to have put on the Daily Express, Sunday Express and Daily Star.
The Barclay brothers’ Press Holdings is refusing to comment on plans to increase its bid following the emergence of the two rivals.
A spokesperson for Press Holdings said: “[Chief executive] Andrew Neil and his team believe that the longer Hollick delays, the more the value of the paper will decline.”
The Barclays are unlikely to up their offer as industry sources claim the newspapers’ circulation slide has slashed profits. The company has confirmed that the bid will only rise when other factors such as online and print interests are brought into the equation.
The approval factor
However, buying a newspaper is as much about winning the public relations battle as convincing the money men.
For Montgomery, this will mean persuading staff that his record as a cost cutter at The Mirror will not be re-enacted at Express News- papers. Many insiders believe the papers are already significantly underfunded.
The Hinduja brothers, who are currently fighting allegations relating to Bofors scandal in India, have promised editorial independence by virtue of an independent board of trustees if their bid is successful.
They are also understood to want to take the Daily Express back towards its traditional Tory roots, claiming that Rosie Boycott’s more left-wing paper has alienated much of its core readership.
The potential impact of a Barclay Brothers ownership on the paper’s political slant has also caused unrest among the editorial staff at the Daily Express who believed they were joining a left-wing newspaper, safe from right-wing ownership.
Neil’s team are not ashamed to admit that a Barclays-owned Express would bare little resemblance to that we know now.
“If you are looking for a template of how Neil’s team will turn the newspaper around, look no further than The Scotsman,” said a spokesperson.
“The Barclays will bring editorial investment, management focus and marketing strategy to the titles and this will require a complete overhaul of the current editorial team for a start.”
Sources close to the Barclays believe that, because the bid has now been out in the open for some time, Hollick may need to make a decision soon before he loses more than he had bargained for.
Will United sell after all?
Despite all the frenzied bidding, United insists the sale of Express Newspapers is not a done deal. Hollick said at the time of the sale of his company’s broadcasting and television interests that the newspapers were part of the group’s long-term future.
However, it appears that United no longer feels so outwardly concerned about the imminent sale, fuelling opinion that the Express titles are simply being neglected in favour of the company’s blossoming market information business.
“The Express newspapers form a relatively small part of our group – from a total six-monthly profit of £150 million up to June 2000, the newspapers and our advertising titles formed a combined total of £14.6 million profit,” said a spokesperson for United, adding that the firm was not under pressure from shareholders. “It is simply not a big issue for us from a City point of view.”
One thing that no-one would deny is that the Express papers have been struggling in the mid market against a rampant Daily Mail that is far better funded and in the red top sector against The Sun and The Mirror.
Not surprisingly, the view from the rival Daily Mail camp offers little comfort either to United or to any potential buyer.
“Something needs to be done soon to change the direction of the newspapers and whoever takes up the cause will need determination and a big pocket,” said Guy Zitter, managing director of the Daily Mail.
“The current situation is probably the result of many years of confusion, not just from Hollick, although he is probably the biggest problem yet.”
From a more neutral point of view, West LBPanmure analyst Lorna Tilbian agrees with many analysts that the papers sit oddly with United’s other media activities, such as high-tech publishing and web-based activities.
Tilbian believes that, if United News & Media were to hold on to the newspapers, it would be as a powerful rather than profitable tool.
“Because Hollick has sold his TV interests, the cross-promotional aspect is no longer there,” she said. “He still has the successful LineOne ISP so there is some benefit to him keeping it.”
And she remains doubtful that a deal will be done. “There is no doubt that the Barclays want to buy the titles but I do not think they will agree on a price.”
Universal McCann press buying director Adam Crow agrees there’s a sense of stalemate between the two parties. “I don’t think it is going to happen, simply because Hollick’s asking price is over-inflated,” he said.
At Optimedia, head of press Simon Timlett feels that once the offer is appropriate, the papers will have new owners.
“I don’t think Hollick has much interest in hanging on to the newspapers for any purpose and he will sell them as soon as the price is right.”
Although Crow acknowledges that ultimately the papers will be sold, he is keen to point out the “fighting spirit” that exists among the offices of the Express.
“The sales team, in particular, at the Express will not give up easily and I would like to see the paper fall to the right hands but, to be honest, the future is not bright,” he added.
Whatever the outcome, concern is growing that time may be running out for the troubled titles, even among rival publishers.
Advertising director at The Mail on Sunday Sue Dear said: “I hope that the papers are bought sometime soon as competition is good.
“The Barclay brothers seem the most suited to buy as they have launched quite a few newspapers and the Express would give them a hold on the middle market.
“Whatever happens, however, it must be sold soon to make any reasonable profit and have a decent voice in the market – time is running out without a doubt.”