I have seen some pretty silly schemes to save local newspapers but the idea trumpeted in the lead of today’s Observer Media and Business section takes the biscuit. The idea is that the publishers will ask the government to relax takeover rules so that super groups could be formed.
“Let us merge or we will die, say local papers,” is the headline. According to the story: “Investment bankers have drawn up plans for leading players such as Johnston Press, Trinity Mirror, Newsquest, and Daily Mail and General Trust (DMGT), the “big four” regional newspaper groups, to swap assets or merge operations”.
It sounds as if the directors are clutching at straws. The failed approach to business which got them into this mess well before more recent financial problems, was based on mergers and acquisitions. Corporate mergers seldom benefit customers, staff or shareholders: often the people with most to gain are the lawyers, accountants and investment bankers who who can make the deal look very pretty on paper.
The real problem is that the assets are over valued and Peter Preston in his media column gets to this when he writes: The really significant US news of the past few days, in fact, has been good, not bad: the purchase, after a year in limbo, of one of America’s top 30 newspapers, the Union-Tribune in San Diego, bought by equity capitalists - and clearly bought cheap.
Conclusion: print still has a price and is still worth buying if that price is right (which it hasn’t been through 20 silly years). Now, as the price goes down, recovery prospects rise. The best hope for the future here is more diverse ownership of local papers. There are a lot of practical difficulties in going along this route but it is worth talking about.