MediaTel

This week has seen the sale of GMG's regional titles to Trinity Mirror and the forced sale of some of BSkyB's stake in ITV. Raymond Snoddy comments on the "sadness and eloquence" of the deals.

The fact that the two unrelated media deals were announced yesterday (Tues) was obviously a complete coincidence. But the sale of the Manchester Evening News and most of the Guardian Media Group's regional and local newspapers at a bargain basement price and the distress sale of most of BSkyB's stake in ITV says a lot about the current state of the UK media.

The saddest and most eloquent sale is perhaps GMG's severing of the last newspaper link with Manchester - once the heart of the business.

You could argue that the writing has been on the wall since the 1960s, when the "Manchester" was removed from the Guardian title and the paper's centre of gravity moved to London.

For decades it was the Manchester Evening News, and its associated local papers, that were the cash cow that kept the loss-making Guardian afloat.

Now in very different times they have obviously been deemed a drag on the Guardian, which now also has to provide for the loss-making Observer.

The damaging effects of the combination of the recession, with the collapse of all all-important jobs, property and cars classified market, and the impact of the internet, is all too familiar.

It is still shocking to hear that the Manchester business has gone for only £7.4 million in cash to Trinity Mirror. The deal can be dressed up to look a bit more respectable because at the same time Trinity Mirror is releasing GMG from a £37.4 million print contract. It is guilding the lily somewhat to describe it as £44.8 million deal.

Clearly consolidation is the name of the game in the regional press but it still suggests a certain desperation on the part of GMG to sell for such a price, at or near, the bottom of the cycle.

The motivation is obvious.

Last year the Guardian group posted a pre-tax loss of nearly £90 million and GMG Regional Media, which also owns local TV service Channel M which is not being sold, had operating profit of just £500,000.The previous year the profit had been £14.3 million. There had been a year on year fall in classified advertising of 30% - not untypical for the sector.

The fact that the problems of the regional press are far from over were highlighted again today (Wed) when the Daily Mail and General Trust reported a 13% fall in its regional British advertising revenues in the first quarter, with recruitment ad sales down 33%.

Do DMGT executives ever wake up in a cold sweat when they ponder the 2006 decision to withdraw Northcliffe Newspapers from sale because the bidders were offering little more than £1 billion? They had been looking for something closer to between £1.3 billion and £1.5 billion.

In fairness, very few predicted such a sharp decline in the fortunes of the regional press but such an offer is unlikely ever to be available again.

The forced sale of 10.4% of BSkyB's stake in ITV at 48.5p a share - the purchase price was 135p - is eloquent in its own way.

It must have seemed like a good idea at the time to swoop and buy the shares within less than 36 hours to block any takeover of ITV by Virgin Media. Naturally the satellite broadcaster denied any such motive and claimed they were interested in being a long-term shareholder. Equally naturally, no-one believed them.

The irony, of course, was that the manoeuvre was unnecessary. ITV had already decided privately to turn down the Virgin approach.

The sale represents the end of a two year-legal/regulatory battle which BSkyB lost even though it did not seek ITV board representation and was prepared to give up its right to vote with all its stake in matters such as takeovers.

The decision to sell the 10.4 stake to institutional investors suggests that there are no serious candidates out there preparing to buy ITV - or at least no-one willing to pay the necessary premium. Such a stake would have created a takeover springboard.

It is possible, however, that BSkyB took the view that if they can't own the stake then no other media group should be allowed to have such a strategic stake either.

Whatever BSkyB's motives, the likelihood now is that there will be no early escape for ITV chairman Archie Norman and his new chief executive Adam Crozier. They are the ones who will have to turn ITV around and be judged by the subsequent results.

What is equally certain is that there will be no shortage of one-off re-structuring deals coming down the track that will tell a lot about the current state of tension in the British media.