Age is just a number where these two are concerned
Raymond Snoddy looks at the two hottest media deals of the year so far, spearheaded by two older industry statesmen
When it comes to media expansion in the teeth of a pandemic and a recession there is nothing quite like two septuagenarians in a hurry – or industry ‘veterans’ as they are more politely called.
It truly is a joy to behold.
The younger, aged 72 has had a life-long love affair with newspapers, which has survived structural decline and everything the digital world has thrown at the industry.
The 75 year-old, who is by far the richer of the two, has largely left newspapers behind and has totally immersed himself in data, digital and programmatic, almost as an act of revenge on the more traditional advertising world, which rejected him.
David Montgomery, 72, is perhaps the braver of the two – standing out against the online gale with a successful £10.2 million bid for all the titles of JPI Media, the former Johnston Press, which 20 years ago was a Stock Market darling.
The scale of the courage of the one-time Mirror Group CEO’s acquisition is most eloquently stated by the purchase price.
The UK’s third largest local newspaper group, with more than 120 newspapers including The Scotsman, The Yorkshire Post and the Belfast News Letter, is worth no more than £10.2 million.
In monetary terms, National World (Montgomery’s takeover vehicle) is paying only £5.2 million upfront in cash with two further payments of £2.5 million on 31 March 2022 and 31 March 2023. There is even some working capital thrown in to sweeten the deal.
Almost by definition, no other investors or newspaper groups were willing – or able for competition reasons- to pay more.
[advert position=”left”]
There are a few key dates in the sorry saga. The first is 1797, when the business was founded in Falkirk.
There were then the years of sensible expansion in Scotland after the Second World War, followed in the first decade of the present century by the wild debt-funded deals struck at the top of the market, before recession and technological took their toll.
The company was never able to escape its burden of debt. When it went into administration in 2018, debts still totalled £200 million.
Journalist and broadcaster Andrew Neil tweeted that the deal demonstrated “one of the most egregious examples of value destruction in newspaper history” given that The Scotsman group alone had been bought for £160 million in 2005.
Can David Montgomery succeed when so many others with the best of intentions have failed?
National World estimates that the company will have digital revenues of £17 million out of total revenues of £85 million for the year ending January 2021 with underlying profits of £6 million.
It is at least a modest base to work from.
Montgomery is also making all the right noises with moves to decentralise management and editorial and get back to local roots.
If that counts for anything, it should mean an end to subbing centres far removed from the communities being written about and a renewed commitment to local journalism.
Perhaps most important of all is the fact that Montgomery is promising that the National World titles will eschew click bait and concentrate instead on unique local content.
Perhaps he will catch the tide that may be turning in the direction of more local lives because of the effect of both the pandemic and Brexit?
As Montgomery put it in a message to his new staff: “Our publications will be enhanced with unique local content to provide advertisers with the best environment to promote their services.”
He is right but if that doesn’t work commercially, it is difficult to see what will.
That said, Montgomery deserves respect for perseverance in the face of one of the most pressing and important media challenges – finding a way to sustain local journalism in the public interest. He can’t be doing it just for the money.
The task facing the other septuagenarian, the 75-year old Sir Martin Sorrell has many fewer bumps in the road, to use a contemporary phrase.
Since being ousted in 2018 from WPP, the company he founded, Sir Martin’s motives could not have been clearer.
He was never one who believed in the R word- retirement- anyway but this is an almost Shakespearean revenge drama.
This week he is well on his way, thumbing his nose not just at WPP but the traditional ad industry as a whole with two new U.S acquisitions.
His new corporate vehicle, S4Capital has paid $200 million in cash and shares – the tried and tested Sorrell method – for two integrated agencies Decoded and Metric Theory, which will become part of two existing S4Capital companies, MediaMonks and MightyHive.
As Sir Martin rather typically puts it “both combinations continue our momentum, broadening our digital, strategic, creative, data and digital media capabilities in line with our objectives for 2021.”
Sir Martin has pulled off no less than seven acquisitions since the pandemic struck in March and is now approaching 4,000 employees. You can be certain there are almost certainly more deals in the pipeline.
As the company said, now that the uncertainties of Brexit are over it will implement “even faster” its strategy of creating a new age/ new era advertising services model and deploying it around the world.
It would be foolish to bet against Sir Martin succeeding in his race against time but alas, none of his activities are likely to provide much comfort to David Montgomery.
There is a third “veteran” to watch this year, even though he is about to become a nonagenarian on 11 March.
Apart from helping to create and promote the madness of Donald J. Trump and then dumping him unceremoniously as soon as he became a loser, Rupert Murdoch has been relatively quiet of late by his standards.
It cannot last. There are still billions of dollars burning a hole in his pocket since the sale of his Sky stake and most of his U.S television interests and philanthropy has never been his thing.
So watch out for another old man in a hurry. He might even be inspired by the restless activities of relative youngsters such as David Montgomery and Sir Martin Sorrell.