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[March 28, 2006]

DC Thomson pays GBP132m to acquire Aberdeen Journals

(The Herald Via Thomson Dialog NewsEdge)DCThomson, the Dundee publishing dynasty, underlined its enthusiasm for the regional newspaper business when it emerged as the surprise winner in the race to acquire the publisher of Scottish titles including the Aberdeen Press & Journal.


The privately-owned firm is paying a total of GBP132m to take control of Aberdeen Journals from the Northcliffe local newspaper division of the Daily Mail & General Trust group.

The deal follows reports that Johnston Press, the acquisitive Edinburgh-based firm, was in pole position to acquire the Aberdeen business for around GBP120m.

DC Thomson has agreed to pay what analysts said was a very good price for DMGT, weeks after the group scrapped an auction of Northcliffe after bids fell short of its GBP1.5bn asking price.

While some industry watchers said that reverse raised questions about the value of regional newspapers in the internet age, DC Thomson appears to have no doubts. In addition to the Press & Journal, DC Thomson will add other titles published in Aberdeen including the city's Evening Express to its stable of newspaper interests, which includes the Dundee Courier and the city's Evening Telegraph.

"The Courier& Advertiser and The Press and Journal, The Evening Telegraph and The Evening Express all have a long and enviable history of campaigning and speaking for the communities in their areas and that will continue, " said Andrew Thomson, chairman of the eponymous group.

While mid-year circulation figures for 2005 showed that sales of the Dundee Courier fell 3.8-per cent, to just over 80,000, accounts filed recently by DC Thomson showed local publishing remained the cornerstone of an extremely profitable business. In the year to March 31, 2005, DCThomson grew trading profits 14-per cent to GBP9.7m, up from GBP8.5m in 2004 after turnover edged up from GBP162.3m to GBP162.6m.

The company's balance sheet was strong enough to support the GBP86m acquisition of Puzzler Media, which publishes Sudoku brainteasers, in December.

Helped by buoyant North Sea oil and gas markets, the Aberdeen Journals group has managed to grow profits against a gloomy market backdrop. In the year ended October 2, 2005 the company made profit before interest and tax of GBP8.1m, up from GBP7.1m, on turnover of GBP38.2m, up from GBP36m.

DC Thomson declined to elaborate on a brief press statement in which it stressed that content and editorial policy of the Aberdeen titles would continue to be run from that city.

However, there may be opportunities to cut costs by rationalising the enlarged operation.

Paul Richards, analyst at Numis, said DMGT seemed to have done well out of the deal.

The group also announced moves to rationalise Northcliffe which would lead to cost savings of GBP45m annually.

DC Thomson agreed to pay GBP105m to DMGT. Aberdeen Journals will be obliged to pay GBP27m into DMGT's pension schemes.

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