REGIONAL PRESS: Jim Brown’s mission

Since the management buyout from Reed, Newsquest’s chief executive hasn’t lost his taste for acquisitions, Sue Phelan explains

Since the management buyout from Reed, Newsquest’s chief executive

hasn’t lost his taste for acquisitions, Sue Phelan explains



Following a successful management buyout of Reed’s regional newspaper

business - since renamed Newsquest Media - at the end of 1995, the

chairman and chief executive, Jim Brown, and his team have been

rejigging parts of the business. They have focused on providing

information in whatever format the customer wants and spent serious

money acquiring the technology to do this.



The company’s bristling, energetic image is very different from that

attributed to it by the City in the run-up to the buyout. At the time,

it was described as ‘well run, but unexciting’. Bets were on that Reed’s

newspapers would end up as synergistic scrap. Few had taken into

account the tenacity and stamina of Brown and his senior colleagues.



A tall, softly spoken Scot, Brown did not become the chief executive of

Reed’s regional newspaper division, or win the confidence of the US

buyout specialists, Kohlberg Kravis and Roberts, for the buyout by being

a tartan teddy bear. Indeed, insiders say that, at times, he is noted

for his abrasiveness.



Having started out as a journalist, Brown was news editing at Express

Newspapers in Glasgow when his career switched tracks and he was

propelled into management at Thomson Regional Newspapers. Joining Reed

in 1990, he became chief executive of the UK’s fourth biggest regional

publisher and the largest publisher of free papers.



By 1992, he had removed many of layers of middle management, tightened

up the circulations of Reed’s dailies - following substantial investment

- and saved the company pounds 130,000 by opting out of the Newspaper

Society. Under his five-year tenure, the papers performed well, gaining

95 per cent penetration in the areas they covered and often exceeding

financial targets.



The secret of his success seems to be his talent for recognising

opportunities and driving a hard bargain. His colleagues describe him as

a strong leader, and Paul Davies, deputy chairman of Newsquest, says he

gives managers the necessary space to do their jobs properly. ‘I

genuinely believe he empowers people - he’s great to work with,’ Davies

says.



Brown believes the trick is to act as a team, bond well and share

opinions with one another. ‘I’ve recruited the team in a certain

fashion. We play to one and other’s strengths. We’re all individualistic

but can work well together and get on. None of us were proprietors;

we’ve all come up the hard way way with a sharp edge and are astute on

the technology front,’ he explains.



Brown was not prepared to let that slip when Reed announced its plans to

sell its regional newspaper business and swiftly set about finding a

backer for a management buyout.



‘The sheer volume of work for a buyout is something you can never be

prepared for,’ Brown says. ‘I’d never been in the position of having to

go around institutions presenting the business. I made 31 presentations

in 17 cities in the US in seven days. I felt physically and mentally

exhausted.’



A buyout can be an arduous and time-consuming affair. It challenges the

management team by forcing it to look again at some key assumptions,

think through the business and outline the worst-case scenario.



‘Our forecasts have been spot on,’ Brown says. ‘We’ve learned a lot from

Reed. Thank God the cash-flow bit has gone extremely well.



‘In the past, we just ran newspapers and didn’t have to worry about

financing pensions or group insurance; that was all handled by the Reed

group. Suddenly, we’ve had to look at the complete business and we are

aware of the tremendous responsibility of putting these things

together.’



He continues: ‘We’ve gone beyond the world of newspapers to running a

business. We’ve all had to grow up. It’s scary, but we’ve had a lot of

help from Reed.’



KKR, the New York investment institution that Brown persuaded to pick up

the pounds 205 million bill for the 129 Reed titles, was attracted by

the quality of the company’s management. ‘It’s of a high calibre and

capable of aggressively managing the business for growth,’ Ian Martin,

chief executive of Glenisla, KKR’s European investment arm, says. ‘The

things the management had done meant it can go further in building

organically, or through acquisitions.’



Brown says that KKR has ‘been marvellous. It’s a good experience to work

with Americans. If we want to buy newspapers, they help us borrow the

money. They know where to go for it, quickly and for the best price.’



After a buyout it is usual for a company to rein in its spending -

Newsquest has done the opposite. Brown explains: ‘We’ve committed

ourselves to the Internet and are proud of all the titles currently on

it.



‘We’re leading the way and have kept up the thrust on technology. We’ve

put more money in to pre-press systems, having spent pounds 4 million

this year alone. We believe in having the right technology to give us a

competitive edge - you have to be brave.’



Brown will not comment on areas for expansion, but says the company will

make full use of the Net. ‘There are a lot of criticisms, but its

advantage is that it’s a huge learning-curve. We’re selling ads, and

although we are not making a fortune, we are well placed to move ahead.



‘We can produce titles and put them online at the push of a button. For

example, we have a search system for houses or cars - it’s a big

breakthrough. A lot is being made about News International doing this

but, sorry, we’ve been there, done that,’ he says with a smile.



New publications from Newsquest include the Sutton Leader and Post,

which ‘has had a super start’, according to Brown, and the Bargain Book

in north London, which was launched to underpin other titles in the

area.



Recent deals include swapping newspapers, such as its Doncaster titles

for the Bury Times group. The group’s chairman, Freddie Johnston, who

seems unable to stop buying regional newspapers, describes Brown as ‘a

super fellow’. Whether he will swap further titles with Newsquest

remains to be seen.



Brown has made no bones about wanting to buy newspaper groups or titles.

Commenting on his deal with Johnston, he says: ‘They fit in

magnificently with our Lancashire titles - they’re produced five miles

away from the Bolton Evening News, seven miles from the print site, and

we can cross-sell. We did the swap and got pounds 9.5 million on top of

that. It was a splendid deal.



‘I have great confidence in the future of the regional press. If we

bought a group of titles, it wouldn’t preclude us from buying another.

We’ve no problems in raising money.’



Commenting on rumours that Stephen Hill, the chief executive of

Westminster Press, is also planning a buyout, Brown says: ‘The titles

are not for sale. I’ve spoken to them several times about buying the

titles.’



Like other fast-growing local newspaper concerns, Newsquest is looking

at other media. It has a 10 per cent interest in a radio consortium in

south London with Dimbleby Newspapers. It is also ‘going gently’ with

cable, which Brown describes as ‘a fanciful thing, like radio’.



He explains: ‘There’s lots of money to be lost there. We haven’t reached

a point where we’d jump into cable, although KKR has considerable cable

interests in the US. But regionals have one heck of a future, with

tremendous penetration, which is why we’re into it.’



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