Even before last week's confirmation that Sir Victor Blank, the chairman of Trinity Mirror, was stepping down, the media world was abuzz with suggestions as to what his departure would mean for the newspaper publisher.
Speculation has been rife as to whether Blank's exit leaves the way open for the company to sell off its national titles, a move Blank was opposed to, but one favoured by some of its shareholders.
In the day following the official announcement, the US investment group Tweedy Browne increased its stake in the company to 5 per cent, pushing up its share price by 34p to 590p. Whoever Trinity Mirror selects as its new chairman, it looks likely that they, and its chief executive, Sly Bailey, will come under pressure from investors to split up the business.
Bookmakers are taking bets on the bidding for Mirror Group Newspapers, with the private equity group Candover the current favourite.
While its balance sheet may be keeping shareholders happy, Trinity Mirror's national titles are struggling (along with the rest of the market). The December circulation figures showed the Daily Mirror falling below the 1.7 million sales mark, with a decline of 1.29 per cent year on year.
The Sunday Mirror and The People also experienced year-on-year sales declines in December.
Its regional operation is in a better position, although falling ad revenues hit all aspects of its business. Trinity Mirror has been tightening its regional operations and looking for savings. At the end of last year, it announced it would axe 300 jobs from its 11,000 workforce to achieve a saving of £15 million.
1. With more than 500 media brands - which include five national and 240 local or regional titles - Trinity Mirror is the UK's largest newspaper publisher. As well as the Mirror titles and The People, it owns two Scottish papers, The Daily Record and The Sunday Mail. Its regional titles include the Liverpool Echo and the Birmingham Mail. Its other operations include its sports division, which houses The Racing Post, a magazine and exhibitions business and recruitment and property sites under its new-media arm.
2. The ad market makes life difficult for all publishers. Bailey has established a "stabilise, revitalise, grow" strategy. According to Trinity Mirror's 2005 interim results, its revenues were up 1.2 per cent overall, with operating profit up by almost 8 per cent as a result of cost-cutting initiatives instigated by Bailey. But in its national division, revenue fell 1.6 per cent, with ad revenue down 5.4 per cent to £93.7 million. Its regional business was stronger, growing 2.6 per cent, with ad sales up 1.5 per cent to £214.1 million.
3. The Daily Mirror's circulation has been in steady decline since its pre-Iraq war (February 2003) sales figure of more than two million. Dominic Williams, Carat's press director, says: "I think Piers Morgan made an error there. He brought his own opinions into his working life and they were not what the Mirror reader wanted." However, the rate of circulation decline at the Daily Mirror fell in the second half of 2005.
4. Last week, Trinity Mirror extended its partnership with Metro to launch the free weekday paper to readers in Liverpool and Cardiff. These new titles will be written and produced by Metro, while Trinity Mirror will print and distribute them, as well as handle local ad sales. Trinity Mirror has a similar arrangement with Metro in Scotland, Newcastle and the Midlands. The company's managing director for regional news-papers, Georgina Harvey, claimed the deal would give the company a deeper presence in local markets.
5. Trinity Mirror's regional division is expected to bear the brunt of its latest round of cost-cutting. However, flagship titles, such as Wales' The Western Mail, recorded rises in circulation. Its morning papers have fared reasonably well, with about half the titles increasing their circulations.
6. With the classified ad market in serious decline, most newspaper groups are trying to buy into the online equivalent. Bailey says she wants the company to be a multiplatform local publishing business. Among last year's purchases were: the hotgroup, an online and traditional recruitment business; GAAPweb, an online financial recruitment company, and Smartnewhomes.com, a marketing portal for new-build homes.
WHAT IT MEANS FOR ...
- This is a very tough market, with everyone struggling to hold on to circulation. But Trinity Mirror's performance has been disappointing, especially where the Daily Mirror is concerned.
- Trinity Mirror capitalising on its regional strengths would be welcome.
Williams says: "If it can target specific audiences regionally, that's exactly what advertisers want."
- How the business would fare if split up depends on who buys it. While not everyone is convinced breaking up the business will help, advertisers don't really care who the owner is, as long as there is investment in Mirror Group Newspapers.
- Some take the view that Trinity Mirror puts an overemphasis on shareholders.
Ian Tournes, the press director at Starcom Mediavest, says: "What it does is geared toward the City. It's seriously underdeveloped in terms of support from promotions that may drive circulation."
- Trinity Mirror refutes this, arguing that it spends a "considerable amount" on marketing and promotions. However, Sly Bailey said last year that the group refuses to invest in an"unsustainable" marketing spend to secure short-term circulation gains.
RIVAL NEWSPAPER GROUPS
- Many of the issues affecting Trinity Mirror are also being felt by the other groups. Most red-tops have been hit by a decline in the retail advertising market and the boom in weekly magazines.
- Publishers are moving into new areas, primarily online. Observers believe that newspaper owners could do more to work with broadcasters in a similar way to The Guardian and Channel 4.