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
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
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
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
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
‘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
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
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.’