Montgomery finally gets chance to prove his worth

I REMEMBER David Montgomery from my time at the Independent newspaper in the early 1990s when he, alongside Independent News & Media’s Tony O’Reilly, controlled the publisher. He used to occasionally wander around the paper's Canary Wharf headquarters on the 18th floor of the tower, where his presence was rarely welcomed by journalists who found him cold, remote and mainly interested in cost-cutting.

Even at that stage, though, those who listened to the former editor of Today newspaper were impressed by his vision of the media as he grasped the challenges and opportunities posed by the growth of the internet. Montgomery was convinced that with a better marshalling of resource, media titles could protect and even grow their franchises even as circulation revenues declined.

Years after leaving Mirror Montgomery set up Mecom, a publicly listed group that put together a series of European newspaper assets he was determined to make profitable by reducing their costs and by extending their reach to embrace more digital products, thereby attracting digital advertising. His timing could not have been worse and Mecom struggled after a major slowdown in European advertising growth, not helped by union troubles in some parts the business and borrowings that were considered too high for the revenues the business was bringing in.

But the irrepressible Ulsterman is back, now gathering support for a deal, likely to be agreed as early as this week, for DMGT’s regional newspaper interests, Northcliffe.

Some may wonder why DMGT would consider selling Northcliffe for around £100m, given that an earlier bid at around £1bn was turned down some years ago. The reason it might be attracted to an offer is that Northcliffe, which accounts now for only around 5-6 per cent of profits, produces a disproportionate amount of negative sentiment for the group, especially amongst US investors.

A new management team, principally chief executive Martin Morgan and Steve Daintith, is keen to present the group as a business to business player with high growth potential.

Messrs Morgan and Daintith even recently fought a battle with Lord Harmsworth to get the name of the group changed but could not convince him to sever such an emotional link. But they did manage to oversee a change of broking advisers in an attempt to bring fresh thinking into the mix.

So a sale of Northcliffe makes a lot of sense strategically, but it will be interesting to see how a disposal treats the huge pension liabilities that are attached to the regional newspaper assets.

Why Montgomery? There are few in the newspaper business who have worked so hard to come to an understanding of where future media revenues might come from and how to attract them from the starting point of a traditional newspaper set-up.

DMGT’s Steve Auckland would be chief executive of the new group Local World, which would also have backing from Trinity Mirror and Yattendon, leaving Montgomery as chairman. If this comes off it would be the ideal opportunity for Montgomery to prove to a world of doubters that he's known what he’s been doing all along.

david.hellier@cityam.com

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