Mail to appoint advisers for Telegraph bid

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The Independent Online

Daily Mail & General Trust is understood to be about to appoint an investment bank to handle its planned bid for The Daily Telegraph.

The media company, which publishes the Daily Mail, is holding a parade of City financial advisers. Lord Rothermere, the group's executive chairman, has taken charge of the project. Although DGMT is listed, the Rothermere family wields 80 per cent of the voting shares.

Hollinger International, the New York-listed company that owns The Daily Telegraph, The Sunday Telegraph and The Spectator magazine, has announced it is considering selling assets though it has not formally put anything on the market yet. DMGT is preparing to be in a position to bid, should the Telegraph Group become available.

The news emerged as DMGT announced full-year results yesterday. Peter Williams, the group finance director, confirmed that the company had a strong interest in Hollinger's national titles. Analysts estimate the papers are worth about £500m. Mr Williams said: "We'll definitely have to look at it. There are inevitable synergies. At the right price, it'd be very attractive to us." He added that The Spectator, a weekly magazine, is "less of an obvious fit".

DMGT debt stands at £873m. Mr Williams said its debt levels would not hold it back from acquisitions. He pointed out that the company is ahead of its interest cover targets and it is "very cash generative".

Mr Williams conceded that any bid from DMGT would be referred to the Competition Commission but insisted that so would offers from other UK national newspaper groups. He believed that a DMGT bid could be cleared by regulators.

Richard Desmond's Northern & Shell group, a bitter rival of DMGT, has also said it wants to buy the Telegraph."Each of us [trade bidders] would still be some way below News International, if any of us bought the Telegraph," Mr Williams said.

Rupert Murdoch's News International, which publishes The Times, The Sunday Times, The Sun and the News of the World, has 32 per cent of the national newspaper market. The Telegraphs have about 8 per cent. DMGT has 18 per cent or 21 per cent counting its Evening Standard publication, which is available only in London and the surrounding areas but may be counted as a national title. Northern & Shell has a 14 per cent share.

Operating profit at DMGT's national newspapers dropped to £69.8m, for the year ended 28 September, from £80.3m last time. The fall was "due primarily to increased revenue investment at the Evening Standard," the company reported.

The Mail increased its profits despite the fact that the advertising environment was "far from strong" during the period. The rise in profits was "not marked" said Mr Williams, though he declined to give the actual figure.

Circulation revenues at the nationals grew 2.4 per cent while advertising revenues fell 1.7 per cent. Since the year end, ad sales in October and November have been in positive territory, with October up 1.7 per cent. "We are now almost back to normality. The [advertising] market is okay but not brilliant," Mr Williams said.

Underlying group pre-tax profit edged up 2 per cent at £185.5m. Turnover was down 1 per cent at £1.93bn, of which £820m came from the nationals.

DMGT's large stable of regional papers delivered another solid year, with ad sales up 3 per cent. Operating profits come in 4 per cent higher at £93.7m, on revenues of £484m.