Trinity Mirror fails to find bidders for regional titles

Trinity Mirror has not managed to attract a single offer for its regional business as a whole, the company admitted yesterday.

The publisher, in effect, put both its national titles, led by the Daily Mirror, and its vast regional newspaper division, up for sale in August, when it announced a strategic review.

Announcing the outcome of that review, Trinity Mirror said it would sell its Racing Post title and two small regional divisions that cover the South-east and the Midlands - including the Birmingham Post and the Reading Chronicle titles.

City analysts and investors were disappointed, however, that the review had not produced a new strategy or a convincing vision of future growth. Trinity Mirror shares fell 5 per cent to 472.5p.

Lorna Tilbian, an analyst at Numis Securities, said: "There were one or two ideas there, but it was not that exciting. Selling these titles is an admission that the problems are structural, as well as cyclical. Otherwise you don't sell things at the low point in the cycle."

The group also released a trading update that said advertising revenues this year were down 10 per cent. Proceeds from the three businesses being sold will be returned to shareholders. These titles could fetch £500m in total, with the Racing Post attracting up to half that sum. After tax is paid and pension fund contributions are made, investors are likely to get about £300m, analysts said.

The company said it had received just one offer for the national papers - a £600m bid from the entrepreneur Marcus Evans, which Trinity Mirror had rejected as derisory. Circulation for the Daily Mirror and its other "red-top" tabloids is in sharp decline.

Trinity Mirror admitted not a single offer had come in for the regional newspaper division, which is the country's biggest with 250 titles. By contrast, half a dozen offers were tabled for the Northcliffe regional newspapers business put up for sale by Daily Mail & General Trust at the start of this year. DMGT abandoned the sales process, saying the offers were too low.

One investment banker said: "I think people sniffed around [the regionals], but it is hard to get to a decent price. They didn't insult the company by putting those numbers forward."

A director at a private equity firm pointed out Trinity Mirror had already proved effective at taking out costs, whereas DMGT had run its Northcliffe business on much lower margins - giving buyers an obvious upside.

"At Northcliffe, there were hundreds and hundreds of people you could have fired. Trinity has already ripped costs out," he said.

Trinity Mirror announced a series of measures to boost the operational performance of the group. This included a £20m cost-savings programme, an upgrade of editorial systems, new call centres for sales and a revamp of the websites for the national papers.

Alex de Groote, an analyst at Panmure Gordon, said: "I don't see an obvious new strategy for the Mirror. I see yet more costs coming out, measures for IT and sales optimisation. This is the sort of thing management consultants would do."

Sly Bailey, Trinity Mirror's chief executive, said the Mirror was maintaining profit margins, unlike its competitors at The Sun and the Daily Star, by refusing to discount the cover price or have costly promotional giveaways, which were "just buying revenues".

Sale of 'Racing Post' is unlikely to change its form

The Racing Post was born out of the turbulence that buffeted the old Mirror Group Newspapers in the mid 1980s.

Under the stewardship of the late Robert Maxwell, MGN was beset with union problems. Its racing title, The Sporting Life, was losing money, boasting the overheads of a national newspaper on a circulation of only 80,000 or so. At the time, there were real concerns in racing that the Life might be closed, leaving the industry without a newspaper of its own.

Brough Scott, the former jockey who is still a consultant to the Postie, working through the International Racing Bureau, was a key figure in the creation of the title that aimed to ensure this did not happen. Backed by Sheikh Mohammed's millions, the Post hired many of the Life's top journalists. "Money was no object," said a former Life staffer yesterday.

The Post's first issue was published in 1986. To the surprise of many, its launch did not usher in the closure of the Life and the titles competed head to head for 12 years, losing millions along the way.

In 1998, however, the battle drew to a close as the Sheikh agreed to sell Trinity Mirror a licence to produce the paper for the princely sum of £1. The deal spelt the end of the line for the Life, which had published since 1859, although a website bearing the name still operates.

With the competition removed, the Post settled down to life as a monopoly and made £17m in profits last year. A sale of the licence is unlikely to presage great change at the title, given that Sheikh Mohammed still nominally owns it and, in effect, has the power to veto any deal that might significantly change what the paper does.