Trinity to reconsider deal with Northcliffe

New boss urged to revisit failed regional newspaper merger plan

Shareholders in Trinity Mirror will press Simon Fox, the new boss of the struggling newspaper publisher, to reignite merger talks with Northcliffe, the regional newspaper arm of Daily Mail and General Trust.

Mr Fox, who was unveiled as the successor to Sly Bailey at Trinity last week, is under pressure to devise a strategy that will grow the company's digital revenues in place of lost income from classified advertising.

The former HMV chief executive is also expected to reassess whether he should try to consolidate the regional newspaper market which is dominated by four large publishers.

Two years ago, Trinity was in talks with DMGT over a deal with Northcliffe, which would have brought together titles including Northcliffe's Leicester Mercury and Bristol Evening Post with Trinity's Liverpool Echo and Huddersfield Daily Examiner.

The all-paper transaction would have given DMGT up to 40 per cent in the enlarged Trinity. It fell apart over concerns about valuation, Trinity's pension deficit and the crystallising of a pension liability for DMGT. However, the industry has continued its decline as circulations and advertising revenues have remained under pressure and executives have warmed to the idea.

A tie-up would instantly create a local media group that covers much of the country and can sell itself as a proposition to national advertisers. There are also significant cost savings to be made.

Mr Fox joins Trinity next week, just a month after resigning from troubled HMV. Britain's last specialist music retailer has endured a torrid time as CD sales have crashed. After a string of profits warnings, Mr Fox was forced to sell off bookseller Waterstone's to keep its banks at bay and a foray into live events fared badly. HMV has struck a support deal with music groups including Universal and Sony that are keen to keep alive a high street alternative to the supermarkets.

Mr Fox replaces Ms Bailey, who was ousted in a protest over the size of her pay package earlier this year. Trinity's shares have slid by more than 90 per cent in the past five years. Despite numerous acquisitions, digital operations account for just 5 per cent of group revenues.

DMGT shelved the sale of Northcliffe six years ago when offers from private equity groups, including Providence, CVC and Candover fell short of its £1.5bn hopes. The business is now worth far less.

Viscount Rothermere, DMGT's chairman, confirmed earlier this year that he was looking again at options for the division. It has become a drag on the rest of group, which is largely focused on business information and events.

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