Outlook: Gotcha! Rupert bags Kelvin

KELVIN MACKENZIE must have been dissappointed with stock market reaction to his abrupt departure from Mirror Group as deputy chief executive. The share price barely moved in response to this tragic loss. What? The newspaper industry's greatest living talent signs off and the City doesn't bat an eyelid? The Mirror share price may be more buoyed by bid hopes right now than any fundamental appraisal of the company's prospects going forward, but even so this really is a bit of an insult, isn't it?

Axel Springer, the German newspaper group which has been contemplating an offer for Mirror, is desperately trying to make as much out of Kelvin's resignation as it can. Plainly this affects any valuation put on the group, its emissaries are quoted as saying. Talents like this are in short supply and Mirror Group is unlikely to get another. All to no avail. The share price sticks stoically in the mid-230s.

Axel none the less raises an interesting question - the extent to which valuations depend on the talents of one individual. Rupert Murdoch has been so rattled by recent improvements in the Mirror Group titles that, according to some accounts, he would have done almost anything to prise Mr MacKenzie away. The title of editor in chief of News International's Sun and News of the World were his for the taking. Mr Murdoch would have backed Kelvin in a flight to the moon if that had been his price for leaving. As it is, News has only had to help finance his bid for Talk Radio. Cheap at the price, it might be said.

So does his departure matter? It is the mark of a stable and professionally run company that it should be able to cope with the loss of senior executives without strain or disruption. In the creative industries it might be a bit different. Good editors can plainly make a real difference to circulation and hence the commercial prospects of their organisations, and although Mr MacKenzie was not technically an editor at Mirror Group, he has certainly been behaving like one. Even so, if Mirror Group is as good a company as its chief executive, David Montgomery, insists, it shouldn't be unduly affected by Mr MacKenzie's decision to abandon ship.

But the proof of this will be in the pudding. Axel Springer is not minded to bid any more than the present market price. That's why every time a cloud passes over Canary Wharf, the Germans claim another 10p has been knocked off Mirror's value. The onus is now firmly on Mr Montgomery to demonstrate his company is worth more. The cleanest way to do this would be through a leveraged buyout bid. But don't hold your breath. He's unlikely seriously to test the market's appetite for this until he sees the colour of Axel's money.

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