When Trinity Mirror chief executive Sylvia "Sly" Bailey arrived at the troubled newspaper group in February 2003, only the journalists disliked her. They feared she was a cost-cutter with no respect for the campaigning, quality-popular history of the company's flagship papers, the Daily Mirror and Sunday Mirror, and its Scottish national titles, the Daily Record and Sunday Mail. Now the City is sceptical too.
Until recently analysts had been speculating that Bailey might announce a sale of Trinity Mirror's national titles when the group unveiled its business review on Thursday. Pulling out of the national market to concentrate on a regional division which, with 250 titles, is Britain's biggest, appeared a logical move. Advertising revenue at the group's national papers was down 8.8 per cent in the year to November.
But months of effort failed to flush out a plausible offer for the Mirror titles and no bids were received for the regional division, either. Neither will be sold intact. "Trinity Mirror's pension deficit [£200m] and debt [£500m] is a technicalbarrier to full demerger," says analyst Richard Hitchcock of Numis Securities. Instead, Bailey announced a partial sell-off that even her admirers consider unlikely to solve Trinity Mirror's problems.
The auction will include 137 local newspapers in the South and the Midlands - including The Birmingham Post, Enfield Gazette and Reading Chronicle, and the horse-racing punter's bible, the Racing Post. Trinity Mirror will keep its north of England, Welsh and Scottish titles.
Bailey insists: "These changes will enable the group to make a number of cost savings and also offer opportunities to generate additional revenue."
The Racing Post is an attractive prospect. It made £17m in 2005, £6.9m in the first half of 2006 and also shrugged off a challenge from failed newcomer The Sportsman. Potential bidders may include SIS, the broadcaster part-owned by William Hill and Ladbrokes that beams coverage to bookmakers' shops. Also said to be interested are the billionaire Irish entrepreneur Dermot Desmond, venture capitalist John Hahn of Providence Equity Partners, magazine publishing entrepreneur Felix Dennis and online gambling company PartyGaming.
Although profitable, the regional newspapers identified for disposal may prove harder to shift - although their break-up into small divisions may encourage interest from modest- sized players including the Kent Messenger Group and Archant, as well as large conglomerates such as Johnston Press and Newsquest, the British arm of US giant Gannett.
But analysts still dispute Trinity Mirror's business logic. "Keeping the UK and Scottish nationals leaves the company with a proportionately higher exposure to the national newspaper market, in which its titles are performing so poorly," explains one. "Circulation of the Mirror fell by 50,000 last month and the Daily Record was recently displaced as Scotland's biggest-selling tabloid by the Scottish Sun."
Alex Bell, director of the website allmediaScotland.com, sees sense in Bailey's approach: "The City might like to see the Record titles sold off, but these are cash cows that pump money into the system. The dip in sales for the Record is actually less than the decline at the Daily Mirror."
His, though, is a rare expression of confidence. Many media observers fear that Trinity Mirror will use amputation of relatively successful chunks to reward shareholders and reduce debts - not to invest in its remaining business.
That would make Bailey's approach very short-term indeed, because the Mirror titles and Trinity Mirror's Scottish nationals are desperately in need of investment. Their websites, in particular, are regarded as unexceptional by comparison with competitors.
Six months ago, Trinity Mirror retired to contemplate the reality that the Daily Mirror, Daily Record, Sunday Mirror and People were failing to compete editorially, poorly prepared for the challenges of the digital world and shedding advertising revenue fast. It promised to confront these problems with rigorous strategic thinking.
No one is yet prepared to write off Sly Bailey, who clambered from a junior job in advertising sales to become chief executive of IPC - and then sold the company for £1.2bn to AOL Time Warner. She has outstanding business and media credentials.
But Bailey and Trinity Mirror are facing their sternest test.
If a partial sell-off and £20m of fresh cost savings do not stabilise circulation and revenue declines and propel the group's ailing titles towards new digital markets, further disposals may be required within a year. Bailey's answer is that the Mirror and its sister titles generate 20 per cent profits with minimal capital investment and can do still better.
For the sake of her own reputation and Trinity Mirror's future, she had better be right.
Missile hits its target
As well as his distinguished career at The Spectator and The Daily Telegraph, the late Frank Johnson will also be fondly remembered for his charm with the ladies. Among those who stepped out with him in earlier days were Anna Ford, Dr Maya Even and Lord Wyatt's daughter Petronella. He could make compelling arguments for their attentions. In the midst of the Cuban missile crisis Johnson took a pretty young girl out to dinner. She was proving rather reluctant, until Frank had a brainwave. "I fear," he whispered, "we may not have much time." It worked.
The Daily Scrooge
It may not be Goldman Sachs but at least the Telegraph staff have all been given a morale- boosting £500 bonus for Christmas. Management, however, has decided to ditch the annual family-friendly Christmas party this year. Not much to celebrate, eh?
While ex-Daily Mail features writer Jane Kelly puts the finishing touches to her portrait of Paul Dacre eating a prawn cocktail, as noted here two weeks ago, spare a thought for another of her subjects, Tim Walker. A painting of The Sunday Telegraph's diarist and theatre critic sitting in the back of a cab was mysteriously stolen from the Art Café, the Brighton gallery showing Kelly's current exhibition, "Stupid English Men". "I'm rather worried that it will be like The Picture of Dorian Gray," says the boyish Walker. "Now it's gone, I will start ageing rapidly."
The Dawn of a new age
In a column in this week's Broadcast magazine, Dawn Airey invents her own end-of-year awards ceremony. The head of channels at BSkyB grants Michael Grade the mock title of "Channel Surfer of the Year", for his move from the BBC chairmanship to ITV's executive chairman's suite. When it came to the scramble for the ITV throne, Airey found her name way down the tip lists, and she confessed to have had no call from ITV in November. Airey subsequently announced she was leaving BSkyB to head up multimedia company Iostar, which doesn't trip off the tongue quite as neatly as ITV. Surely not a touch of chagrin?
'The Sun' says sorry
While the Daily Mirror crows about winning Newspaper of the Year at the What the Papers Say Awards, The Sun may try to play down its latest prestigious award - a Crunk. Handed out by an American website for the best correction of the year, The Sun won for an apology, following a wild and drunken report about Princess Eugenie's rather more staid 16th birthday party. "There was no damage to furniture," grovelled The Sun. "No revellers dived into bedrooms in search of drunken romps and to describe the house as being trashed was incorrect." Artful.
A Callow response
Simon Callow may not be surprised that he has had rather ungenerous reviews from many critics for his performance as Falstaff in Merry Wives - The Musical at Stratford-upon-Avon. But, then again, critics are hardly well-disposed towards the thesp since he penned an article in The Times in October charging them with homophobia for their poor reviews of Bent. Charles Spencer of The Daily Telegraph was singled out for particular criticism, and Callow even bawled him out when they ran into each other in a theatre foyer a couple of days later. Callow omitted to mention in the article that Bent was directed by his boyfriend, Daniel Kramer. Spencer's review of the musical on Thursday in turn omitted to mention what marvellous theatrical talent Callow possesses.Reuse content