Wham! Pow! With new Friends, DC Thomson is a rare success

How the firm's new buys, and old comics, cushion its news titles from recession.

As any Scotsman will tell you, Dundee is the home of "jute, jam and journalism".

But while the linen mills and marmalade factories have gone, the third of the three Js is still very much in evidence. DC Thomson, the private publishing house that owns The Courier, The Sunday Post and comics such as The Beano and The Dandy, is a rare success story, last year boasting record sales of £240m and producing 200 million copies of its titles.

The fortunes of this mysterious family-run company took a new turn last month when one of its subsidiaries bought Friends Reunited – the school-reunion website – from ITV for a bargain £25m, £150m less than the troubled broadcaster paid for it in 2005. The deal has been hailed as a shrewd move by industry analysts, who say it was a small price for such a well-known brand, despite the website's struggle to compete with Facebook.

The acquisition is the latest of several adventurous diversifications by an organisation once considered the most old-fashioned in the industry. The changes began with the death, aged 87, of Brian Thomson in 2006, the redoubtable chairman who had personally managed the firm's 2,000 staff since 1947. According to Tam Dalyell, a friend and admirer, his office in the company's redbrick fortress in Dundee's Albert Square contained only a table and two hard chairs, and "might have been all right for an acting lance corporal in the Army". Such austerity is typical of the very private Thomsons, despite personal wealth estimated at £540m in this year's Sunday Times Rich List.

Steering the firm into new waters since Brian's death are his son, Christopher, and nephew, Andrew, descendants of David Coupar Thomson, who gave the firm its name in 1905. Like all newspaper proprietors, they have seen readerships and revenues dwindle alarmingly. Last month's ABC figures showed falls in circulation across all DC Thomson's titles. But while Scottish papers such as The Scotsman face an uncertain future, Thomson's titles are safe, thanks to the company's imaginative investments elsewhere.

In 2005, the firm was swift to capitalise on the craze for Sudoku and bought Puzzler Media, a publishing firm with 50 puzzle titles. In 2007 it spotted the genealogy market's potential, buying up the website Find My Past. Now, with Friends Reunited, Thomson will acquire the hugely successful genealogy site Genes Reunited, with its millions of members and solid subscriptions revenue. It has also won a contract with The National Archives to digitise, license and publish the 1911 Census.

Other sources of revenue stem from The Beano and The Dandy. Thomson held on to the copyright on characters such as Dennis the Menace, and this month the BBC broadcasts a new cartoon strip of the character, which has already drawn criticism for softening his bad-boy image. But, says Euan Kerr, Beano editor for 26 years, Dennis, like DC Thomson, is just responding to change: "Thirty years ago the strip was full of caning and beatings. I'm happy with his latest incarnation."

Responding to the liberalisation of society was not something Brian Thomson was known for. He abhorred sensationalism and insisted his papers were clean of "filth". Even now, The Courier and Sunday Post remain free of scandal or gossip. Founding father David Coupar was also notoriously strict, refusing to employ Catholics and banning trade unions, a tradition which continues to this day.

One of the secrets of the firm's success, according to Dalyell, has been its ownership of Dundee's old jute warehouses. "They buy newsprint in phenomenal bulk for very little money and then store it for years in the town's warehouses," he says. "The company is run with enormous prudence."

If the firm's aggressive growth strategy seems unusual, a more familiar picture emerges elsewhere. In recent months, management has had to address losses in its newspaper and comics divisions by implementing a radical cost-cutting programme, including trying to reduce staff numbers by 20 per cent through voluntary redundancy. The accountancy firm PricewaterhouseCoopers was asked to advise, prompting fears among staff that the company's fortunes were worse than previously thought.

But staff have been reluctant to leave. Kerr, who left in July after 40 years, says employees are extremely well looked-after. "It is a fantastic place to work," he says. "As an editor you are left very much to your own devices."

According to Tam Dalyell, the Thomsons are motivated not by profit but by a devotion to public service and in "behaving properly to people". They are also not without a sense of pride. A story told of Brian Thomson was that, on running into Lord Northcliffe at a train station, he was asked how much he wanted for the Courier, Sunday Post, Beano and Dandy. He is said to have replied: "How much do you want for the Daily Mail?" As the company's recent acquisitions show, its new chairmen are no less ambitious. Dundee's journalism is, for now, quite safe.