The owner of the Mirror newspaper group has sealed a £200m deal with Richard Desmond to buy his Express and Star national titles, as well as the celebrity magazine OK!
Trinity Mirror, the publisher of the Labour-supporting Daily and Sunday Mirror as well as the Sunday People, has paid £126.7m for Desmond’s Brexit-supporting titles. The company has also agreed to invest £70.4m in staff pension schemes through to 2027.
The company’s share price surged nearly 15% in early trading, with investors buoyed by the financial benefits and cost saving opportunities of one of the most significant mergers among British national newspapers in decades.
Simon Fox, the chief executive of Trinity Mirror, said the five national newspapers would remain editorially independent.
“The Mirror is not going to go right-wing and the Express is not going to go leftwing,” he told the Guardian. “They will absolutely all have editorial independence. Decisions on what goes into each title will be entirely down to the editors.”
However, Trinity Mirror wants to make £20m in annual savings, with £9.3m from “content generation”. This will mean job cuts, the pooling of some editorial resources and considering the viability of magazines such as New and Star.
Fox gave the example of creating a single sports team to serve all the papers, although in areas such as politics the teams would remain separate.
“Rather than sending many reporters to cover the same football games, we can cover more games, more sports and offer deeper and wider content,” he said. “Then it will be down to the editors as to what content they want to use.”
Canary Wharf-based Trinity Mirror does not have the capacity for the estimated 900 new staff (about 350 editorial) in its offices, and has agreed a 10-year lease, with a five-year break clause, to continue to use part of Northern & Shell’s Lower Thames Street offices.
Fox said no decisions had been made about the movement of staff between the sites.
He added that he did not expect the enlarged group to run foul of the competition regulator. Fox said the combined circulation of Trinity Mirror’s national titles would still be less than that of the Sun, and similarly they would not control too much of the national newspaper ad market. Enders Analysis says that the Competition Markets Authority will scrutinise the deal.
As part of the deal, Desmond will receive 25m Trinity Mirror shares, worth about £20m, giving him a 9.4% stake and making him the third-largest shareholder.
Desmond is known for his outspoken views, but Fox said he did not expect any problems.
“I have no reason to believe he will be anything other than a supportive shareholder,” he said. “He didn’t want a seat on the board, none of our shareholders have one … He wants skin in the game and believes very much in the group.”
The deal marks the end of the billionaire’s 43-year publishing career, which he acknowledged in an internal email announcing the deal to staff.
Desmond said he remained a “great believer” in the titles and that Trinity Mirror was the “perfect home to make the most of their potential”.
Under the deal, Desmond, who still owns businesses including the Health Lottery, has agreed to spend £32m over the next five years on advertising in Trinity Mirror titles. As the owner of Northern & Shell, Desmond will pocket most of the £106.7m cash portion of the deal.
Desmond started in publishing in 1974, aged 23, with two music titles. In 1983, he won the UK licence to publish Penthouse and then several other pornographic titles, including Horny Housewives. The launch of OK! in 1993 shook up the celebrity magazine world. In 2000, Desmond bought Express Newspapers for £125m.
Trinity Mirror, which owns a large regional newspaper portfolio including the Manchester Evening News and Birmingham Post, employs more than 5,300 staff. About 2,200 are in editorial; 700 on the national titles and 1,500 on the regionals.
The deal still needs approval from Trinity Mirror shareholders, who will vote on it in the next two weeks.
Newspaper circulations for Trinity Mirror and Northern & Shell’s national titles in December, according to ABC’s monthly newsbrands report:
Daily Mirror 581,877
Sunday Mirror 493,069
Sunday People 191,188
Daily Express 364,933
Sunday Express 317,893
Daily Star 391,509
Daily Star Sunday 239,853
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