Northcliffe and Iliffe newspaper groups in talks over pooling regional titles

http://www.guardian.co.uk/media/2012/oct/28/northcliffe-iliffe-talks-regional-titles

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Two newspaper groups are reported to be working on plans to pool their regional titles into a new business called Local World which would be led by the former Mirror Group chief executive David Montgomery.

The proposed combination involves Northcliffe Media, which is the regionals arm of Daily Mail & General Trust (DMGT), and Iliffe News & Media, owner of the Cambridge News and Hertfordshire Mercury, Sky News said.

Iliffe's parent company Yattendon Group and DMGT would between them own close to 50% of Local World, while Montgomery would also have a stake. He is expected to use the initial combination as a springboard for pursuing other assets in the sector.

The deal would be Montgomery's first since he stepped down from the European newspaper publisher Mecom in January 2011.

DMGT said: "In response to media speculation, DMGT confirms that it is currently in talks regarding the future of Northcliffe Media. No deal or transaction has been agreed but if these talks move to the point where agreement is reached, an announcement will be made to the market."

Its Northcliffe Media division includes the Leicester Mercury, Bristol Post and Derby Telegraph, as well as 26 local news, information and classified websites under the "thisis" banner.

The proposed deal is expected to value Northcliffe at little more than a tenth of the £1.2bn offer reportedly rejected by DMGT in 2005. Conditions in the industry have deteriorated sharply since then, with Northcliffe's operating profits falling 37% to £17m in the year to November 2011.

Iliffe News & Media has a portfolio of three daily newspapers, 25 weekly newspapers and two Sunday newspapers.

The proposed deal is thought to have the support of the hedge fund manager Crispin Odey, while a syndicate of banks are preparing to agree new borrowing facilities for the enlarged group.

In 2010, DMGT held talks with Trinity Mirror over a possible sale of Northcliffe, but the two sides were unable to agree a price. There were reports last month that Trinity's new chief executive, the former HMV boss Simon Fox, was being urged to reconsider a deal by major shareholders.