Herald Express and 76 other local newspapers become part of new company

The owner of the Herald Express and thisissouthdevon is to be sold by current owners the Daily Mail along with 76 other newspapers and dozens of websites.

DMGT has today announced that it has reached agreement to sell Northcliffe Media to Local World, a newly-formed media group that will combine the Northcliffe titles with those of Iliffe News & Media Limited.

DMGT will receive consideration of £52.5m in cash and a 38.7% shareholding in Local World, which will allow DMGT to benefit from the potential upside from the evolution of the regional newspaper industry.

The Iliffe family, owners of Yattendon Group, will have a 21.3% shareholding in the new business. Trinity Mirror will have a 20% shareholding in Local World. The remaining Local World shares will be purchased by other investors, including Artefact Group, an Investment Fund associated with Lord Ashcroft, and Odey Asset Management.

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Local World will become one of the UK's leading regional newspaper publishers, online content providers and local advertising platforms, with more than 107 print titles and 60 websites. DMGT will contribute more than 80 titles to the new venture, with another 36 coming from Iliffe News & Media.

Local World, with a combined weekly newspaper audience of 6 million readers and 7 million online users, aims to revitalise local media by offering fully integrated print and digital media services that focus on relevant content, advertising and local services across the UK.

Steve Auckland, currently chief executive of Northcliffe, will become CEO of Local World. Rachel Addison, group finance director of Northcliffe, will assume the same role at the new company alongside a board of directors drawn from the main shareholders. The company will be chaired by David Montgomery.

Steve Auckland commented: "Local World will be a comprehensive local content provider, offering the best and most trusted source of news, views and advertising in print, online and mobile, to its local audiences in the UK. The new company will be well-resourced, entrepreneurial, and able to respond quickly to the differing requirements of local communities."

Martin Morgan, chief executive of DMGT, said: "This is good news for DMGT, for all who work at Northcliffe and for the future of local news media. With this move we receive cash from the sale and also retain a stake in a business with excellent prospects. Local World has talented people and a clear vision for the future of local media. I think the media industry has been waiting for this logical next step for regional newspapers."

In a letter to employees this morning, Lord Rothermere said: "For everyone who works at Northcliffe, we believe Local World, with DMGT as its largest shareholder and led by Steve Auckland as Chief Executive, will be a good guardian of these assets. It is acquiring this business to expand it. The new company will also seize new opportunities in the fast-growing world of digital information".

David Montgomery, experienced media executive, will be Chairman of Local World.

Announcing the new venture, Mr Montgomery said: “This is an entirely new type of media business. The value of Local World will lie in its people, its franchises and its IP. It will be unencumbered by the infrastructure of the industrial past such as property, printing presses and large scale distribution or any legacy issues such as high levels of debt. Local World signals the fight back in Britain’s regional media industry.”

The management team led by Montgomery, a former Chief Executive of publishers Mecom and Mirror Group, intends to re-invigorate local newspaper publishing and the digital distribution of local content.

The new business aims to expand Local World’s digital presence with the investment of £10 million.

Local World will include 63 local portal websites with a monthly audience of over seven million unique users. The print business includes 16 daily titles, 36 paid weeklies, 40 free weeklies, two Metro franchises and a number of niche products including magazines. Famous brands include the Cambridge Evening News, Leicester Mercury and Hull Daily Mail. The combined print portfolio has a weekly reach of six million people.

The new company, which will rely on digital for 8.4% of total revenue and 11.2% of advertising revenue at launch, aims to more than double its digital revenues to 20% of the total.

Citing his experience at Mecom, where subsidiary Edda Media in Norway derived a quarter of advertising revenue from online and enjoyed digital traffic almost matching daily print circulation, Montgomery added: “Demand for local content remains as high as it has ever been. The correct strategic approach can transform a local media business focused on that opportunity. We look forward to satisfying this continuing demand and monetising our strategy.”

Incoming Group CEO Steve Auckland added: “Local World is a new beginning with a team dedicated to growing the local markets they serve. Our plans give us a real opportunity to produce a business that is positive, engaging and a pleasure to work with. This takes time, dedication and brilliant execution, and is somewhere everyone in media would want to work.”