Consolidation of Republic's independent provincial newspapers has only just begun

There are about 40 titles which may be bought by provincial groups and with an average 15 times profits being paid many owners will become millionaires, writes Colm Keena

The Republic's provincial newspaper market is expected to consolidate substantially in the next few years as smaller operations are targeted by larger media operators. The move will turn many newspaper owners into millionaires.

About 40 independent titles may come under the ownership of five provincial newspaper groups, with the current owners being paid a premium price for their titles.

The recent sale of the Longford Leader to Scottish Radio Holdings (SRH) for €9.1 million (£7.17 million) was the latest development in this process. The sale price was 15 times the newspaper's profits for 2001 (€630,000).

The Longford Leader has a staff of 20 and a circulation of 13,000. It was bought by SRH after an earlier offer had been made by Thomas Crosbie Holdings Ltd (TCHL), publishers of the Examiner.

"We made a bid some time ago and it wasn't accepted," said Mr Anthony Dinan, managing director of TCHL. "If SRH wanted to pay that sort of price, good luck to them."

Mr Dinan said the prices being paid for provincial papers were averaging 15 times profits.

"I think the regional newspaper sector is a fantastic sector with great potential."

The absorption of a regional title into a group can bring benefits in such areas as technology back-up, staff training, payroll services, marketing and advertising sales. He believes editorial matters should be left to local management though columns can be syndicated throughout a group.

The regional titles owned by TCHL have a combined circulation of more than 100,000. Turnover for the group, including the Examiner and the Evening Echo, was €58 million last year and about 25 per cent of revenue comes from the regional titles.

Crosbie is currently in talks with four different titles. "That would be the case at any particular time," said Mr Dinan. "We would have spoken to all the regionals and said if you're thinking of selling, then don't do anything before talking to us."

Owners are considering selling because of the money which is being offered for their papers and because of the benefits which come with being part of a group.

"The days of the independent (regional) newspaper are coming to an end," Mr Dinan said. He sees the sector condensing down to five groups: Independent News & Media; TCHL; SRH; Trinity Mirror; and the Leinster Leader group.

The Leinster Leader has four titles with sales in Kildare, Offaly, Laois and Louth and a combined circulation of 40,000. About four years ago the Leader started making acquisitions. "The market opportunity was there and we took it," said Mr Michael Sheerin, editor of the Leader. "The place is well run and we had the resources and so, when the opportunities came, we were able to take them."

The Leader has been in existence for 142 years. The expansion of the paper into a group "strenghtens our hand. We are larger and better able to fight someone who might want to take us over." Mr Sheerin said the board would look at other opportunities if they arose.

The Limerick Leader is one of the larger provincial newspapers still operating as an independent. The Leader publishes a tabloid paper on Mondays and Wednesdays. It publishes the Limerick Chronicle on Tuesdays and on Wednesday evenings it publishes a country broadsheet edition of the Leader. On Thursday it publishes a broadsheet city edition. Overall sales are about 52,000. Total number of employees is about 60.

The Limerick Chronicle is the second-oldest English-language newspaper still in existence, according to Mr Eugene Phelan, deputy editor of the Limerick Leader. The paper was founded in 1766. (The oldest English-language newspaper in existence is the Belfast Newsletter.)

The group made an after-tax profit of €900,000 in 2000, the latest year for which figures are filed in the Companies Office. At a multiple of 15, that would indicate a value of €13.5 million though a true value is likely to be higher given its circulation and position in the Limerick market.

The Limerick market is an attractive one. The Evening Echo now publishes a Limerick edition and has a Limerick office. The Leader also competes against the Evening Herald. Competition is healthy. Talks are currently under way with trade unions about the bringing out of a tabloid on Thursday and Fridays.

The Limerick Leader is owned by members of the Buckley, Wright and McAuliffe families. It is understood there have been a number of approaches over the years from interested parties, including SRH and TCHL.

The Galway-based Connacht Tribune, which made an after tax profit of €1.27 million (£1 million) last year, is another major provincial newspaper likely to charge a high price should it ever sell out. Again on a multiple of 15 times profits, the accounts would indicate a rough value of €19 million. Circulation and location are likely to mean the true value is higher.

With the purchase of the Longford Leader, SRH plc now owns five regional titles in the Republic. Of its 1,032 employees, 187 are now in the Republic.

Since its €35 million purchase of the Kilkenny People group in 2000, SRH has been looking for other titles which it can print on its Kilkenny press.

There are still a lot of independent titles which could be purchased. The Regional Newspapers Advertising Network has 38 members which produce 53 titles. (There are approximately 15 other titles outside the network.)

The organisation offers a service to advertising agencies whereby access can be had through it to all or some of the member titles. Advertising sales (excluding classified) are said to be buoyant.

The regional newspaper sector will be unrecognisable in 10 to 15 years, said Mr Neville Galloway, the association's chief executive. "The groups are buying more and more of the family-owned businesses. The map is changing and changing rapidly. I don't know that in 10 years there will be any family-owned titles."

The largest group in the regional newspaper sector, Independent News & Media, is thought unlikely to purchase any more titles as such a development might fall foul of competition law.

SRH is taking full ownership of Today FM. It also owns Downtown Radio in Northern Ireland and the Morton newspaper group.