Regional papers no longer poor country cousins

Provincial (sorry, they like to describe themselves as regional, not provincial) newspapers have a bit of a Cinderella image. Big city journalists can sometimes look at the regionals with their reams of parish notes with amused disdain and dismiss them as something of an anachronism in this modern age.

Some regionals may not be icons of journalistic excellence but these days they are rolling in money and operating on margins of which many city newspapers could only dream.

There's a pretty good reason why Independent News & Media is so big in regional media and why the likes of Trinity Mirror and Scottish Radio Holdings have spent big money carving out a presence in Irish regional media.

Some have looked with amazement at the £28.2 million paid by Scottish Radio Holdings (almost £30 million when the premises is included) for the Kilkenny People and its three titles, not to mention the £18 million Mirror paid for the Derry Journal two years ago.

But the bald facts are that, despite paying what many in the industry believe is a top-of-the-range price to John Kerry Keane for the Kilkenny People, the deal will boost Scottish Radio Holdings' earnings in the first year. That's hardly surprising given the 27 per cent operating margins the Kilkenny People gets from its business.

And those margins in Kilkenny are by no means exceptional in the regional papers.

It is thought that Independent group gets up to 30 per cent margins from its chain of titles, while even the smallest family-run paper with only a few thousand circulation is reputedly getting a 20 per cent plus return.

Remember, Scottish Radio paid £1 million a year ago for the Leitrim Observer, a paper servicing the country's poorest and least populated county.

It might be a bit simplistic linking operating profits or turnover directly with the prices already paid for regional titles. But the Scottish Radio/Kilkenny People deal shows clearly that there is an awful lot of money locked away in the regional papers, many of which are still run independently by family interests.

In many cases, the family interests running the papers are into the third generation but Current Account has been told by more than one proprietor how difficult it is getting the next generation interested in the business.

Given John Kerry Keane's windfall, there must be some proprietors thinking about cashing in before the end of the boom sends valuations tumbling.

If John Kerry Keane's 43,000 circulation in Kilkenny and Tipperary justifies a price tag in excess of £28 million, what would the Limerick Leader - four issues a week selling more than 100,000 copies be worth? And what about the Connacht Tribune in booming Galway (over 28,000 circulation), Eugene McGee's Longford Leader (25,000), the Walsh's Munster Express (18,500), Padraig Kennelly's Kerry's Eye (18,000) or Johnny O'Hanlon's Anglo Celt - complete with spanking new premises and circulation of more than 15,000.

Don't be surprised if our corporate financiers get on their bike and go down the provinces to try and unlock some of this wealth.