The Irish Times view on the INM deal: A fresh start

On paper, it looks like a smart deal for Mediahuis

More than 13 years after he first invested in Independent News & Media, businessman Denis O'Brien yesterday sold just over half his stake as part of a deal that will see Belgian-Dutch publisher Mediahuis acquire Ireland's largest media group for €145.6 million.

O’Brien’s involvement with INM has been destructive for his bank balance and the company’s reputation has suffered in recent years. We can’t be sure about the exact loss he will sustain from selling his 29.9 per cent shareholding but he spent about €500 million accumulating the stake and will receive just €43.5 million from selling it.

The boardroom battles over this period, initially with Sir Anthony O'Reilly and his family, and the appointment of High Court inspectors last year to investigate allegations of a data breach, have damaged the reputation and standing of INM in the marketplace. O'Brien and former INM chairman Leslie Buckley are key figures in that extraordinary data breach saga.

For INM, this deal offers the prospect of a fresh start under new owners who have significant expertise in the industry. On paper, it looks like a smart deal for Mediahuis. INM had cash reserves of €81.7 million at the end of last year. So Mediahuis is paying just under €64 million to buy the operating business, which made a pre-tax profit of €24 million in 2018. That’s a multiple of just two-and-a-half times, well below the norm.


Highly profitable

In spite of the challenges facing newspaper publishers, INM remains highly profitable (12.4 per cent profit margin last year) and many of its titles still lead the market, albeit with declining circulations.

But it also needs significant investment. Some of its top journalists left the business in recent years and have not been adequately replaced, and the company’s digital strategy needs a major reboot. The new owners will also have to deal with any fallout from the work of the High Court inspectors and the alleged data breach. The inspectors’ work also means that O’Brien won’t be able to draw a line under his involvement with INM for some time to come.