David Montgomery considers potential Reach purchase

UK newspaper veteran David Montgomery is exploring a bid to buy Reach, the country’s largest local news publisher and owner of the Mirror and Express titles.

Montgomery’s company National World, which last year made a swoop on the UK’s third largest local news publisher JPI Media for £10mn, said late on Thursday that it was in “the early stages of exploring a possible offer” for Reach, adding that it had not yet approached its board.

The UK’s local newspaper industry has long struggled to make money from online readers, while declining print circulation has pushed down revenues. Reach has in recent years pursued an aggressive acquisition strategy, arguing that scale is the way to make online news pay.

A successful bid for Reach would once again put Montgomery at the helm of a sizeable chunk of Britain’s local news market and further consolidate a sector that has struggled to find a sustainable business model based on digital advertising.

Reach’s share price has slumped nearly 70 per cent in the past year on concerns about the outlook for advertising spending, soaring newsprint costs and a deteriorating UK economic backdrop. But the company still has a market capitalisation of £328mn, roughly six times higher than National World.

Montgomery, who ran the predecessor to Reach in the 1990s, led a consolidation of local press titles in 2012 with the creation of Local World, which he sold three years later to Reach, then known as Trinity Mirror, in a £187mn deal.

Other ventures have been less successful. The launch of Local World followed Montgomery’s exit from Mecom, a pan-European media group he set up in 2005. A string of acquisitions meant its debt ballooned to €680mn before investors fled and it crashed out of the FTSE 250 alongside Johnston Press.

When National World last year purchased JPI, it estimated that the group would make £17mn in digital revenue in the year ending January 2021, out of total revenue of £85mn. Revenues last year reached £86mn but digital made up only £12.9mn.

Montgomery also weighed a bid for the Telegraph newspapers in 2019. He listed National World that year, seeking to carve out a stake in British news.

Reach, which declined to comment, reported revenue of £615.8mn with an operating profit of £79.3mn in 2021.

Journalists at Reach went on strike in September after talks with management over pay collapsed, although they later accepted a revised salary offer.