Telegraph results boost sale prospects for new owners Lloyds

Receive free Media updates

We’ll send you a myFT Daily Digest email rounding up the latest Media news every morning.

The Telegraph Media Group has posted profits for the full year ahead of expectations in a boost for new owners Lloyds Banking Group as they prepare to sell the business later this year.

The group will reveal on Tuesday that pre-tax profits surged by a third to £39mn in 2022, driven by growth in digital subscriptions and cost management in parts of its operations.

The results will be used by potential bidders as the basis for their bids, with analysts estimating that the newspaper group could fetch between £400mn-£700mn.

The newspaper is on track to reach a strategic goal of 1mn subscriptions by the end of 2023, it said, boosted by continued growth in its digital offer as well the acquisition of Chelsea Magazine Company this year. 

The group said subscriptions across print and digital rose above 974,000 as of June 2023, with digital subscriptions comprising 637,717. Revenue rose 4 per cent to £254.2mn in the year ended December 2022.

TMG expects profitability to increase further in 2023, despite continued decline in print advertising revenues and inflationary pressures, as more shift to higher margin digital subscriptions.

Nick Hugh, chief executive of the Telegraph, said in a statement that its aim was to “reach more paying readers than at any other time in our history”.

Lloyds took control of The Telegraph and The Spectator last month after previous owners, the Barclay family, failed to pay down debts of more than £1bn against the businesses.

Lloyds appointed receivers AlixPartners to oversee the restructuring of the business ahead of a sale expected to begin formally in coming weeks.

The lender is close to appointing a bank to help run the auction, with Goldman Sachs among the potential candidates, having picked Mike McTighe, who chairs BT’s Openreach infrastructure arm, as chair of the Telegraph Media Group to help oversee the sale. Lazard has been advising Lloyds on debt and strategic options for the group.

Potential bidders and analysts say the price for The Telegraph will in part depend on the value of the brand name and position in British society as an influential right leaning publication as much as a straightforward earnings multiple.

This is also true of The Spectator, which has a smaller audience but carries weight in Conservative political circles, and which could be sold in a separate deal to maximise sale proceeds for Lloyds.

Douglas McCabe at Enders said: “This momentum will help leverage its valuation, though multiple bidders will always be the critical ingredient.”

Those close to the process said that while there were a large number of potentially interested buyers, many of these were unlikely to be seen as acceptable owing to the threat of either regulatory or competition issues. 

Potential bidders include rival media groups such as Rupert Murdoch’s News Corp, Daily Mail owner DMGT, David Montgomery’s local newspaper group National World and Belgian publisher Mediahuis.

There are also a number of private investors and media executives considering making a bid for the newspaper, potentially alongside investment from a Middle East sovereign wealth fund.

Sir Will Lewis, former editor of The Telegraph, is pulling together a consortium, with hedge fund billionaire Paul Marshall and Daniel Křetínský, the Czech billionaire and owner of West Ham United, also expected to show interest in either or both titles. 

Analysts at Enders added that potential buyers included UK and non-UK media groups, private equity investors, wealthy UK individuals interested in acquiring a “trophy” asset close to the Conservative party, or non-UK individuals.

“In our view, AlixPartners will inevitably prefer a buyer that can make an unconditional offer to buy The Telegraph, rather than entertaining an offer that perforce will be conditional on regulatory clearance.”