'The Telegraph' Is Up For Sale, But For How Much?

With digital revenues only able to fill a smart part of the chasm left by plunging circulations and declining print revenue, it seemed only a matter of time before we had another huge day of reckoning in the newspaper industry. Today, it would appear we have news that The Telegraph and The Sunday Telegraph are being put up for sale.

According to The Times, which broke the story at the weekend, one of the Barclays brothers has been keen on a sale for several years, and got his way after the pair took a recent look at their billions of pounds worth of assets to decide which should stay and which could be released. The Times suggested last month that the pair were also seeking to sell The Ritz hotel with an estimated asking price of GBP800m. 

News of the brothers looking for a buy for The Telegraph papers come very shortly after its latest results showed digital subscriptions were up 27%, leading to an overall subscriptions revenue rise of 10%. However, operating profits were down more than 80% from GBP16m to GBP3.1m. The story breaking the news that the papers are up for sale repeats a promise from The Telegraph that next year will see much better results.

It is hard to see how. The paper has several things going against it. Don't get me wrong -- it has been and remains a fine newspaper with a breadth of quality articles that rival any other quality newspaper. The issue is that it is very much associated with an ageing population as well as the Leave campaign which, again, is mostly associated with older readers.

The question will remain: how long these people will carry on buying a newspaper -- and when they lose the habit, will they convert to signing up online for digital versions? 

It is not only The Telegraph that faces this question, but it is certainly where the spotlight is today. The owners have previously taken a hit on the value of the company -- most recently with GBP115m taken off its book value in 2017, just two years after GBP150m was taken off the company's value as a non cash impairment charge. 

These moves would suggest the papers (daily and Sunday) have been valued as being worth less than previously thought and one can only wonder if the latest results provided the moment when the owners thought they were swimming against the tide trying to improve the company's value. 

If digital subscriptions are up, and yet the devastating impact digital is having on print sees profits fall 90%, then it leaves little room for conjecture as to why the owners would be considering selling the newspapers, rather than waiting for the promised improvement in its financial position.

The Times is suggesting that the Daily Mail Group is a potential buyer, as is Evening Standard owner Alexander Lebedev. The big question mark will now be how much they are prepared to bid for the paper compared to the GBP665m the Barclay brothers paid for it in 2004. 

Now that print revenues have been decimated by digital, what will the two newspapers be worth? If they can have a successful digital subscription drive, which sees numbers go up 27%, and yet still see profits fall by 80%, it would be hard to see the newspapers being worth more than they were bought for 15 years ago. Given the write-offs in value, it is hard to see how they would be worth more than half the sum paid by the Barclays, but we can leave that to the bidders and their advisors to decide.

It was clear when the latest Telegraph Group figures were released, little less than a fortnight ago, that the 90% drop in profit was a huge story that would have major ramifications.

Today, we know that this includes the possible sale of the daily and Sunday versions of the famous newspaper. The price they go for will be a bellwether sign for the UK's troubled newspaper industry. It is highly unlikely to be positive news.

2 comments about "'The Telegraph' Is Up For Sale, But For How Much?".
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  1. David Beck from Retired, October 28, 2019 at 1:15 p.m.

    profits were down 90% from GBP14m to GBP3.1m

    Interesting maths.

  2. Sean Hargrave from Sean Hargrave, October 28, 2019 at 1:43 p.m.

    Apologies, there were a bunch of figures around regarding pre tax and operating etc profits. Have adjust the change from 16m to 3m as 80%. Thanks for pointing this out. 

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