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LONDON (Reuters) - Daily Mail has agreed to sell its regional titles to a new company led by tabloid veteran David Montgomery in the biggest shake up of the British newspaper market for years.
Under the plans, the new group will be called Local World and will reach a weekly newspaper audience of 6 million readers and 7 million online users, through its 107 print titles and 60 websites.
Daily Mail will sell its titles to the new company for 52.5 million pounds ($83.6 million) and receive 39 percent of the new media group.
The Iliffe family, which owns the Yattendon Group, will take a 21 percent holding in return for their 36 titles, while rival newspaper publisher Trinity Mirror will pay 14 million pounds to take a 20 percent equity stake. It will not sell any titles to the new group.
The overhaul of the British newspaper market follows years of falling advertising revenues and falling circulation among the regional titles.
Montgomery has played a key role in restructuring Europe's newspaper industry, firstly at Britain's Mirror Group and then as chief executive of European newspaper group Mecom.
He told Reuters a year ago that he had formed a London registered company with unnamed partners called Local World, with the intention of investing in European titles.
Montgomery will be chairman of the new group while Steve Auckland, currently chief executive of Daily Mail's regional unit, will become the chief executive of Local World.
"With this move we receive cash from the sale and also retain a stake in a business with excellent prospects," Daily Mail Chief Executive Martin Morgan said.
"Local World has talented people and a clear vision for the future of local media. I think the media industry has been waiting for this logical next step for regional newspapers."
Reporting by Kate Holton; editing by Neil Maidment