SRH beats off Examiner to snap up Longford Leader

Scottish Radio Holdings (SRH) is understood to have beaten off strong competition from Cork-based Examiner Holdings to buy the Longford Leader Group, publishers of the regional newspaper of the same name, for €9.1 million (£7.17 million).

While Longford Leader editor and managing director Mr Eugene McGee would not comment on the number of approaches he had received for the company, industry sources said that both SRH and Examiner have been aggressively courting regional newspaper publishers and offering large sums for their companies. An indication of how much buyers are prepared to pay for profitable regional newspapers is the multiple that SRH has paid for the Longford Leader - some 15 times last year's profits of €630,000.

The Longford Leader is one of the middle-ranking regional newspaper groups with a circulation of 13,000, but like most regional titles it enjoys a phenomenal reader loyalty. Its circulation of 13,000 is based on a county with a population of no more than 30,000.

The acquisition is SRH's third in Irish regional newspapers and follows the €35 million acquisition of the Kilkenny People Group in 2000 and the €1.5 million acquisition of the Leitrim Observer a year earlier. SRH has also invested heavily in commercial radio in Ireland and recently acquired the outstanding 74 per cent of Today FM for €60 million. Overall it has spent well in excess of €100 million on its media interests in the Republic. It also has extensive media interests in Northern Ireland, owning Downtown Radio in Belfast and the Morton chain of local newspapers. Over the same period, the Examiner group has bought the Kerry title The Kingdom and more recently bought the Carlow-based Provincial Publishers.

The Naas-based Leinster Leader group has also been on the expansion trail and last year bought the Dundalk Democrat. The British group Trinity Mirror also owns the cross-border Derry People group of newspapers.

But despite the flurry of acquisitions, Independent News & Media remains the biggest regional newspaper publisher, with a chain of 11 titles concentrated on the east coast but also including The Kerryman, one of the largest selling regional titles. Competition issues prevents Independent expanding its chain of regional titles, industry sources said.

One pattern that has emerged from acquisitions in recent years is that they have largely involved what Mr McGee of the Longford Leader described as "second-tier" titles. So far, none of the larger circulation titles based in large towns and cities such as the Limerick Leader and the Galway-based Connacht Tribune have changed hands.

These larger groups, however, would be very expensive to buy based on the multiples of profits at which the smaller newspaper groups have been acquired - between 10 and 15 times profits.

The regional newspapers are attractive acquisitions for a number of reasons. They have benefited hugely from the strength of the economy in recent years; they are attracting an increasing share of national advertising through the Regional Newspapers Advertising Network; they enjoy strong customer loyalty and many of the titles are "must buys" in their locality. They also tend to operate with low cost bases - the Longford Leader employs just 20 people.

Mr McGee said that SRH allowed its subsidiaries operate as standalone operations with no outside interference and said he would be remaining as editor and managing director of the Longford Leader.

"Scottish Radio leave things as they are and they don't interfere. The paper isn't going to change and the style of the Longford Leader you will see in a month's time will be the same as the paper you see now," he said.

He would not be drawn on whether the current print contract with the Meath Chronicle group would be maintained, adding that this would be a matter for the new owners. But industry sources said that it would be a surprise if SRH did not transfer printing of the Longford Leader to its Kilkenny printworks where the group's other titles were printed and where there was spare capacity.

Mr McGee himself is the major beneficiary of the sale and will receive €4.3 million for his 47 per cent stake in the parent company. Mr Michael Dolan, another director of the group, and local Longford businessman Mr Padraic Gearty will receive about €1.4 million each for their 16 per cent shareholdings while Ms Patricia Murray will receive around €1.8 million for her 20 per cent stake.