Mixed feelings as Johnston's success rankles rival biddersScottish

0 Comments | Sunday Herald, The, Jun 26, 2005

JOHNSTON Press's rivals couldn't decide if they were envious or furious at the news that the Edinburgh group had been lined up by Emap to take over Scottish Radio Holdings's newspaper division Score Press for pounds-155 million last week. While most were impressed at Emap's dealmaking, many wondered why the 45 Score titles were changing hands without an auction.

Groups like Northcliffe, Trinity and Newsquest, publisher of the Sunday Herald, are all thought to have expressed an interest. Other players like Archant and Dunfermline Press, which already has an Irish portfolio, were almost certainly sniffing around too. Surely Emap plc should have auctioned the titles to squeeze out maximum benefit for shareholders?

The close links between the protagonists at Emap, SRH and Johnston fuelled mutterings of a Scottish stitch-up. You have Jimmy Gordon, SRH chairman, on the Johnston board. You have Marco Chiappelli, former Johnston finance director, on the board at SRH.

Hamish Grossart, the SRH vice-chairman and a key player in the Emap/SRH negotiations, is the nephew of Sir Angus Grossart, chairman of Edinburgh investment bank Noble Grossart, which was one half of Emap's financial advice team.

It doesn't stop there. Johnston was the group that bought Emap's newspaper division in 1996. And Gary Hughes, the former Emap financial director, who was heavily involved in negotiations with SRH and Johnston before he stepped down last month, is a Scot with longstanding links to various opposite numbers in Edinburgh and Clydebank. Put it all together, and it's hardly surprising that many rivals were quietly incensed at not getting a look-in.

In spite of all this, there seems to be no trouble in store. The Emap shareholders have either kept quiet or made warm noises, indicating they share chief executive Tom Moloney's view that pounds- 155m was worth paying to avoid an auction and that other enquiries were all flawed. In these choppy advertising seas, it seems a big dollop of straightforward cash is keeping everyone contented.

There are two very different ways of looking at this deal. One view would be to say that it all looks a tad cosy, particularly with all the board connections. But noone is coming out to say this publicly.

The other is to say that a deal was done which made business sense and which built up one key Scottish media player just as control passed south from another.

Assuming no last-minute surprises, this deal will, therefore, go down as a great negotiating victory for Tim Bowdler and Stuart Paterson, the chief executive and finance director at Johnston. It's not often that a buyer pulls off such a clean swipe in the face of so many potential rival bidders.