London 'Independent' titles cost IN&M €285m

THE LONDON Independent newspaper titles have cost Independent News Media (INM) €285 million since the group first bought into them in the mid-1990s, according to Denis O’Brien, one of the group’s biggest shareholders.

Mr O’Brien, who owns 26 per cent of the Irish-based media group, is seeking an extraordinary general meeting (egm) in a bid to halt INM’s proposed sale of its South African outdoor advertising business for €98 million.

Mr O’Brien has been calling for the sale or closure of the London Independent and Independent on Sunday titles, which INM bought from the Mirror Group.

Yesterday, a spokesman for Mr O’Brien estimated the British titles had cost INM €285 million since their purchase. This includes the €75 million business buyout, €7.5 million in losses for the first two years of its involvement, and €195 million in losses for the period from 1996 to 2009.

“We stand by these figures,” the spokesman said. “The losses incurred by the investment in the London Independent and the Independent on Sunday have had an enormous impact on the erosion of shareholder value at INM.”

The group has been in talks with financial institutions to whom it owes €1.3 billion on foot of a series of bond issues. The company was originally due to repay €200 million last May, but has won a series of extensions on this deadline while negotiations on restructuring its liabilities continued.

The sale of the South African business is part of its settlement proposal with its bond holders.

INM’s chief executive, Gavin O’Reilly, said last night that the matters facing the group are very serious.

“And this is a time for serious behaviour – not what appears to be a personal vendetta that is directly impacting stakeholder value. If Mr O’Brien has a constructive proposal to put to shareholders, let’s hear it before asking shareholders to abandon an agreed road map to financial stability,” he argued. “Conversely, if Mr O’Brien’s aim is to unilaterally wrestle control of this company for his own benefit, he should avoid the back door and make a transparent bid for the company.”

A spokesman for the group said it did not want to get involved in a tit-for-tat over the London Independent titles’ financial position.

“The group’s clear strategy is to bring the UK nationals to profitability and, assuming that the advertising market will neither recover nor worsen, the company anticipates the titles breaking even within 15 months,” he said.

He added that their closure would force the company to make a guaranteed £30 million payment, and pointed out that cash losses to break-even point would cost less than half of this.

INM is Ireland’s biggest media group. It publishes the Irish Independent and Sunday Independent newspapers, the Evening Herald, Belfast Telegraph, Sunday World and a range of provincial titles. It owns stakes in the Irish Daily Star and Sunday Tribune.

Along with this, it has newspaper and advertising interests in Australia, India, New Zealand and South Africa.