No happy ending for paper venture

After months of speculation and negotiations another national press revolution has come to nothing. The talks, aimed at getting The Telegraph and Express groups to merge salesforces, ended following a meeting last week.

But many blame the premature way the proposed merger was announced – prompted by managing director Stephen Grabiner’s departure from The Telegraph to join United News & Media as executive director of newspapers – early in May.

It would have looked as if Telegraph deputy managing director Len Sanderson had lost out on the top job when Grabiner’s replacement, group editorial director Jeremy Deedes, was announced so the new Telegraph sales unit was announced at the same time.

Disagreement over management structure has also been touted as the reason for the breakdown in talks.

However, rather than the traditional merger bickering over top jobs, both The Telegraph and the Express say the simple reason the deal fell through is money.

Talks on a merger between the two sales houses began between Sanderson, managing director of the merged company, and Grabiner well before the latter moved over to United News & Media and was actually in a position to make things happen.

Grabiner had not even taken up his new role when The Telegraph announced it was to set up a new media sales company that would sell advertising for all its titles.

“The whole thing was too premature. I think when it was announced no consideration had been given to details and it was not well conceived,” says one buyer.

Sanderson agrees the announcement was made too early. However, once Grabiner was in place at United News & Media talks resumed between the pair and plans forged for the new operation to start up in the autumn.

The tie-up was part of Sanderson’s vision of the future of media sales (MW May 10).

“The future is more about centralisation of all media, from both a cost-cutting point of view and to develop news sales opportunities,” he says.

“Sanderson and the finance people worked together to devise a plan and structure,” says Grabiner.

But, according to Sanderson, talks concerning the financial arrangements for the merger could not be agreed and this became increasingly apparent in numerous meetings over the past two months.

After Wednesday’s meeting both parties finally retreated to lick their wounds.

“The Telegraph felt that after discussions about costs and savings there was not enough in it for them in the short term. Len and the team were probably the most miffed of all the people involved,” says Grabiner.

“We took a more strategic view and committed to the notion that it was a good thing. But in the end it takes two to tango,” he says.

So is there any chance that the merger between the Express and The Telegraph’s sales teams will resume? Both Sanderson and Grabiner say absolutely not.

The Mirror Group failed in negotiations with the Express to develop a similar sales merger last year, but the collapse of the Telegraph deal has left the way open for the Mirror Group again.

It was thought Mirror Group chief executive David Montgomery may have been trying to dismantle the proposed merger to revive his own courtship of Express newspapers (MW May 31).

Sanderson says: “We now have a blueprint for how it will work so we may give it a go (with another party).”

Meanwhile, Grabiner says he has learned valuable lessons which he hopes may help with the Express’ own operations.

“I do see developments from the Express’ links with Channel 5 – it could lead to a television synergy,” says a media buyer.

United News & Media and MAI, which has a 29 per cent shareholding in Channel 5, merged in February.

Grabiner himself hinted at a possible match. “We are not going to be hunting for a new partner, we’ll be looking at our own organisation. However, we may talk to another newspaper or even an operator in different media in the future.”

Remarkably, in the period following the announcement of the merger in May until talks were dissolved last week, there has not been a single senior personnel casualty. Buyers say both sales teams were in disarray because of the uncertainty about their jobs.

Sanderson, who was to head the new operation, resumes his work as Telegraph’s deputy managing director after his two to three month sojourn on the planned merger.

In contrast Grabiner says the merger was just part of his role and that he was not brought into United News & Media solely to work on the joint sales house.

Christine Costello, group ad director at the Express, was tipped to take one of the top roles at the new company. She is now working on what the Express has learned from the past two months and may integrate this into its ad sales infrastructure.

The management structure of the merged company would have led to some job losses, according to Sanderson, so both sales teams can, for now, return to work and put weeks of nail biting behind them.

The long-term pressures – rising costs and falling circulations – that pushed the two groups towards a merger still exist, so it is unlikely that this is the last such proposal in the newspaper industry.

However, while printing and distribution have managed to set up joint ventures with relatively few problems, advertising sales still appears to be too competit ive an arena to be made to work without truly major financial benefits.