United News & Media plc

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United News & Media plc

Ludgate House
245 Blackfriars Road
London SEI 9UY
United Kingdom
(0171) 921-5000
Fax: (0171) 928-2728
Web site: http://www.unm.com

Public Company
Incorporated : 1918 as United Newspapers Ltd.
Employees :18,150
Sales :£2.01 billion (US$3.12 billion) (1998)
Stock Exchanges :London
Ticker Symbol :UNEWY
NAIC : 51111 Newspaper Publishers; 51112 Periodical Publishers; 511199 All Other Publishers; 51312 Television Broadcasting; 54187 Advertising Material Distribution Services; 514191 On-Line Information Services; 51411 News Syndicates; 51211 Motion Picture & Video Production; 51212 Motion Picture & Video Distribution

United News & Media plc (UNM) is a leading U.K.-based international media firm. Although the company’s earliest roots are in the newspaper field, UNM’s largest operating area is that of business services, which accounts for about 53 percent of overall revenues. The largest part of this division is Miller Freeman, which is the number one trade exhibition organizer in the world and a leading business magazine publisher, with strong positions in the United States, Europe, and Asia. Other business services operations include market research firms Audits & Surveys Worldwide Inc., Mediamark Research, and NOP Research Group; global newswire service, PR Newswire; and Visual Communications Group, a photographic image marketing group. UNM’s second largest operating area is that of broadcasting and entertainment, which includes three Independent Television Network licenses in the United Kingdom, a 29 percent interest in the United Kingdom’s Channel 5, and television production and distribution activities. The third leg of the United News & Media empire is that of consumer publishing. This sector includes the remnants of the company’s newspaper roots—the national U.K. papers the Express and the Daily Star —as well as advertising periodicals in the United Kingdom and the United States. UNM adopted its current name in 1995, before which it was known as United Newspapers plc.

Early History of United Newspapers

From the middle of the 19th century the newspaper industry had grown faster in the United Kingdom than in any other country in the world. Educational reform provided a literate readership interested in foreign affairs and domestic politics and rapidly improving road and rail links facilitated distribution throughout the country. The industrial revolution had created towns and cities that were able to provide a local newspaper with readers and advertisers. Advances in technology—Linotype and rotary presses, typewriters, telephones, and telegraphs—enabled local and national newspapers to operate profitably.

Politicians were quick to realize the great influence that newspaper editors had over the electorate, and from the 1850s onward there was a considerable interchange between the Parliament and Fleet Street, the traditional home of U.K. journalism. David Lloyd George, prime minister in the United Kingdom during World War I, was an adept user of the press and was not afraid to exercise his influence to negate the effects of a political crisis. When the Daily Chronicle employed as a military correspondent a stern critic of his policies, Lloyd George responded by calling together a group of Liberals to buy out the owners of the paper.

United Newspapers Ltd. was formed in 1918 by these supporters of the prime minister. The company bought two papers in the deal, of which the Daily Chronicle was the most important. The other paper, Lloyd’s Weekly News, had been founded in 1842 and held the distinction of being the first newspaper with a circulation of one million readers. The board of United Newspapers soon began to publish a northern edition of the Daily Chronicle as a rival to the Conservative Lord Northcliffe’s Daily Mail and also acquired the Edinburgh Evening News and the Doncaster Gazette, papers that carried on the strong Liberal tradition of Lloyd George and his politically minded associates.

In 1927 the company was sold for £2.9 million to the Daily Chronicle Investment Group, a joint venture of Liberal interests led by the Marquis of Reading, Sir David Yule, and Sir Thomas Catto. A covenant in the sales document restricted the owners to running the paper “in accordance with the policy of Progressive Liberalism” to further social and industrial reform, free trade, and “other programmes of Liberal and Radical measures adopted by the Liberal party.”

Within a year United Newspapers was again in the hands of a new owner, William Harrison, a Yorkshireman who had trained as a solicitor in London. Although Harrison was a Conservative, he proclaimed that the group would continue to support Lloyd George and the Liberal cause. As chairman of the Inveresk Paper Company, Harrison bought a controlling interest in United Newspapers. The latter was then amalgamated with Provincial Newspapers Ltd., an umbrella organization taking in some 17 local newspapers that Harrison had acquired in the early and mid-1920s.

Harrison’s belief in the regional market molded United’s acquisition strategy for the next 50 years, but this strategy was also responsible for his downfall. In autumn 1929,80 percent of the value of the shares in the Inveresk Paper Company was written off because of the Great Depression. In December Harrison resigned as chairman when it was revealed that Inveresk had debts of £2.5 million and that United Newspapers had no immediate means to pay for a £500,000 modernization program for the Daily Chronicle. Both companies were highly leveraged at a time when investment capital in all sectors of the economy was nearly impossible to secure.

The board of United Newspapers—led by Sir Bernhard Binder, founder of the chartered accountants Binder Hamlyn, and managing director Jack Akerman—was now facing a major crisis. Its solution was to merge the Daily Chronicle with the Daily News to produce a new title, the Daily News and Chronicle. In a move to provide finance for United’s provincial press, 50 percent of the ownership of the new paper was sold to News and Westminster Ltd.

The mid-1930s were difficult for United Newspapers. It was a time of depression and mass unemployment, especially in United’s marketplace, the north of England. Fears for the company’s survival increased when Lord Rothermere announced his venture, Northcliffe Newspapers, with a stated aim of producing an evening paper in every city and metropolitan area served by United Newspapers. But in a move executed by Jack Akerman and Sir Herbert Grotrian, who had replaced Binder as chairman, United Newspapers sold its 50 percent share in what—in June 1930—had become the News Chronicle for £500,000 and was instantly freed from its debt. The reaction from the City was ecstatic, and United’s preference shares rose from one shilling sixpence to 25 shillings, as final proof that the crisis had been averted.

The war years were less difficult for United than they were for those newspaper groups that were based in heavily bombed Fleet Street. An increase in news was cruelly matched by newsprint rationing, distribution and communication problems, and government censorship. Although Sheffield and Hull suffered damage from Luftwaffe bombing comparable to that inflicted on London, presses in Scotland, Leeds, and the west country fared better, and United Newspapers was able to consolidate its success in these areas.

Drayton Took Over As Chairman in 1946

The next event of importance for the directors of United Newspapers occurred in the winter of 1946 with an invitation to dinner at the Hyde Park Hotel from Harold Charles Drayton. Drayton—always known as “Harley”—was the epitome of the self-made man; born in rural Lincolnshire, he started his working life as a £1-a-week office boy and rose through the ranks of the City, eventually controlling the 117 Old Broad Street Group, a large and diverse empire of companies with worldwide interests.

Although Drayton described himself as almost uneducated, he was in truth an erudite and imaginative businessman. He realized that United Newspapers was holding assets of immense value, in the shape of offices and printing houses in the center of major towns and cities throughout the United Kingdom. Within a few weeks of the Hyde Park dinner, Drayton began negotiating with United Newspapers and eventually bought 500,000 shares, representing approximately one-third of the equity of the company. After several months as an ordinary board member, Drayton became chairman on New Year’s Day 1948.

Years of steady but unspectacular profits for United followed, enlivened by a number of small and cautious acquisitions. Drayton realized that the directors of the company, three of whom were in their 70s, would soon have to be replaced. Two important additions were made to the board; significantly, they were both men who had risen through the ranks of Provincial Newspapers, a company associated with United that had been formed in 1930.

Company Perspectives

Our aim is to exploit fully our existing content, through established distribution channels and new media, and to invest boldly to develop new content and services to take advantage of the increased functionality of digital media.

Ken Whitworth had been advertising manager of a group of local newspapers based in south London before joining the Royal Air Force in 1939. He returned from four years as a prisoner of war in Japan to prove his business worth as a member of several of Provincial’s boards. William Barnetson had started as an editorial writer on the Edinburgh Evening News and swiftly rose to become editor. He demonstrated his management skills on the board of the Edinburgh paper and later on the board of Provincial. After the quiet years of the 1950s, when the United Kingdom struggled to recover from the ravages of World War II, United Newspapers entered the 1960s with the commercially minded Whitworth and the editorially gifted Barnetson as joint managing directors. With Harley Drayton as chairman it was to be the first golden age of United Newspapers.

United Newspapers entered the 1960s as a wealthy company with an established stable of widely read regional newspapers. It was to Barnetson’s credit that he did not rush headlong into reckless expansion but instead formulated a cautious acquisition strategy that relied as much on the goodwill of competitors as on his own undoubted capacity for striking deals. United’s move in 1963 to larger premises in Tudor Street was indicative of United’s imminent emergence as a major player in the U.K. newspaper industry.

In 1963 the Nelson Leader and the Colne Times, both struggling Lancashire papers, were bought by United, which rationalized operations by transferring printing to its own underutilized plant at Burnley. Later in the same year United sold the 49 percent stake in the Hull Daily News, held by Provincial, for £1.7 million to Associated Newspapers. In November, United gave the Edinburgh Evening News to the Thomson group in exchange for two Sheffield papers, the Telegraph and the Star. For Thomson it meant the end of competition for its Evening Dispatch in Edinburgh and for United the loss of a fine paper was offset by the strengthening of its position in Yorkshire. This deal was followed by an agreement to sell United’s Yorkshire Evening News for 20 percent of the equity of the far stronger Yorkshire Post Newspapers. Drayton adroitly realized that it was necessary to lose a battle, or at least to appear to lose a battle, to win the war. The purchase of the group of newspapers centered on the Blackpool office of the West Lancashire Evening Gazette and further consolidated United’s position in the north of England.

Harley Drayton was succeeded as chairman by William Barnetson in April 1966. Barnetson followed Drayton’s strategy and tactics when he sold the Doncaster Gazette to Yorkshire Post Newspapers in exchange for 49 percent of a new joint venture company, Doncaster Newspapers Ltd., which was set up to publish the Doncaster Evening Post. With Ken Whitworth’s help as managing director, United introduced new economies in preparation for the company’s greatest years of expansion.

The year 1969 started quietly with the acquisition of a group of weekly papers in north London. United then took the brave step of entering the periodicals market when Bradbury Agnew and Co., fearing hostile predators, offered its flagship Punch, the Countryman, and a number of printing houses to the company. During the tail end of the 1960s Punch had been suffering from a problem that was to recur with some regularity over the next 20 years. Seen as a magazine for dentist’s waiting rooms, it found itself out of step with contemporary humor, but United worked closely with then editor William Davis to counter this problem.

While the deal with Bradbury Agnew was being finalized, United had begun to increase its shareholding in Yorkshire Post Newspapers. In October 1969 United acquired the total equity of the group in a transaction that was more of a mutually beneficial merger than a hostile takeover. In just one year United Newspapers had more than doubled in size.

The 1970s saw a further period of deliberate consolidation for United Newspapers. Under Lord Barnetson the company had become firmly established as one of the Big Four of the U.K. regional press, and acquisitions were designed to increase further its share of the local market. When Barnetson died in 1981 his successor David Stevens, later Lord Stevens of Ludgate, knew that if the group was to survive it would have to venture beyond traditional areas of interest and concluded that expansion abroad was vital. He instigated a process of rationalization that saw the closure of unprofitable papers in Sheffield, Doncaster, and Wigan and the sell-off of the group’s printing interests.

Stevens’s leadership of United coincided with the rise of the 1980s media magnates. Rupert Murdoch and Robert Maxwell did more than simply buy out the interests of the Astors, the Beaverbrooks, and the Rothermeres; they replaced the old-fashioned newspaper proprietor with an aggressive, profit-driven businessman who was prepared almost continually to buy and sell media interests. Stevens, with a public profile deceptively lower than that of his major competitors, ensured that United Newspapers did not lag behind.

Acquired Fleet Holdings in 1985

In January 1985 United Newspapers bought a 15 percent stake in Fleet Holdings, owner of the Daily Express, the Sunday Express, the Star, and the Morgan Grampian Group, from Robert Maxwell’s Pergamon Press. When Lord Matthews, chairman of Fleet, refused to elect him to the board, Stevens initially launched a £223 million takeover offer in August 1985. This was well below the price of the company’s shares at the time and was accepted by less than one percent of Fleet shareholders. The bid was subsequently raised to £317 million, significantly larger than the market value of United Newspapers itself. The skills Stevens had learned as a fund manager in the City enabled him to gain complete control of Fleet Holdings by October.

Express Newspapers gave United Newspapers its first national newspaper in 50 years, but the return to Fleet Street was to be far from easy. The Daily Express had been losing readers in the middle market and was further hit by the launch of Today in 1986. Numerous changes in editorial staff led to a confused editorial style and the paper’s image problem was not helped by a steady turnover of advertising agencies.

Stevens initially reduced the number of regular employees from 6,800 to 4,700 and forced through new agreements with the national printing unions and the paper’s own chapels. In the ensuing years to 1990, the number was further reduced to 1,700. Electronic production and direct input of copy to computers meant that the labor-intensive process of hot metal composition could be bypassed. A ban on secondary picketing, enforced by the Employment Acts of 1980 and 1982, further weakened the hold of the traditional printing unions, which had already been shaken by protracted strikes and violent demonstrations in Warrington and Wapping. These measures returned the newly acquired national papers to profitability, enabling Express Newspapers to embark on a program of investment to ensure the future viability of its newspapers. This strategy involved the utilization of the new print technology, investment in color presses, increased paginations, and reduced advertising proportions, with the clear aim of improving the papers’ appeal to their target audiences. By 1990 there were strong indications of the success of this strategy, with all Express titles showing stable circulation and strong shares of their respective advertising markets. By the end of the 1980s the Daily Express and the Daily Star were, respectively, the fourth and sixth most popular daily titles in the United Kingdom. The Sunday Express was by far the biggest selling Sunday broadsheet paper and the fifth most popular of all national Sunday newspapers.

Diversified and Expanded Geographically in the 1980s and 1990s

Stevens’s first major overseas acquisitions took place in the United States. Gralla, a family-run publisher of trade magazines and promoter of trade shows, was bought in 1983 for US$44 million. Miller Freeman, publisher of a number of medical and computer trade magazines, was the next U.S. acquisition, followed by PR Newswire, a corporate and financial news agency. In the domestic market, United took control of Link House Publications in a move that added the classified advertising paper Exchange and Mart to United’s increasingly impressive list of titles.

Stevens also was determined to diversify into different markets. In 1987 Extel, a provider of financial and sporting information, was bought for £250 million. Benn Brothers plc, producer of directories and tax guides, was bought in 1987. In 1989 the Daily Express was the last national newspaper to leave Fleet Street, moving to the other side of the Thames River to new offices at Blackfriars Bridge.

By the beginning of the 1990s Lord Stevens had transformed United Newspapers from a publisher of regional U.K. newspapers to a diversified media group whose additional interests included the national U.K. papers Express and Daily Star, trade magazines, advertising publications, news services, and trade show activities. Geographically, the company had gained a considerable presence in the United States and was expanding certain business—most notably Miller Freeman and PR Newswire—into Asia. In 1995 this diversification was highlighted through the company changing its name to United News & Media plc.

Even more dramatic changes were in the cards for UNM during the remainder of the decade, under the continued direction of Stevens. In February 1996 a £2.9 billion (US$4.5 billion) merger joined the operations of UNM with those of MAI PLC—with the combined entity retaining the United News & Media name. MAI’s interests included two television licenses in the United Kingdom for the Independent Television Network; a 29 percent stake in Channel 5, a national commercial broadcasting service in the United Kingdom that made its on-air debut in 1997; NOP Research Group, a market research company; and various financial services firms. MAI too had an agreement, also concluded in February 1996, with Time Warner to partner on a £225 million (US$344 million) Movie World theme park and film studio complex to be built just west of London. But it was the extension into television broadcasting, production, and distribution that made the MAI merger most attractive to UNM.

Within just a few years of this blockbuster deal, United News & Media made a series of acquisitions and divestments that further transformed the company. In late 1996 UNM bolstered its trade show operations through the £592.5 million (US$905 million) purchase of U.K.-based Blenheim Exhibitions and Conferences Ltd., which was soon integrated into Miller Freeman. This acquisition made UNM into the largest exhibitions group in the world. During 1997 United News acquired HTV, a Welsh independent television broadcaster; Telecom Library, a magazine publisher and trade show organizer in the United States; and Lemos Britto, a Brazilian trade show organizer.

In early 1998 UNM made a dramatic break from its past with the divestment of its regional newspaper business through three separate sales, totaling £450 million (US$700 million). In November of that same year, the company demerged the financial services businesses inherited from MAI into a separate public company called Garban plc. These moves left a more focused UNM, with three main business segments: business services, which included Miller Freeman, PR Newswire, and market research operations NOP and Mediamark Research; broadcasting and entertainment, which included the independent television licenses, the Channel 5 stake, and television show production and distribution activities; and consumer publishing, which included the Express and the Daily Star national U.K. newspapers and advertising periodicals in the United States and the United Kingdom. In the late 1990s more than half of the company’s revenues were generated by business services, which was also UNM’s most profitable sector.

At the turn of the century, United News & Media appeared likely to continue to make strategic acquisitions to bolster its core operations. Purchases made in early 1999 highlighted this strategy, while at the same time showing an ongoing interest in U.S. growth and an increasing interest in Internet-based opportunities. In January 1999 UNM—through PR Newswire— acquired NEWSdesk International, a leading European Internet distributor of corporate news for the high-tech industry. Two months later UNM acquired Audits & Surveys Worldwide Inc., a leading U.S. market research firm, and Continuing Medical Education, Inc., a provider of continuing medical education resources for U.S. physicians, including conferences and seminars, trade magazines, home study products, and web sites. In late April 1999 United News agreed to purchase CMP Media Inc. for US$920 million. The Manhassat, New York-based CMP’s operations included the publication of such trade magazines as Information Week, Computer Reseller News, and Electronic Engineering Times, and the maintenance of 40 online web sites, including Tech Web and Channel Web. CMP was to be combined with Miller Freeman, creating one of the leading business-media groups.

Principal Subsidiaries

BUSINESS SERVICES: Miller Freeman PSNInc. (U.S.A.); Miller Freeman Asia Ltd. (Hong Kong); Blenheim Exhibitions and Conferences Ltd.; Miller Freeman BV (Netherlands); Miller Freeman, Inc. (U.S.A.); Miller Freeman plc; Groupe Miller Freeman SA (France); PR Newswire Association Inc. (U.S.A.); Visual Communications Group Ltd.; FPG International LLC (U.S.A.); Mediamark Research, Inc. (U.S.A.; 90%); NOP Research Group Ltd.; Audits & Surveys Worldwide, Inc. CONSUMER PUBLISHING: Express Newspapers plc; United Advertising Publications plc; United Advertising Publications, Inc. (U.S.A.). BROADCASTING AND ENTERTAINMENT: Anglia Television Ltd.; HTV Group Ltd.; Meridian Broadcasting Ltd.; Survival Anglia Ltd.; TSMS Group Ltd.