David Elms, Head of Media at KPMG comments on the sale of the Northcliffe newspaper arm by the Daily Mail General Trust:
“This deal shows the potential for consolidation in the sector and that today alliances and partnerships are being formed that would have been unthinkable a few years ago.
“The fast growing competition from digital combined with the recession has forced media businesses into challenging their business models and making tough choices. Regional newspapers need to change their business models and they need to do so quickly.
“In my view, there is a need for increasing scale in regional newspapers. Up until now regional newspapers have tended to react to the structural and cyclical challenges facing them with cost cutting measures. I think a real step change and way forward would be the formation of larger regional newspaper groups, that cover the major UK conurbations and are therefore ‘national’ in coverage and perspective. Groups of that scale would have the power to attract national advertisers as well as local advertisers. They would be able to emulate developments in the UK radio industry where Global Radio has sought to develop national brands through its Heart and Capital networks. Regional newspaper groups of such scale could also share costs and streamline processes at an unprecedented level which will hopefully release more capital and more options to invest into new business ventures.”
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.