David Montgomery eyes French regional newspapers
LONDON/PARIS (Reuters) - British tabloid veteran David Montgomery is eyeing a return to the newspaper business via a restructuring of heavily indebted southern French regional newspaper group Groupe Hersant Media, he said on Tuesday.
Montgomery, a former editor of Rupert Murdoch's News of the World and until recently chief executive of European newspaper group Mecom (MEC.L), said he was in talks with Hersant's creditor banks and would reach a deal by year end if at all.
"I think I'm running out of time. It's a developing situation because the newspapers are burdened by a lot of debt. The current owners are struggling to maintain ownership," he told the London leg of the Reuters Global Media Summit.
Montgomery led Mecom to become the first foreign owner of a German newspaper group in 2005, a move that provoked outrage in Berlin at the time. He previously presided over a ruthless restructuring of Britain's Mirror Group as CEO.
Montgomery said he and his partners were proposing to invest 50 million euros ($67 million) in Hersant's paid-for newspaper titles, but said Hersant would have to sell its overseas assets with the money repaid to the lending banks.
Montgomery declined to say who his partner or partners were. They have formed a London-registered company called Local World Ltd. as an investment vehicle.
It's far from certain that Montgomery's pursuit of the French newspaper group will succeed. He wants management control and a stake in the paid-for titles, the two biggest of which are Nice Matin and La Provence.
The family-owned Hersant Media group was in negotiations with the Belgian press group Rossel for a tie-up but were unable to reach a deal by the end of the exclusivity period on November 10.
An Hersant spokesman said on Tuesday: "The group is still committed to the deal with Rossel, even if the exclusivity period is over. The talks with our banks are continuing. A new proposal was given to them at the end of last week."
The spokesman added that Montgomery had submitted a proposal for Hersant to the French government committee known as the CIRI, which advises troubled companies on restructuring, and that his proposal was not viewed favorably.
The CIRI has been playing a role in the talks between Hersant and its creditors.
Hersant, which posted 697 million euros ($929.44 million) in revenue last year and has roughly 6,000 staff, has not yet been able to convince its creditors, a group of 17 banks, to back the deal.
It has asked the banks, which include BNP Paribas (BNPP.PA), Natixis (CNAT.PA) and Societe Generale (SOGN.PA), to forgive a chunk of its 200 million euros of debt.
Like many newspaper groups, Hersant has been struggling amid a depressed print advertising market and flagging readership, and is finding it difficult to repay its debts.
Nice Matin has seen its circulation slip from 119,401 to 103,589 since 2005, while La Provence has dropped from 156,336 to 132,969 in the same period, according to France's circulation auditor OJD.
Montgomery said that despite the turmoil in the newspaper industry, the French regional market -- with its near monopolistic brands and weak competition from national titles -- represented an opportunity, and he might be their best chance.
"I think all of the papers I've mentioned do need serious investment to resuscitate them for the long term," he said, adding that Hersant's debt-to-EBITDA ratio was about 20.
"That doesn't mean the papers themselves are not robust franchises, but they are not very profitable and they will need considerable investment to sustain them, and I'm one of the few people who thinks that that's a worthwhile investment."
Montgomery left Mecom early this year after a disagreement with shareholders. Mecom had been forced to retrench and sell assets after borrowing heavily to fund expansion just before the 2008 financial crisis demolished advertising revenues. ($1 = 0.7499 euros)
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