Job cuts feared after Trinity deal waved through by Culture Secretary
Reach plans to slash costs by £20m a year after snapping up a string of titles including the Daily Express and Daily Star.
The takeover of the Express and Star newspapers by the owner of the Daily Mirror has been cleared by the Government, sparking fears over job cuts.
Culture Secretary Matt Hancock has said he will not be referring the £126.7 million takeover by Reach, the publisher formerly known as Trinity Mirror, for a full investigation after reports from regulator Ofcom and the competition watchdog.
The move effectively paves the way for the deal to buy a string of titles from Richard Desmond’s media empire, with final approval expected imminently by the Competition and Markets Authority (CMA).
But attention has turned to the impact on workers amid plans for hefty cost-cutting.
Reach warned there will be job losses under aims to slash annual costs by £20 million within two years, although it is unclear how many at this stage.
The bulk of the cost cutting will be made by 2019, it added, signalling a tough six months for staff at the titles.
Mr Hancock had intervened last month on the deal, referring it to Ofcom on the grounds of public interest and triggering a report from the CMA.
On announcing his decision not to refer the deal for a so-called phase two investigation, he said he accepted Ofcom’s conclusions that the deal does not raise public interest concerns over plurality of views in the media and does not raise concerns in relation to free expression of opinion in newspapers.
He added he backed the CMA’s findings that the acquisition does not lead to a substantial reduction of competition in any market.
Simon Fox, chief executive of Reach, said: “We welcome today’s decision by the Secretary of State.
“Today we are two successful separate news organisations, but together we will be stronger and better able to compete and adapt to the challenging conditions in which we operate.”
Under its planned takeover, Trinity will stump up an initial £47.7 million to Northern & Shell, followed by £59 million between 2020 and 2023 and a further £20 million in shares.
It comes at a difficult time for the newspaper industry, which is grappling with sliding advertising revenues, laid bare by a trading update issued by Reach.
The group said that, excluding the Express titles, like-for-like revenue at the group fell 9% in the four months to April 29.
While advertising picked up in March and April, the extreme weather dented newspaper sales. Print advertising revenue fell by 17% and circulation revenue fell by 7%.
Revenue for the Express and Star is estimated to have fallen by 5% on a like-for-like basis, with print falling by 8% and digital growing by 40%.