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United Newspapers plc

United Newspapers plc

Ludgate House
245 Blackfriars Road
London SE1 9UY
United Kingdom
(071) 921 5000
Fax: (071) 928 2728

Public Company
Incorporated:
1918 as United Newspapers Ltd.
Employees: 13,053
Sales: £829.12 million (US$1.60 billion)
Stock Exchange: London

United Newspapers plc is a broadly based international publications, exhibitions, and information services group. It is based in the United Kingdom and operates in the United Kingdom, the United States, and elsewhere in the world.

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 while 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 technologyLinotype and rotary presses, typewriters, telephones, and telegraphsenabled 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 use 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, Lloyds 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 North-cliffes Daily Mail and also acquired the Edinburgh Evening News and the Doncaster Gazette, papers which 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 in order 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 which Harrison had acquired in the early and mid-1920s.

Harrisons belief in the regional market molded Uniteds acquisition strategy for the next 50 years, but this strategy was also responsible for his downfall. In autumn 1929, 80% 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 Uniteds provincial press, 50% 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 Uniteds marketplace, the north of England. Fears for the companys 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. However, in a move executed by Jack Akerman and Sir Herbert Grotrian, who had replaced Binder as chairman, United Newspapers sold its 50% share in whatin June 1930had become the News Chronicle for £500,000 and was instantly freed from its debt. The reaction from the City was ecstatic, and Uniteds preference shares rose from 1 shilling 6 pence 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 which were based in heavily bombed Fleet Street. An increase in news was cruelly matched by newprint 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.

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. Draytonalways known as Harleywas 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 Years 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 replaced. Two important additions were made to the board; significantly, they were both men who had risen through the ranks of Provincial Newpapers, a company associated with United that had been formed in 1930.

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 Provincials boards. William Barnetson had started as a leader 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 Barnetsons credit that he did not rush headlong into reckless expansion but instead formulated a cautious acquisition strategy that relied as much on the good will of competitors as on his own undoubted capacity for striking deals. Uniteds move in 1963 to larger premises in Tudor Street was indicative of Uniteds 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 under-utilized plant at Burnley. Later in the same year United sold the 49% 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 Uniteds Yorkshire Evening News for 20% 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, further consolidated Uniteds position in the north of England.

Barnetsons prodigious capacity for unconventional deal-making is best illustrated by a story concerning one of the last acquisitions he made before his death in 1966. Fearing damage from rumor-mongers, the board of the Chorley Guardian invited Barnetson to a motorway café to sell its interests over pie and chips. Privacy-conscious to the point of obsession, the board finally shook hands with Barnetson in a storeroom high above the motorway.

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

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 dentists waiting rooms, it found itself out of step with contemporary humor, but United worked closely with the then editor, William Davis, to counter this problem. Although Punch today still has something of an image problem, it has added to the profits of United Newspapers because of its ability to attract high class advertising.

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, now 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 selling-off of the groups printing interests.

Stevenss 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.

In January 1985 United Newspapers bought a 15% stake in Fleet Holdings, owner of the Daily Express, the Sunday Express, the Star and the Morgan Grampian Group, from Robert Maxwells 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 companys shares at the time and was accepted by less than 1% 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 had led to a confused editorial style and the papers 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 papers 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 by-passed. 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.

The Daily Express and the Daily Star are, respectively, the fourth and sixth most popular daily titles in the United Kingdom. The Sunday Express is by far the biggest-selling Sunday broadsheet paper and the fifth most popular of all national Sunday newspapers.

Stevenss 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 which added the classified advertising paper Exchange and Mart to Uniteds increasingly impressive list of titles.

Stevens was also determined to diversify into different markets. In 1987 Extel, which provides financial and sporting information, was bought for £250 million. Despite the recent downturn in City activity, Extel continues to launch innovative products, such as information compact discs and online databases, to supplement the steady profits from Extels printed card services. Benn Brothers plc was bought in 1987 and demand for its directories and tax guides is beginning to spread overseas. 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.

United Newspapers entered the 1990s as a strong, well-balanced group offering a diverse but complementary range of products. However, United is a publicly quoted company with a wide share ownership and, as such, is vulnerable to predators.

Principal Subsidiaries

United Newspapers Publications Ltd.; Express Newspapers plc; United Provincial Newspapers Ltd., Link House Publications PLC; United Publications Ltd; Extel Financial Ltd; United Newspapers, Inc. (U.S.A.).

Further Reading

Schofield, Guy, The Men that Carry the News, London, The Cranford Press, 1975; Taylor, A.J.P., Lloyd George: Rise and Fall, in Essays in English History, London, Hamish Hamilton, 1976; Jenkins, Simon, The Market for Glory, London, Faber and Faber, 1986; Saatchi & Saatchi, Top Fifty European Media Owners, London, Saatchi & Saatchi Communications, 1989.

Andreas Loizou

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