We are about to learn what a national newspaper is worth these days, some 30 years after the print industry wondered how to respond to the arrival of its potential nemesis, the internet. An auction for The Daily Telegraph and its Sunday sibling will shortly be under way at the behest of Lloyds Bank, to which the papers’ most recent owner the Barclay family owes more than any sum it is likely to fetch.
By 2014, when the Telegraphs last changed hands, it was dawning on the industry that the internet might be bad news, yet Lazard bankers drove the price to £665million, or more than £1billion in today’s money. That price looked high once it was clear that the newspaper’s traditional revenue streams were both drying up: elderly readers were dying and there weren’t many younger ones; Google and Facebook were making off with the advertising money.
But for all the doom-mongering – exacerbated by a feeling among journalists that a determinedly private family had no business running a newspaper – the paper traded effectively, finding online subscribers to replace those old-timers leaving this world, returning annual profits, recouping the purchase price. And if purists mourned a slapdash approach to newspaper lay-out and headlines, they had to admit the titles broke enough stories to remain important players. Nevertheless, the owners were forced over the years to write down the papers’ value. By 2019, when the family was rumoured to be looking for a buyer, the starting price was thought to be £200million.
If that is the floor, how high is the ceiling? What is The Daily Telegraph worth today? The old answer is the right one: whatever someone is prepared to pay. The typical business case multiplies earnings (technically, earnings before interest, tax, depreciation and amortization, but let’s not get into that) by 12.5. The Telegraph’s CEO has forecast earnings of £57million to £60million for 2022. That takes us to £750million. Media analysts have been more cautious, suggesting somewhere between £450million and £600million.
Even the lower estimate demonstrates the success of newspapers in defying diagnoses of mortal illness. Owners have run titles as elderly cash cows, cutting costs and taking the last cover price revenues from loyal readers heading for the grave. This was how Richard Desmond made so much money from the Express group, before picking up another £200million by offloading it to Reach. Or they have believed in online and found new readers and revenues, whether through the subscription model adopted by the Financial Times, The Times and The Daily Telegraph, the part subscription, part donation solution that rescued The Guardian, or the big circulation, greater ad returns approach of the Daily Mail.
Things have worked better than many expected because newspapers have high-profile brands, long-established news-gathering structures and a core of loyal readers on which to build. The internet start-ups Vice and BuzzFeed thought it would be easy to muscle into online news and took on large staffs to do so. It wasn’t. The journalists were laid off. Papers know how to do stuff that newcomers can’t. The editorial staff of the Telegraph Media Group have responded with imagination and zeal.
Which takes us to more nebulous elements on price: auction excitement and trophy value. They are long-established, trusted brands (or trusted, at least, by their particular audiences), offer access to power and promise political influence. Here a couple of more recent sales can guide us: Nikkei paid £844million for the Financial Times in 2015, a price that bore no relation to value on any sane multiplication of revenue. But the FT offers a calling card
around the world and the German company Axel Springer was bidding hard. When Lord Rothermere bought back all the shares in DMGT in 2021, the Daily Mail was valued at £810million. If it had been up for sale, its trophy value could well have driven a higher price. We might not be looking at an entirely open auction, for Lloyds will want to offload the titles fast – no bank wants to own a politically campaigning paper in an election year – which probably rules out the kind of international buyer or trade sale that would require regulatory scrutiny.
Once this is more than business, emotions play. Wealthy individuals who want something don’t like being outbid. The Barclay family was ready to run up debt to secure a welcome in Downing Street. The No 10 door might not open so fast under a Labour government, but the incoming owner of The Daily Telegraph could be ready to pay to influence the next version of the Conservative Party.