The Barclay Brothers on Monday sold Scotsman Publications, owner of The Scotsman and Edinburgh Evening News, to Johnston Press, the regional newspaper publisher, for £160m cash.
Andrew Neil, publisher of the twins’ Press Holdings Group, described the sold titles as “a mature business in a mature industry”, and said the Barclays would look for online and other assets that offered higher rates of return.
Part of the sale proceeds will be invested in handbag.com, the website for women owned by the media-shy twins.
The price represents about 2.5 times the total turnover of £63.5m or 32 times the £4.92m of pre-tax profits reported by the privately owned Scotsman Publications in Companies House accounts for the year to December 2004. It compares with the £170m book value given for the Scotsman Publications business in the 2004 accounts.
Under the deal, the Barclays will retain The Scotsman’s building, worth an estimated £25m, and lease it to Johnston, which already owns local titles in Scotland and in August paid £150m for publications from Scottish Radio Holdings.
Mr Neil added that The Business weekly newspaper, also owned by the Barclays, would have to demonstrate “it can at least break even” within the year or face closure. The title lost £3.5m in the past year.
The Scotsman’s circulation has been under pressure, in common with other newspapers. A price-cutting campaign in 2000 pushed circulation above 100,000 but sales fell back after the normal cover price was restored.
In spite of investing in a tabloid format in 2004, last month’s circulation was 65,932 copies, a decline of 2.3 per cent year-on-year.
Mr Neil said the group’s expansion plans had been hampered by “the Scottish political establishment” and admitted The Scotsman’s editorial politics had clashed with “the left-wing collectivist consensus” in Scotland.
The sale of the Scotsman titles, which include Scotland on Sunday, comes as Daily Mail & General Trust is auctioning its Northclifffe regional newspapers, including the Aberdeen Press & Journal, for about £1.5bn.
Johnston is expected to participate in that auction, for which first round bids are due today.
Bids are expected from Trinity Mirror and private equity groups such as Blackstone, Cinven and KKR. Macquarie Bank is understood to have decided against an offer.
Additional reporting by Andrew Bolger