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Free sheets are usually the first newspapers to close in an economic downturn. But the Alpha Newspaper Group, Northern Ireland’s largest regional publisher, has in recent weeks launched four new titles, targeting local advertisers who want to woo shoppers from the Irish Republic.

Differences in tax and the recent sterling weakness have encouraged thousands of southern families to shop in Northern towns such as Armagh and Newry.

The Armagh Advertiser, which is distributed exclusively on the southern side of the border – in spite of its name – is made up of 70 per cent advertising, against the norm for a paid newspaper of a third to a half.

“I don’t think some of these groups from Scotland would understand the Irish market well enough to be able to spot an opportunity such as this,” says Alpha’s proprietor Lord Kilclooney – better known as John Taylor, an ex-Westminster MP and former deputy leader of the Ulster Unionists. It is the one ray of light in an otherwise gloomy outlook for Ireland’s regional newspapers.

Johnston Press, one of the “Scottish” groups Lord Kilclooney refers to, this week became the latest UK publisher to tire of Ireland, announcing plans to sell its Irish titles in what promises to be a huge shake-out.

Scottish Radio Holdings quit the market in 2005. Dunfermline Press, through its Celtic Media group, will soon be the only British mainland publisher operating in Ireland.

“What you had here was a bubble, just like the property bubble,” says Michael Foley, head of journalism at Dublin Institute of Technology.

Between 2000 and 2005 there were more than €600m ($778m) of deals done as family owners were persuaded to sell to big Irish publishers and mainland UK groups.

Ireland was then Europe’s best performing economy. Newspaper readership levels were higher than the UK and there were opportunities for savings by cost sharing and centralised printing.

When Johnston Press bought the Score Press from Scottish Radio Holdings in 2005 it paid £155m, which included €121m for its Irish titles – one of the highest prices paid for regional newspapers in the Republic. It was equivalent to €2.6m for every 1,000 copies sold, the key measure in regional newspaper markets in the UK and Ireland.

Recently only one deal has been at a higher valuation – Independent News & Media’s acquisition of Northern Ireland’s Belfast Telegraph, an afternoon daily for which the Dublin-based group paid £304.6m, or €4.6m for every 1,000 copies sold. Together with the Leinster Leader Group, for which Johnston Press paid €138.6m, it is now putting all 13 titles in the Irish Republic up for sale. Those close to the deal believe it should fetch €80m-€90m (£70m-£79m), far less than the €260m Johnston Press originally paid.

Martin Block, chief executive of 4FM, Ireland’s newest independent radio station which launches later this month, says the difference in price reflects the more difficult financing conditions. He believes regional newspapers, with strong local franchises, are still a good investment, and are probably weathering the recession better than national titles.

Johnston Press’s Irish titles are understood to have made profit of about €10m on sales of €38m last year.

Some industry experts say the sale represents an opportunity for the original owners to buy back the assets.

But Roderick Flynn, lecturer in communications at Dublin City University, believes this is unlikely. “I imagine a lot of them put their money into what probably seemed safe investments at the time – property and equities. So I don’t really see any of the old owners rushing to buy these newspapers.”

Lord Kilclooney says he will “definitely take a look”. Thomas Crosbie Holdings, the Cork-based publisher, and IN&M, which both own regional newspapers, may be interested in some titles.

Raglan Capital, a corporate finance advisers, has been hired to run the sale. An information memorandum is expected to be sent to prospective buyers in the next few days.

Copyright The Financial Times Limited 2017. All rights reserved.

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