12-31-02 | Printable Version

Gannett Continues to Expand in UK with Scottish Acquisition

While it hasn't gotten much attention in the U.S., Gannett has quietly amassed a substantial newspaper group in the UK in a little more than three years.

After Gannett consummates its announced acquisition of a group of Scottish newspapers, SMG, Gannett’s UK holdings alone will be larger than some of the publicly traded newspaper companies in the U.S.

With its latest acquisition, Newsquest, Gannett’s operating arm in the UK, is expected to generate estimated annual revenue of more than $824 million, making it slightly larger than Media General, the 11th largest public newspaper company in the U.S. (see graph), and not too far behind McClatchy Newspapers. Gannett’s Newsquest is now the UK’s second-largest newspaper publisher.

Gannett announced in late December that it would pay $346 million for the publishing assets of Glasgow-based SMG, extending its UK holdings into Scotland for the first time. These assets include three regional dailies -- the Herald, Sunday Herald, and Evening Times. Also included in the deal are 11 trade and specialty consumer magazines and an online advertising and content business.

Gannett’s UK acquisition spree began in the third quarter of 1999, with its purchase of Newsquest, one of the largest regional newspaper publishers in England. The Newsquest acquisition, with 180 publications in total at the time, including 11 dailies, provided a platform from which to expand in the region.

In the second quarter of 2000, Gannett purchased Newscom, a large regional newspaper publisher in the UK, with 114 publications in total, including four evening dailies. Newscom also operates a contract printing and magazine publishing business.

With the Scottish acquisition, Gannett’s UK division now has well over 300 titles, including 18 dailies. The company’s UK clustering strategy of paid and free newspapers offers readers and advertisers a wide variety of products covering the market while allowing for the cross-selling of advertising among newspapers serving contiguous markets.

As with U.S. newspapers, advertising is the largest revenue component in the UK group, comprising approximately 80% of the total. Circulation revenue represents 11% of total revenue and printing activities account for most of the remainder.

Compared with U.S. newspaper companies, advertising revenue is a greater percent of total revenue, reflecting the greater volume and importance of free weeklies in the UK newspaper market.