KM Group Forced to Scrap Takeover Bid
19th October 2011
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The KM Group has had to scrap its bid to buy a series of rival newspapers in Kent after it was referred to the Office of Fair Trading (OFT). The papers involved were to be the Medway News, Isle of Thanet Gazette, Thanet Times, Folkestone Herald, Dover Express, the Times series covering Canterbury, Faversham, Whitstable and Herne Bay, and the East Kent Gazette.


All of those titles are currently owned by Kent Regional News and Media (KRNM). KRNM itself is part of Northcliffe Media, a division of the Daily Mail and General Trust (DMGT), one of the largest media conglomerates in Europe.


The  deal collapsed yesterday afternoon after the OFT referred the proposed acquisition to a full Competition Commission inquiry amid concerns it could create a “local monopoly.”


Now pardon me for being thick, but isn’t the OFT’s job to ensure small local businesses can strive to thrive despite the bullying tactics of much larger, more powerful companies. How exactly is it achieving that then by siding with the DMGT against the KM Group – a family owned local business.


It would appear that there are individuals on either side who agree with me. Northcliffe managing director Steve Auckland said:  “This makes a mockery of politicians expressing their desire to reduce red tape in business and allow consolidation in the regional press. We are not talking about a Google or a Microsoft here. The OFT has to operate within a regulatory system that is not designed to cope with small local newspaper businesses that have no prospect of funding a Competition Commission review and are thus denied the opportunity to consolidate.”


And KM Group chairman Geraldine Allinson said: “We have invested a huge amount of time on this project over the last few months. The costs and time required for a full Competition Commission review would be completely unreasonable for a business of our size and for a deal of this scale. The acquisition would have been a good opportunity for our business.


In a statement, the OFT had this to say:  “These companies publish the only local weekly newspapers in seven local areas in East Kent. The OFT’s investigation concluded that the monopoly of local newspapers that would result in these areas risks costlier advertising for businesses and higher cover prices for readers. During its investigation, the OFT consulted with advertisers and readers to find out whether other regional or online newspapers, websites or magazines would be able to curtail these risks. The evidence was clear that local weekly newspapers remain a very important means for advertisers to reach local audiences and for readers to obtain local news, despite acknowledging that these media provide some competition.”


It seems to me that a lot of work needs to be done within the OFT to ensure that the spirit of what it’s there to do, is maintained through its actions.

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