The Era of Amalgamations

The most spectacular financial newspaper deal was that involved in the creation of the Daily Mail Trust, Limited. It was incorpo rated on Sept. 27, 1922 and purchased the 400,000 deferred (con trolling) shares in Associated Newspapers, Ltd., as sanctioned by the court on the death of Lord Northcliffe. The price paid was L1,600,000, which was met by an issue of 7 per cent first mort gage debentures. Early in 1923 the trust purchased 49 per cent in the London Express Newspaper, Ltd. A little later it purchased the large newspaper business of E. Hulton and Company, Ltd., and paid for it by a second issue of L8,000,000 7 per cent deben tures, liquidating out of the proceeds the former issue of LI,600, 000 debentures. At the same time the trust retained 49 per cent. interest in The Evening Standard, which had been included in the Hulton group but was transferred to Lord Beaverbrook. In the same year the trust sold the greater portion of the Hulton press to the Berry brothers for more than the original purchase price, while retaining possession of The Daily Sketch, The Sunday Herald and new printing works ; these three assets being subse quently promoted and sold for L1,600,000 under control of Lord Rothermere. The trust paid £4 for the deferred shares in Asso ciated Newspapers, Ltd. They appreciated almost as much again. The trust in two years discharged a debenture obligation of £9,000,000.

The Rothermere

Group.—The most powerful newspaper group in Great Britain is that controlled by Lord Rothermere, not because of the number of newspapers combined or associated, but on account of their predominantly national character and the immense financial resources behind them. Lord Rothermere only occasionally contributes articles to his newspapers, and then only on subjects upon which he holds strong personal views. The chief Rothermere groups are : The Associated Newspapers, Ltd., owning the Daily Mail, Evening News, Sunday Dispatch, Overseas Mail. Capital: 5% Cumulative Preference shares . . 500,000 7% Cumulative Ordinary shares . . . . 600,000 Deferred shares . . . ... 2,250,0o0 Daily Mirror Newspaper, Ltd. Capital: 8% Cumulative Preference shares . . . . 800,000 Ordinary shares . . ..... . 2,400,000 Total . . . . ..... 12,200,000 In the spring of 1928 the ordinary shares of the Daily Mirror and Associated Newspaper Companies were converted each into four shares of a nominal value of 5s. The value of these shares in the summer of 1928 was in the case of the Associated Newspapers 245., and in the case of the Daily Mirror 35s.

Sunday Pictorial, Ltd. Capital: 8% Cumulative Preference shares . . . . 500,00o Li Ordinary shares ...... 1,500,000 Total. . . . . . . . i2,000,000 These companies are shareholders in the Daily Mail trust, con trolled by Lord Rothermere, already referred to. The financial

strength of the Rothermere newspapers is not indicated by the amount of dividends which they distribute, as they build up great reserves and have no prior debenture or other charges.

In Feb. 1928, Lord Rothermere also promoted Northcliffe News papers, Ltd. (share capital L2,500,000; loan capital L3,000,000, 51 per cent. guaranteed debenture stock), primarily for establish ing or acquiring "in selected centres of large population through out the country evening newspapers which, by reason of possess ing the advantages of extensive organization and large resources, will be the most up to date in the country." It was stated in the prospectus that the surplus assets of Asso ciated Newspapers and of the Daily Mirror were respectively L5,129,000 and £2,500,000—excluding good will and all liabilities.

The debenture stock was guaranteed by the Associated News papers, Ltd., and the Daily Mirror Newspapers, Ltd. The 5 per cent. debenture stock was very much oversubscribed. The share capital was divided into L2,400,000, Li ordinary shares and LI 0o, 000 Li management shares. Two shillings was paid on all the management shares and on L1,400,000 ordinary shares, so that the company started with capital in cash amounting to £3,150,000, with £2,260,000 uncalled share capital.

During the summer of 1928 Northcliffe Newspapers, Ltd., ac quired several prominent newspapers and made arrangements to start new evening newspapers in selected centres as announced in the prospectus. The Daily Mirror Company, acting independently or in association with Northcliffe Newspapers, acquired several well-established evening newspapers and founded a regional Sun day paper at Stafford.

The capital of the various Rothermere companies does not by any means indicate their financial strength and great earning capacity. They possess a complete dual organization between the Associated Newspapers and the Daily Mirror, and are build ing up a third national organization in the Northcliffe Newspapers. All these newspapers are safeguarded in regard to the supply of paper; they control mills in Newfoundland, Canada and Eng land. The following table shows the capitalisation of their paper making companies : Anglo-Newfoundland Development Co., Ltd.

Capital $6,439,585, Ordinary Shares.

issued $2,426,010, 8% Cumulative Preference Shares.

$1,594,255, Second Preference Shares.

As at 31.8.27 {L 280,625, 5% Debentures.

ii,118,650, 6% Second Mortgage Bonds.

The Associated Newspapers Limited hold a majority of the Ordinary Shares.

A. E. Reed & Company Limited Capital: £293,970, 6% First Mortgage Debenture.