Daily Mail General Trust’s £70m Acquisition of The New Scientist

Deal Overview

• Announcement Date: 3rd March 2021
• Industry: Consumer/Magazine
• Deal Structure: Pure cash
• Deal Value: £70 million
• Acquirer Advisor: N/A
• Target Advisor: N/A

Company Details: Daily Mail and General Trust

• Founded:1896
• HQ: London, UK
• Market Cap: £1.956bn
• EV: £1.94bn
• EBITDA: £115 million
• EV / EBITDA: 16.84

Daily Mail and General Trust own a range of newspapers, with their core asset being the Daily Mail. In addition, they also manage the Metro, Ireland on Sunday, Mail Today, and other newspapers, providing news coverage primarily to the UK market. The wider group consists of five main divisions: Insurance Risk, Property Information, EdTech, Events and Exhibitions, and Consumer Media. The Consumer Media division manages the aforementioned newspapers, and the New Scientist will subsequently fall under the realm of the division upon acquisition. The group notably sold a majority stake in the Evening Standard to Alexander Lebedev, a Russian Oligarch, for a mere £1 in January 2009.

Company Details: New Scientist

• Founded: 1956
• HQ: London, UK
• Revenue: £20 million

The New Scientist is the most popular science and technology magazine in the world. As the world becomes less paper-based, they have progressed from just selling magazines; they provide newsletters, videos, podcasts, courses and live events. Despite this, 75% of their annual revenue is still from their primary newspaper subscription service — According to ABC, the New Scientist sells an average of 84,215 print editions per week and 50,111 digital editions (134,326 in total worldwide).

Strategic Rationale

A tough year

It is no surprise that the coronavirus pandemic has taken its toll on DMGT- circulation of their publications dropped by 7% and advertising fell 30%. Both of these factors hit them hard, with their annual revenue dropping by over 10% relative to last year. Whilst the acquisition has set them back £70 million, DMGT believes that the New Scientist will provide them with a new revenue source, that will help cushion the impact of the pandemic.

Diversification

DMGT’s current publications provide general news and entertainment. By acquiring the New Scientist, which primarily report on the science and technology space, DMGT will have the scope to branch into a new sector of the Magazine/Publication sector. This may be of particular importance to the group, at a period where they are facing significant public backlash in the wake of The Mail On Sunday’s embarrassing lawsuit, following their publication of private letters between Meghan Markle and her father. In a bid to possibly move away from the more traditional tabloid and news stories that the group have primarily based their business around, the acquisition of The New Scientist provides an opportunity to attract a new target market of readers, and to diversify their business in the process.

Risks

Unstable times

Whilst DMGT CEO Paul Zwillinberg did remark that the New Scientist is ‘well positioned for future growth’ it is uncertain whether either company will recover (or at least when they will recover) from the devastating effects of the pandemic. Although The New Scientist is an impressive asset for the DMGT group, the wider group’s poor financial results, most notably the huge drop in 2020 revenue, may mean they may struggle to support The New Scientist while sustaining its existing publications.

By Gabe Levey