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Friday, July 14, 2006

Trinity Mirror Abandons Magazines and Shows

Trinity Mirror's sale of its magazine and exhibition division, Inside Communications for £41m to the management, backed by private equity company Ion is a modest triumph. Revenues for the division last year were £32.7m delivering an EBITDA of around £7m. Press Gazette reports it straight, but what does it mean?

Inside Comms is a hotchpotch of trade mags, most notably Inside Housing and consumer titles and shows, much of it about caravans. Trinity Mirror CEO, Sly Bailey resisted the managements desire to buy the business for some time, arguing that although the business had little strategic fit with the rest of the business, it was very profitable and highly cash generative.

The price achieved amounts to a 6 multiple, which probable makes it not much more than a neutral deal for Trinity in financial terms, but Sly must have judged that with little prospect of growth (it hasn't grown in some years) she can better put the cash to work on other activities - buying more web businesses for example.

For the new owners Inside Comms, now renamed Ocean Media, will be a tough growth challenge. No doubt the management have been sold a buy and build story by their new backers. They may find that daily grind of servicing a leveraged business in practice makes this tough to do. David Moran, the MD is a good operator. There won't be much cost to take out so this is a gamble on some management driven organic growth.


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