Desmond, Montgomery and the Express
I wrote on this blog in December that titles such as the Telegraph or Express might be for sale in 2017.
Overnight, it has been revealed that Trinity Mirror PLC has been in discussion with Richard Desmond's Northern & Shell about taking a minority interest in a new company which would - probably but not certainly - include the Daily Express, Sunday Express, Daily Star, Daily Star Sunday and their websites.
Trinity's interest in the Express titles goes back years. But there is a much bigger story going on here.
The man behind a deal to potentially take these titles off Richard Desmond is none other than David Montgomery, the former editor of the News of the World and Today who went on to become a major investor in media.
Over recent months, Montgomery has been trying to raise the necessary finances, speaking to several banks, as well as equity partners.
Montgomery is being advised by Lloyds, Bank of Canada, and the familiar figure of Jonnie Goodwin of Lepe Partners.
Before Christmas, he had raised £125m. This comprises £60m of debt finance, £10m from Montgomery, £30m from other equity backers - and £25m from Trinity Mirror.
Mark Kleinman of Sky News has reported that the investors Montgomery is speaking to include Towebrook Capital Partners. I have not been able to verify this yet myself.
Richard Desmond, who bought the Express titles in 2000, spoke to me about his intentions.
In May last year, Express Newspapers, which is part of Northern & Shell, announced it had tripled pre-tax profits in 2015 to £30.5m.
Desmond told me that with OK! Magazine doing well, and his printworks in Luton owning assets now worth "around £100m", Express Newspapers was making around £50m.
I asked Desmond if he was intent on selling to Montgomery and had received an offer.
"There's a lot of talk, nothing has happened. I haven't had an offer." Asked specifically if he wished to sell Express Newspapers, Desmond said: "Why would I? You tell me, why would I?"
But he swiftly added that he was "interested in everything".
Asked if he would demand a five-times multiple of profits for Express Newspapers, he said: "Why wouldn't I?"
Desmond hasn't seen Montgomery since his Christmas party. "My people have been speaking loads to his management."
His preference, as things stand, is to consolidate back-office staff rather than sell Express Newspapers - though he would, of course, entertain the latter option if he was offered a suitable price.
"If we can bring in a minority partner to share back-office staff, that could save tens of millions," he added.
He specifically referred to "IT, ad sales" in reference to these back-office operations.
Using what were clearly ballpark figures on a deal that hasn't yet transpired, about an entity not yet clearly defined, Desmond told me the savings for Trinity Mirror of a combined company could be around £30m, and for Desmond they could be around £60m.
"If Trinity then owned 20% of the new company, which should make £80m, that's £16m."
I should urge caution about these figures, because Desmond himself did: when I asked what exactly would make £80m, he was open that this was a generalisation about a possible future company.
Desmond is a brilliant deal-maker who sold Channel 5 to Viacom for £463m in 2014, having bought it in 2010 for just £103.5m.
By the way, Viacom has had an excellent two years with Channel 5, with ratings up, in the years since that sale.
He didn't give me the impression he is keen to get out of media in a hurry.
No knockdown price
I asked David Montgomery if the above figures were accurate and indeed whether he was being advised by those I mention above.
At the time of writing he hadn't responded to my queries.
I asked a Trinity Mirror PLC spokesman whether the £25m figure was accurate.
He offered no comment.
I have spoken to multiple sources across the industry about the likelihood of a deal going through between Montgomery and Desmond. As things stand, it is very uncertain.
Desmond won't sell for a knockdown price: after all, he has stable profits.
And any consolidation of back-office operations depends on a huge range of specifics that are yet to be hammered out.
But as I have repeatedly said on this blog, there is a coming consolidation in the media sector, and indeed in over-supplied sub-sectors such as that of national newspapers in Britain.
By over-supplied I simply mean we have plenty for an island with our population.
Expect more on this soon. And I will publish Montgomery's response if and when I get it.