Here's a teaser for the UK media industry: should Daily Mail and General Trust (DMGT) sell all its consumer publications? At the tail end of last year, it offloaded Northcliffe Media to new venture Local World, backed by David Montgomery and run by longstanding DMGT exec Steve Auckland.
But what about that beacon of British publishing, The Daily Mail, and its parent company A&N Media? DMGT has for a long time been a predominately B2B product-focused conglomerate, with profitable businesses all over the globe.
There's probably no hurry but it might be a good idea. DMGT's annual report shows a pretty healthy company in action, with underlying revenues up 3 percent to £1.92 billion and pre-tax profit up 10 percent to £255 million for the 12 months to September 2012.
A&N Media contributes £78 million to that. But the report also suggests that those B2B assets are a much healthier business, and one which more closely resembles the global, digital business DMGT wants to be. Here's why:
-- Profit mix: B2B accounts for 73 percent of DMGT's operating profit but less than half of its revenues. That's actually down slightly on 2011, but the margins are way ahead of the consumer division: Euromoney Institutional Investor made an operating profit of £112 million in 2012, with a margin of 28 percent.
-- International aims: DMGT says its long-term plan is to become even more global and as you can see from the map below it has come a long way towards that goal. Yet A&N Media's total non-UK operating profits were £4 million from a total of £78 million. Compare that to Euromoney, whose mains offices are in London, Hong Kong and New York.
-- Digital transition: 35 percent of DMGT's total revenues come from digital, but for A&N Media, the percentage is much lower. Sure, Mail Online is ramping up its revenue rapidly, up 74 percent year-on-year to £27 million.
But that still pales in comparison to the Daily Mail's total revenues -- and, across Associated Newspapers, digital accounts for only 4 percent of revenues.
-- Ads vs subscriptions and events: Associated, like every other paid-for newspaper publisher, is suffrering circulation and ad revenue falls. And it's still dependent on advertising for roughly half its revenue.
In contrast, B2B parts of DMGT such as subs-based RMS or DMG Events. Neither is at the mercy of volatile, cyclical ad markets.
If you were looking to offload a part of DMGT, then the consumer operation would be the prime candidate.
However, it's worth considering DMGT's main shareholders are the Rothermere dynasty, who will have a historical and emotional attachment to the Daily Mail at the very least. Just as Rupert Murdoch accepts losses in News International to achieve wider political and business goals, Lord Rothermere may well see contuing fringe benefits in owning the UK's most powerful newspaper.