Daily Mail Parent Faces Credit Warning Over Telegraph Acquisition

The parent company of the Daily Mail has come under scrutiny after announcing a £500 million agreement to acquire the Telegraph titles. Lord Rothermere’s Daily Mail and General Trust revealed the substantial deal with RedBird IMI, marking a significant development in the British media sector. This acquisition enters an exclusive negotiation phase, with both parties aiming to conclude the transaction in the coming weeks.

S&P Global Ratings placed Rothermere Continuation Holdings Ltd, the new Jersey-based parent overseeing Lord Rothermere’s media assets, on credit watch. The agency warned that loading additional debt for the Telegraph purchase may risk the company’s current BB minus long-term issuer rating. Analysts highlighted the group’s limited financial capacity, noting the Telegraph Media Group operates in structurally challenged newsprint and advertising markets, which compounds the risks involved.

The report underscored that RCHL is relatively modest in scale, especially in consideration of the £500 million valuation for the Telegraph group. S&P suggested this transaction could materially increase leverage beyond its accepted threshold. Despite speculation about the sources of funding, DMGT has stated there will be no foreign state investment or capital in the financing to adhere to regulations on overseas influence. Some market observers have pointed to the potential for investment from non-state foreign backers, yet previous talks with Qatari investors did not proceed.

Recent financial disclosures show that Rothermere’s businesses, encompassing a Middle East-based events operation and property information services across the UK and US, produced £1.1 billion in revenues and £78 million in adjusted pre-tax profits in the year leading to the end of September 2024. The consumer media division alone reported revenues of £613 million and £53 million in adjusted operating profit. Property information generated £219 million in revenue with £22 million in operating profits, while the events and exhibition business noted a 67 percent year-on-year rise in revenue to £272 million and achieved £42 million in adjusted operating profits.

October saw DMGT announce a £906 million restructuring, creating Rothermere Continuation Holdings as the parent company and separating its UK and overseas operations. RCHL is controlled by a discretionary trust for the Rothermere family. The deal for the Telegraph titles comes amid significant attention to the financing, regulatory, and strategic implications for the wider UK press sector.