Matthew Moulding, media magnate, has a certain ring about it. And since the founder and chief executive of online retailer THG – The Hut Group, as was – is interested in newspapers, in the sense that he can be prickly about what’s written about the company, one can understand why he is buying City AM, the London-based business free sheet that put itself up for sale at the start of the month.
Yet one has to ask a few related questions. How on Earth does this deal fit with the rest of THG’s operations, which are dominated by nutrition and beauty products via websites including Myprotein and Lookfantastic? Isn’t this an example of the sort of corporate sprawl and drift that Lord Allen, the former chief executive of ITV, was hired as chairman last year to stop? And shouldn’t Moulding be buying City AM with his own money rather than the funds of THG shareholders? He owns only 25% of the company.
The strategic logic, apparently, is that City AM will broaden THG’s “reach” for its own brands and those it promotes for third parties. Well, OK, the paper distributes 70,000 copies a day and its target audience is financial workers who tend to be attractive to advertisers. Plus there’s a monthly online readership of up to 2 million, which THG might seek to increase.
Come on, though, advertisers normally confine themselves to buying adverts rather than whole newspapers. As for the idea that City AM should be considered an addition to a fledgling media unit within THG, that’s stretching things. The other titles seem to be promotional digital magazines for nutrition and health and beauty enthusiasts. City AM, employing 40 staff, is a punchy publication with a specialism in zinging front page headlines.
THG’s formal strategy is “to create and grow category leading brands on a global scale”, which is vague enough to allow almost anything to be considered a fit. Yet the company seemed to be conducting an overdue tidying-up exercise recently. A small cycling equipment operation was sold to Frasers Group last week in the name of simplification and streamlining. A mini-adventure into newspaper ownership would turn the dial back in the old direction; that analysis is not altered by news that City AM will expand its coverage of “wellness technology and beauty” (groan).
Moulding’s time would be better spent on THG’s core operations as a way to improve a share price that, even after a little rally this year, is still down by four-fifths from 2020’s float price. He has belatedly given up his controversial takeover-blocking “golden share” in THG to try to restore City trust, but it’s hard to see how this deal will help the process of normalising the company’s governance in investors’ eyes.
On plus side, THG won’t be paying much because City AM is being acquired via a pre-pack administration. Allen might also have a few media industry tips to pass on from his old TV days. Really, though, this purchase looks like an indulgence and a distraction. In the round, we shouldn’t complain about people wanting to own and invest in newspapers. But Moulding should be using his own money, not his shareholders’.
