City AM Prepares for Insolvency Process as Search for Buyer Fails
City AM, the London-based business newspaper, is on the verge of appointing BDO, the accountancy firm, to handle an insolvency process after an unsuccessful search for a buyer. The directors of the newspaper’s parent company are preparing to take this step in the coming days, according to sources. Despite ongoing discussions with potential buyers, City AM has been unable to secure a solvent deal. The COVID-19 pandemic has severely impacted advertising revenues for the nearly 18-year-old free sheet title, as commuter footfall declined sharply. Additionally, rising print costs have further strained the finances of City AM and its competitors.
There is a strong possibility that a pre-pack sale, where administrators are appointed to a company before immediately selling some of its assets, will take place. A notice of intention to appoint administrators is expected to be issued this week. City AM, which has been distributed for free at various transport hubs and locations in London and the home counties since 2005, has a daily print run of 70,000 and an audited circulation of over 67,000.
The newspaper is 50% owned by a group of Dutch investors, with Lawson Muncaster, the managing director, and Jens Torpe, the chief executive, holding 25% stakes each. Muncaster announced the search for a buyer earlier this month, stating that City AM is well-positioned to expand into new areas and develop new revenue streams in the post-pandemic media landscape.
The initial search for a buyer was led by FRP Advisory, a specialist restructuring firm. City AM’s website attracts up to two million monthly unique visitors, and its latest circulation figure is only 10,000 lower than pre-pandemic levels. The newspaper’s Friday edition was discontinued in January due to changing commuter habits, resulting in it becoming a four-days-a-week publication. The editorial and commercial operations of City AM employ just over 40 people.
Media analyst Douglas McCabe from Enders commented earlier this month that potential buyers would likely be interested in City AM as a digital brand. He noted that free print media is challenging, and the pandemic, along with Brexit, has affected the newspaper’s corporate advertising. Andy Silvester, the editor of City AM, and a spokesperson from BDO declined to comment on the matter.
City AM’s decision to appoint insolvency practitioners comes as The Daily Telegraph, its Sunday sister publication, and The Spectator are set to be put up for sale by receivers appointed by Lloyds Banking Group. Lloyds took this action due to the Barclay family’s failure to repay a £1 billion loan. Mike McTighe, the chairman of Openreach, has been named the chairman of the parent companies of The Telegraph and The Spectator. Bankers will soon be hired to conduct an auction of the titles.
Note: Mark Kleinman is a paid columnist for City AM.