EXCLUSIVE: NewsTeam Group to acquire PaperRound in management buy-out

NewsTeam Group (NTG) has acquired PaperRound as part of a management buy-out it claims will bring benefits to all newspaper sellers.

The deal was spurred by NTG’s “return to profitability” and the retirement of both firms’ financial backer, Michael Kinton.

With more than £50m annual turnover, NTG is the UK’s largest home news delivery (HND) firm on a drive to cover every postcode in the UK. PaperRound is a HND software system used by more than a thousand HND retailers, including NTG. The firm has promised the deal will bring benefits for all newspaper sellers.

Kinton achieved success in software firm Endava PLC, a major partner of what is now publisher Reach PLC. He then co-founded PaperRound with Chris Hoy in 2005 before becoming a director and financer of NTG in 2014. A senior NewsTeam Group spokesperson said:  “His top priority has always been providing a good service to retailers and publishers. He’s truly passionate about the newstrade. His support has seen NewsTeam Group grow dramatically and we’re now in 47 consecutive months of growth. Mike has been much more than a financial backer, he’s our mentor.”

What the change means for retailers

The spokesperson reassured HND retailers using PaperRound that the service will continue to operate separately to NTG, which is often seen as a major rival to other HND agents. This pledge includes all customer data, which is protected by data protection laws. The spokesperson explained: “We would never cross any moral or legal lines around the use of this data. We are a trusted partner for retailers and want to work collaboratively to grow everyone’s benefit from the newstrade.”

These benefits include using the combined scale of the two companies to ‘grow and promote opportunities from NTG to other PaperRound users including working to convert their casual HND customers to subscribers, with the HND agent receiving payment for each sign up. This would be a completely voluntary option for HND retailers.”

They continued: “We will secure promotions and additional support from publishers for all users, as shown by the existing enhanced margin schemes on offer from the Daily Mail and Guardian, which were in part driven by NTG’s scale.”

Asked if it would use the combined scale to protect retailer newspaper margins, the spokesperson responded: “Publisher cuts to retailer margin jeopardises the whole category. It means less newspaper seller and therefore less newspaper sales. It is short sighted and needs to stop. NewsTeam Group and PaperRound will lobby to put a stop to this practice.”

NTG’s long-term objective is to acquire rounds from other HND agents and to begin using its network to sell and deliver products outside of the newstrade. The spokesperson confirmed: Whether that’s handling other companies’ deliveries or selling additional products ourselves. PaperRound will be the vehicle to facilitate this mission and these benefits will be shared with other PaperRound users who may also wish to diversify.

“This could be handling magazine subscriptions to the doorstep or effectively combining the news wholesale and home news delivery networks to create a model where parcels can be efficiently delivered from depots to doorsteps.”

Retailers respond

The move received the backing of the Fed, with national president Muntazir Dipoti telling RN:  “The benefits to NewsTeam are clear to see. NewsTeam needs a recognised operating system to further develop its business. There are also some clear opportunities for the PaperRound system to be further developed, to support those retailers looking to expand their delivery services into other product markets and to consumers at different times of the day. 

“We look forward to hearing more about NewsTeam’s plans and timescales, although we will be seeking assurances that the data of Fed members using the PaperRound system is protected.” 

Guy Day of Jackie’s News in Kent is a user of the PaperRound system. He told RN: “There should be huge benefits to all from a HND company running PaperRound and taking forward the development of the software. NewsTeam Group continue to demonstrate leadership and an understanding of how our industry might move forward both in partnership with publishers and helping other HND agents maintain their areas.”

Paul Amasanti of Willis News Distribution in London also uses PaperRound. He said: “NewsTeam with their knowledge of user needs along with its pasion for newspaper deliveries will most definitely be a good match and help drive the system forward.”

The new structure

RN understands a holding company will oversee both firms, with senior figures within NTG holding shares and directorships in the newly created parent company. Kinton will retain a share in the holding company.

Former Reach chief operating officer Neil Jagger will remain as chairman of NTG and will act as Kinton’s proxy on board decisions and votes. Jagger is also chair of Better Retailing publisher Newtrade Media. Former Express deputy circulation director Paul Goddard will become managing director of the holding company while Jon Kennett will be managing director of NewsTeam Group. Simon Wakeham will take up the role of PaperRound executive chairman and John Harris remains as PaperRound sales director.

A spokesperson confirmed that ‘day to day existing management remains in place but with the addition of new IT resource’. RN understands the company plans on doubling the number of IT developers as it ramps up new services and features on PaperRound.