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Daily Mail owner bucks poor media-governance trend


By Liam Proud

(The author is a Breakingviews columnist.)

LONDON, March 4 ( Breakingviews) - Liberal Brits cringe at the sometimes retrograde treatment of society's minorities in the Daily Mail's pages. Minority investors, though, are getting a fair showing from the group's controlling Rothermere family. It's a governance lesson for European media tycoons.

Instead Jonathan Harmsworth, aka Viscount Rothermere, seems to be penalising himself to get the deal approved. In return for one share, outside investors get almost one-fifth of a Euromoney share, about 68 pence in cash and just over half a share in the slimmed-down parent. Add it up, adjust for cancelled shares, and the value is 6.57 pounds. Rothermere gets less than 26 pence in cash and just under one share in the remaining Mail group, implying a value of 6.17 pounds.

He's admittedly boosting his economic stake - to 36 percent including voting shares from 24 percent. But that's 2.6 percentage points less than if he had taken Euromoney shares on the same terms as everyone else. That should help him muster the support of three-quarters of independent shareholders set as the approval threshold. It also avoids having to hold Euromoney shares directly, which would violate the Rothermere trusts' mandate as a steward of the Daily Mail parent.

Rothermere isn't obliged to seek approval from three-quarters of unaffiliated investors. But the move reflects a culture of more generous minority investor protections under UK law: a 2009 study scored Britain five out of six on the Antidirector Rights Index, a measure of shareholder protections, compared with France's 3.5 and Italy's two. Meanwhile the company's board owes investors a break since attempts to sell Euromoney at a premium clearly flopped, and the parent group's shares are down almost two-fifths in five years. The Rothermeres are bucking the media trend; for once it's helpful.

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- Daily Mail and General Trust on March 3 said it plans to return all of its shares in Euromoney Institutional Investor and 200 million pounds of cash to eligible shareholders.

- DMGT holds more than 49 percent of Euromoney, which provides business-to-business information. DMGT Chief Executive Paul Zwillenberg said in a statement that in total the distributions would result in almost 900 million pounds of assets being returned to shareholders, who "will benefit from direct ownership of Euromoney while retaining exposure to a simplified DMGT Group".

- DMGT said that eligible shareholders would be holders of A Shares other than Rothermere Affiliated Shareholders and the DMGT Employee Benefit Trust.

- Shareholders affiliated to Lord Rothermere, whose foundations exist to hold the family's interest in DMGT, will not participate in the share distribution and will limit their receipt of the cash.

- DMGT shares were up 5 percent to almost 6.80 pounds at 0830 GMT on March 4.

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