A leading financial services company has expressed concerns about the risks facing the UK regional newspaper industry and is continuing to advise shareholders to ‘sell’rather than invest in publishers.
UBS, based in London and New York, singled out Trinity Mirror, Daily Mail and General Trust (DMGT) and Johnston Press as companies facing problems with ‘strategic focus”.
Of Trinity Mirror, publisher of the Daily Mirror, Sunday Mirror and over 240 local and regional newspapers, UBS said that ‘the competition at the end of the tabloid end of the national newspaper market was a particular concern”.
Trinity Mirror’s share price closed yesterday down 5.9 per cent, setting a new 52-week low. Press Gazette understands an announcement is expected on Friday on the sale of the Racing Post and the company’s West Midlands titles, including the Birmingham Mail.
UBS began coverage of DMGT on Tuesday with a ‘neutral’rating and a 750p share price target, adding that it had an ‘attractive’portfolio of titles for investors and a ‘relatively safer and more reliable way to play to UK advertising sector than peers such as Trinity Mirror or Johnston Press”.
‘However”, UBS said yesterday, ‘the [DMGT] stock is not particularly compelling on valuation terms and we are concerned about certain aspects of their strategic focus.
‘There are signs the Evening Standard circulation numbers are now stabilising and Eastern Europe offers a new route to growth. However we have doubts over whether DMGT is choosing quality over quantity for its online sites.”
DMGT’s share price fell last night 3.3 per cent to 651p.
In the consumer publishing sector, UBS recommended investment in Emap, publisher of Heat and FHM magazines as well as local radio and digital TV channels, and praised the company for diversifying away from relying on UK advertising.
Shares in the company ended 1.9 per cent lower at 862.5p. A trading update from the company is expected tomorrow morning.