Best case scenario: editors to start hiring by Christmas

If anything stops the cuts, and prompts new hiring, it’s going to be advertising (not slowly declining circulation revenues). Or as Peter Williams, the finance director at DMGT, put it last week: ‘Advertising is probably the thing which is going to move the numbers at the margin.”

So what do DMGT’s half-year results, published in the middle of last week, tell us about advertising markets?

How is Associated Newspapers doing by comparison with ITV (ad revenues up 8% YOY in Q1)? How is it faring against The Sun (which led a YOY ad revenue rise of 10% at Wapping during Q1)?

Answer: a rising tide lifts all boats. Between October and December, underlying ad revenues at Associated fell by 7% YOY. Between January and March, they rose by 11%.

That’s very similar to what we’ve seen at Wapping and ITV. In parts, Associated may even have done better. Metro, in particular, seems to have done brisk business during Q1.

The slides accompanying last week’s presentation to analysts suggest that display revenues at the Mail, Mail On Sunday and Metro rose by 15% YOY in January and by the same amount in March.

Peter Williams, finance director at DMGT, told analysts that April was ‘a bit sort of choppy’but May has been ‘perfectly OK again”. Like others, he blames the General Election for a slight slowdown in ad spend.

Later, he elaborated, talking about YOY increases in ad revenues:

On a month by month basis, [advertising at Associated Newspapers in] March was actually well into double digits, April is actually quite low, single digits, but I think you’ve got to put those two together, that’s our view, and then May is actually looking, will be back into double digits.

So: growth is coming along nicely at ITV, Associated Newspapers and News International. Speaking in person talking to analysts on Wednesday morning, DMGT’s executives sounded chirpier than the dour earnings release they issued beforehand.

Their joy wasn’t unconfined, however. Williams, for example, warned that Associated ‘will not get a big bounce in June from the World Cup in the way that ITV does’because this ‘just doesn’t happen in newspapers”.

He added that the number of ad pages being run by Associated Newspapers ‘remains some way below 2008″.

And you needn’t expect that Associated will start hiring in a big way any time soon. In the words of DMGT chief executive Martin Morgan, Associated and Northcliffe have ‘quite a way to go before we need additional resources’to handle the upsurge in ad sales and pagination.

As profits start to surge inward over a much-reduced cost base, there’s a strict hierarchy of needs at quoted companies.

First, bankers get what they are owed (if they weren’t already). After the bankers, it’s the shareholders’ turn to benefit from resumed, or enhanced, dividends. Next come investment bankers touting hot takeover prospects. (As Martin Morgan of DMGT noted last week, media M&A markets seem to be returning to life.)

Last in line come the wage slaves. Even if recovery remains on track, many newsrooms will spend the next six months dealing with a rising tide of pagination on the basis of depleted resources. With any luck, some editors will be hiring again — albeit very cautiously — by Christmas.

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