Daily Mail group profits up as Northcliffe regionals struggle

The Daily Mail and Mail on Sunday are “holding up well” despite worsening conditions in the UK economy, with the relaunched Mail Online trebling its revenues in the past year, results released this morning have revealed.

But the Daily Mail and General Trust warned today that its regional newspapers division, Northcliffe Media, was experiencing “tougher trading conditions”, with advertising revenue in the first three months of 2008 down 6.2 per cent compared with the same period last year.

Announcing its half-year results this morning, DMGT said overall revenue in the period from October 2007 to the end of March 2008 rose five per cent to £1.17bn. Like-for-like operating profits also grew by five per cent to £166m.

The group’s national newspaper division Associated Newspapers – publisher of the Daily Mail, Mail on Sunday, Evening Standard and Metro – reported a four per cent fall in profit, down from £46m to £44m, due partly to the cost of opening the group’s new colour printing plant in Didcot. The Mail titles have been printed in full colour since the beginning of January.

“It seems that economic conditions in the UK will be tough in the second half and this is having an impact on our local media division,” the company said.

“To date, however, our national titles are holding up well, and we expect to achieve growth in our business to business divisions, despite a high level of development expenditure.”

It was different story at Northcliffe Media, where operating profits fell 13 per cent on a like-for-like basis to £33.8m and like-for-like revenue down two per cent to £179m.

Revenue at Associated Northcliffe Digital grew by 12 per cent to £46m, but operating profits fell from £4.8m to £2.2m because of investment in its online motors portal, Motors.co.uk, and heavy marketing of the property websites, Findaproperty and Primelocation.

The star performer at AND was Mail Online, which is now the UK’s second biggest national newspaper website. The site trebled its revenues to £4m in this six-month period compared with the same period last year.

“We’ve only been putting money behind the Mail sites in the last 18 months. We’re operating at a pretty low base,” the DMGT finance director Peter Williams said in a conference call.

“The traffic figures are just remarkable, although quite a lot of that growth is overseas. We need to monetise that fantastic traffic that we’ve built. We’ve started, but it’s great oaks from little acorns.”

Asked about DMGT’s plans for its free newspapers division, Williams said there were no immediate plans to increase the distribution of Metro.

“There’s a very limited number of other places in the UK we would even contemplate going to,” he said.

“You have to have the right circumstances to make a morning free newspaper work in terms of people travelling on public transport and having sufficient numbers of people. We’re in most of the major cities already.”

Teletext continued to make an operating loss of £3m, with revenues in the six-month period falling 16 per cent year on year to £17m.

DMGT said 53 per cent of its profits came from activities other than newspaper printing. It added that further progress had been made on building up digital advertising.

The DMGT chairman, Viscount Rothermere, said: “Most of our businesses have performed well despite the conditions in the global financial and property markets.

“The economic outlook remains uncertain but the group’s strong cash flow allows continued investment to ensure our businesses achieve their full potential.”

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