Daily Sport plans more cuts after 50% advertising dip

The new owner of the Daily and Sunday Sport has warned it will ‘maintain its policy of cost-cutting’ after display advertising at the titles fell by more than 50 per cent in a year.

In its first full-year results since mobile video company Interactive World merged with Sport Newspapers in September 2007 to form Sport Media Group, the company reported a pre-tax loss of £18.2m in the year ending 31 July 2008 – down from a £5.3m profit in the previous year.

Sport Media Group bought the Sport titles for £50m, and said today that an £18.4m write-down to the purchase price due to deteriorating conditions in the tabloid market had contributed to the loss.

Group turnover in the year to July 2008 rose from £11.4m to £29.4m as a result of the acquisition of the Sport titles and Flip Media, publisher of lads’ mag Front, in April 2008.

About two thirds of the revenue, £20.1m, came from circulation and advertising at the Sport titles. The remainder, about £9.2m, came from adult material distributed via the internet and mobiles.

The company’s move into publishing from mobile content has also had an effect on its profit margins – down from 49.1 per cent in 2007 to 21.9 per cent last year.

Sport Media Group relaunched the Sport titles in April 2008 under the editorial leadership of Barry McIlheney and Loaded founder James Brown.

Pam McVitie was promoted in October last year to be the title’s first-ever female editor after former Cambridge Evening News editor Murray Morse was made editor-in-chief in July of that year.

Chairman David Bailey said he was hopeful that the new editorial direction of the papers would lead to them being stocked in a wider range of shops. Tesco began a trial at a number of its stores last September.

Bailey said the papers were currently being sold in about 39,000 retailers – up from 37,000 at the time of acquisition.

“Prior to acquisition, sales of the Sport newspapers had been falling steadily, there had been a gradual but sustained erosion in the number of retail outlets stocking the titles, content and staffing costs were too high, the products were almost entirely reliant on advertising revenue from the adult industry and the editorial tone and content of the titles was inconsistent and lacking in direction, he said.

“A newspaper is a product that is ‘baked fresh’ each day and, although there have been setbacks on the way, the board is encouraged that the recipe we now have is beginning to gain acceptance and credibility in the market.”

But he added: “Although classified advertising revenues have shown a small increase year on year, the general tabloid market is extremely challenging and display advertising revenues are down by almost half.

“It is clear that the Sport Newspapers business will need to maintain its policy of cost-cutting to ensure a successful year and the achievement of significant turnaround is likely to take longer than planned.”

In November, the Daily Sport sold 77,964 copies in an average day – all at the full rate of 50p.

An official year-on-year comparison from ABC is not available, but Sport Media Group said the figure represented a fall of 30 per cent since it bought the title in September 2007.

The Sunday Sport, which has an 80p cover price, sold 76,009 copies – down 16 per cent year on year.

But Bailey said that although the drop in circulation had “obviously adversely impacted revenues”, it also allowed the company to save about £1.6m a year in printing and distribution costs.

The Daily Sport “soft-launched” its new website in November, and the group said a number of projects were in the pipeline to “develop this revenue stream”.

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