Mecom: Rate of decline in newspapers is slowing down

Mecom has become the latest newspaper publisher to report signs of increasing stability after a period of plunging revenues.

The group, run by former Mirror Group chief executive David Montgomery, said in a trading update today that the rate of revenue decline was beginning to slow.

But Montgomery said the traditional operating model for newspapers was “defective” and the expense attached to it “unsustainable”.

While circulation and subscription revenues remained stable, like-for-like advertising revenue in the four months to the end of April fell 22 per cent.

Mecom said total group revenue in the same period was down 14 per cent.

“There are now indications that rates of decline have generally reduced since February, the worst month, and that there is greater stability,” the company said.

“However no consistent trend has yet emerged and strenuous and renewed cost reduction measures remain a key focus of management.

“Those cost savings already achieved will compensate significantly for revenue decline.”

Mecom said like-for-like costs were down nine per cent over the four months.

It has saved €45m (£40m) in costs since the New Year and said it was on track to achieve its full-year target of €75m (£66m).

Montgomery, the Mecom chief executive, said: “The economic crisis has finally made the industry accept that the traditional operating model for newspapers is defective and the expense unsustainable.

“At the same time our unique content can be commercialised and exploited across different platforms.

“The challenge is to promote this increased productivity within a reduced cost base and that is the main thrust of the next phase of our development.”

Mecom joins Trinity Mirror and Johnston Press, both of which announced last week that revenues were stabilising.

Trinity Mirror said it expected the rate of decline to ease through the remainder of the year – spelling an end to the double-digit year-on-year percentage declines in revenue.

Johnston Press added that although trading remained tough, it was encouraged to see some stability in advertising revenue in recent weeks.

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