Northcliffe & Associated: Desperately seeking an upturn

Bang: this is where things get really tricky. DMGT’s results for the six months to 29th March demonstrate how badly the news business needs a post-Christmas upturn, as forecast by the Chancellor.

Northcliffe Media avoided lurching into the red by the narrowest of margins.

DMGT’s regional newspaper arm announced UK-based operating profits of £3.2m on revenues of £142m. I’ll bet Michael Pelosi’s bean-counters scrutinized the underside of every stone on Derry Street to squeeze out that £3.2m.

At Northcliffe, operating costs are already 20% down on last year. ‘Further significant reductions’are planned.

Where are the green shoots? Conspicuous by their absence. During the six months as a whole, Northcliffe’s ad revenues declined by 31%. For April, the number was worse: -36%. Here’s what passes for a positive:

In total, advertising revenues in the last 15 weeks have remained steady with the exception of recruitment.

So rising unemployment — it started late, and will continue for a long time — is what’s now pulling down the numbers at Northcliffe. For the six months, recruitment ads were down 47%. In April? Down by 63%.

Look, too, at how the downturn is squeezing the rest of DMGT’s business. Overall revenues are down by 7% YOY, but operating profits collapsed by 30% YOY, from £166m to £116m.

Even if Lord Rothermere wanted to cut Northcliffe some slack based on good results elsewhere, he can’t. Cost cutting must be universal now.

To be fair, the rest of the damage for DMGT (in terms of profitability) is all down to Associated Newspapers, which is rapidly heading down the curve in Northcliffe’s wake. (Operating profits down from £44m to £18m YOY).

Ad revenues at Associated Newspapers were down by 15% YOY during the six-month period. For Northcliffe, DMGT offers a glimpse at April’s data. For Associated, it doesn’t. This suggests cause for concern: presumably, ad trading at Associated during April wasn’t impressive.

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