Northcliffe issues gloomy prognosis and warns of cuts

Daily Mail and General Trust has refused to rule out further job cuts in its regional newspaper business, Northcliffe Media, after it reported a sharp decline in advertising revenue.

The company said today that although it was not planning to dispose of any under-performing titles, it was “watching all costs very tightly” and had already begun not replacing staff who leave.

In a trading update, DMGT said like-for-like revenues at Northcliffe in the three months from April to June were down five per cent compared with the same period last year to £102m.

Regional advertising revenues recorded a 16 per cent year-on-year slump in June, fuelled by a decline in property advertising, which DMGT said was down by more than a third.

“May and June saw a deterioration in trends particularly in the property and recruitment sectors,” the publisher said. “The first three weeks of July have seen a further deterioration in recruitment advertising.”

The DMGT finance director, Peter Williams, said: “We’re obviously watching all our costs very tightly. Our overall costs in our regional division are running lower than last year. That’s largely down to non-replacement when people leave. We haven’t had big redundancy programmes.”

The gloomy prognosis at Northcliffe – which employs 4,500 staff – follows a similar warning by Trinity Mirror, which is expecting full-year profits to be 10 per cent lower than expected. Newsquest and Johnston Press have also reported declines in advertising revenue.

“The regionals are definitely being hit,” Williams said. “Broadly, we don’t compete directly with each other. Northcliffe appears to be doing marginally better than one or two of the other groups, but we’re not going to buck the trend.”

Associated Newspapers, which employs around 2,500 people and publishes the Mail titles, the London Evening Standard and free morning paper Metro, saw revenues increase marginally year on year, up 0.4 per cent to £243m.

Circulation revenues, which make up nearly half of Associated’s print income, rose four per cent on the back of the Daily Mail’s 10p cover price rise to 50p in April.

The decline in advertising revenue at Associated was less sharp than in the regionals division, down three per cent year on year, with retail advertising continuing to grow, up three per cent on last year.

“I think our nationals division is holding up pretty well,” Williams said. “I expect the Mail titles to come booming back. I have every confidence that that will be the case.”

DMGT added that its digital division and the companion websites for its newspaper titles “again grew strongly”.

“The Mail Online site is growing very strongly but from a pretty low base,” Williams added.

DMGT’s non-print division, which now makes up more than half of the overall business, helped offset the decline in the print businesses. DMG Information saw revenues rise six per cent year on year, and Euromoney posted a 13 per cent year-on-year rise in revenue for the quarter from April to the end of June.

Williams said that, despite the worsening conditions in DMGT’s print portfolio, the company was not planning any disposals.

“That’s not the way we think,” he said. “We might think of selling a business if we thought for the long term it was good for DMGT. We’re not renowned for knee-jerk reactions. We don’t do things on the spur of the moment.”

But he also ruled out any major acquisitions, adding: “Let’s just say, as of the last six months or so, we’ve spent very little money on acquisitions. We’re very much in the mode of not spending money at the moment unless something compelling comes along.”

DMGT is due to report its next set of results on 25 September.

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