The most pessimistic forecasters for the regional newspaper industry now accept that the internet will not replace local daily and weekly titles as a primary source of community information, neither will it destroy their classified base, believes Chris Oakley, chief executive of Regional Independent Media.
"Increasingly, parallel publishing -using traditional print titles and online sites to complement each other – is seen by newspaper publishers as the way to maximise revenue and readership," said Oakley when he presented RIM’s half-year figures last week.
"Household penetration by RIM’s major titles, for example, has risen by almost 1 per cent in the past two years thanks to the readership of their online sites."
Oakley, buoyant about his figures, said that with increased profits in the first half (up 13.7 per cent to £23.2m), his company was well placed to achieve further growth in the second six months, despite a slowdown in advertising revenues.
Turnover and profit margin have both increased and internet revenue is up 50 per cent to £1m. With acquisitions in Scotland added to the portfolio, Oakley called the results encouraging and said they compared favourably with peer companies.
RIM had prepared for the harsher market conditions of 2001 with a cost reduction exercise to save £1.5m, almost offsetting the impact of its higher newsprint bill.
"Advertising revenue growth slowed to 3.1 per cent, but the steps taken before the start of the year enabled operating profit of the core business to increase by 6.6 per cent," Oakley said.
Excluding newsprint, costs in the second quarter were 2 per cent below the comparable period in 2000 and, even with the more expensive newsprint added in, were 0.7 per cent below.
Circulation revenue was largely static, with increases from rising sales and cover prices on the group’s weekly titles offset by small declines in the sales of most of the group’s daily titles.
Circulation of the larger daily titles remained a challenge, Oakley admitted, and said RIM was investing an additional £0.6m this year in pursuit of sales stability.
A further review of costs was undertaken during the second quarter and this is expected to generate more savings this year.
Newspapers remain the group’s best revenue provider, generating 92 per cent of RIM’s turnover in the first half.
RIM’s specialist off-road motor-cycling magazines were severely hit by the impact of the foot and mouth epidemic, causing cancellation of all the events which are the backbone of the titles’ coverage.
Oakley expects them to recover sales and advertising revenue when the situation returns to normal.
By Jean Morgan