This morning brings a carefully-worded trading update from Daily Mail & General Trust. Quoted companies use trading updates to ‘guide’the market toward reasonable expectations for full-year results. DMGT’s financial year finishes in early October. The company will report full-year results on 26th November.
I said the statement was carefully-worded. Actually, the lack of any sign of an improvement in national newspaper ad revenues is disappointing.
Some relative improvement is visible at Northcliffe (smaller YOY declines in ad revenues). Yet local newspaper revenues continue to decline at an alarming rate.
It bears repeating: with circulation revenues stagnant at best, we need an improvement in ad revenues before we can start talking about any kind of sustainable recovery for the newspaper industry. At DMGT, there’s no real sign of this happening yet.
This is what we knew about ad revenues at Associated up until this morning:
And this is what we learned this morning:
Interestingly, DMGT didn’t offer a number for display advertising performance at Associated during Q3. Nor is there any mention of digital revenues. Depending on your perspective, you might choose to find this worrying.
July and August, it seems, were a nightmare:
Whilst Associated’s total advertising revenues in July and August were down by 21%. September has been better, although trading remains volatile from week to week with little visibility on future advertising performance.
Note that suggestion of ‘little visibility”. Associated said the same in July about Q2. The coded implication? Despite the talk of economic recovery, the slump in national ad markets continues unabated.
Here’s what we knew up until this morning:
Q408 (UK ad revenues): -27%
Q109 (UK ad revenues): -36%
Q209 (UK ad revenues): -33%
And here’s what DMGT told us this morning about Northcliffe in Q3:
July & August 2009: -26%
September 2009: ‘continuing improving trend”
And here’s what we’re told about that “continuing improving trend”:
Absolute weekly levels of advertising revenue have stabilised and year-on-year rates of decline are now showing improvements.
This sounds positive enough. Typically, local newspapers are are an early-stage recovery play. Yet these YOY declines still feel stubbornly high.
Remember, too, that DMGT’s local newspaper ad revenues have been declining at a significant rate for well over a year now. In July and August 2008, for example, the YOY decline was 23% — not much different from what’s happening now.
The only real bright spot was reserved for investors. DMGT has cut its costs by £150m this year. Across Associated Newspapers and Northcliffe Media, 1,500 jobs (around 15% of the workforce) have gone during the past 11 months.
As a result, DMGT says that it ‘confident’that it won’t disappoint market expectations of profitability for the full year. In particular, cost-cutting means that Northcliffe’s profitability actually improved YOY during August and September.
For small mercies like this, if that’s how to describe them, we should be grateful.