Guardian Media Group‘s national newspapers have reported plunging profits while its regional titles are now making a trading loss, it reported today.
In its annual report for 2008/2009, GMG revealed that national newspapers division Guardian News and Media reported an increase in operating losses to £36.8m (compared with £26.4m in 2008) on reduced turnover of £253.6m (£261.9m).
The regional newspapers division reported profits of just £500,000 on steeply reduced turnover and revealed a trading loss for the last six months.
Guardian Media Group overall reported a pre-tax loss of £89.8m compared with a profit last year of £306.4m on turnover down to £405.4m compared with £502.1m.
The huge reduction in turnover for GMG is largely accounted for by the fact that Trader Media Group, which GMG owns 50.1 per cent of is now accounted for separately – as is GMG’s joint venture ownership of B2B publishing business Emap.
When turnover from GMG’s share in its joint ventures is included, turnover for GMG this year was said to be £637.9m (compared with £625.7m in 2008).
GMG’s 2008 profit figures were inflated by the one-off proceeds from selling a 49.9 per cent of Trader Media Group.
This year’s figures include non-trading losses of £78m.
GMG chairman Amelia Fawcett said: “While declining revenues were a factor in our financial performance, the reported loss is also due to the restructuring of the portfolio over the last two years – specifically the partial sale of Trader Media Group and investment of the proceeds in long-term assets.
“Scott Trust ownership, the lack of institutional investors and a far-sighted approach to investment have allowed the Group to place long-term security before short-term profit.”
GMG chief executive Carolyn McCall said: “The sharp decline in the advertising market had an impact on each of the wholly owned businesses. All are reducing costs to a more sustainable level in this harsh new environment.
‘The two joint ventures with Apax Partners – Trader Media Group (TMG) and Emap – continued to perform strongly, delivering substantial profit despite adverse market conditions.
“The journalism of our flagship title continues to flourish in print and on the web, and as a Group we expect to emerge from recession with our market-leading positions not only intact but also strengthened.”
GMG results breakdown:
Guardian News and Media (national newspapers and websites)
Losses of £36.8m, from £26.4m in 2008, on turnover down to £253.6m (from £261.9m).
GMG: “GNM experienced the toughest trading conditions seen for many yearsâ€¦GNM’s aim is to emerge from the economic downturn a leaner and stronger organisation: leaner due to a bottom-up reappraisal of the cost base to ensure it is affordable; stronger because it will continue to invest in its journalism and in maintaining its market-leading positions.”
GMG Regional Media (local newspapers division)
Operating profit down to £0.5m (from £14.3m in 2008) on turnover down to £94.5m (from £120.5m)
GMG: “The past financial year was perhaps the most challenging in the history of the local and regional press. The underlying problems of the sector are predominantly structural and can be traced back at least ten years, but were masked by a long period of economic growth. The onset of recession revealed the full impact of online disruption to the traditional business model of local and regional papers…Since the end of the 2008/09 financial year conditions in the regional pres have, if anything worsened.”
Operating loss of £6.6m (compared with £0.1m profit in 2008) on turnover of £46.6m (£48.8m).
Trader Media Group (TMG) – joint venture
Operating profit of £110.8m (compared with £119.9m in 2008) on turnover of £296m (£309.9m).
“The main brand, Auto Trader, continued its successful transition from print to online, with profit contribution from digital growing to more than 85 per cent from 70 per cent a year ago. Despite difficult motors and media markets, TMG remains on track to deliver sustainable, profitable growth.”
Emap – joint venture
Operating profit of £98.2m on turnover of £284.9m. (No year-on-year comparison available)
“Emap is not immune from the challenges facing the media sector. However, it is a strong and diverse business, with profit evenly distributed between its three prime formats of delivery: data, events and publishing. Its 35 per cent operating margin puts it at the forefront of the business-to-business sector.”