- Telegraph triples pre-tax profit in 2020 financial results
- Subscription-first strategy paying off
- CEO Nick Hugh reveals most staff will return to full-time office working
The Telegraph could generate most of its revenue from subscriptions this year, according to chief executive Nick Hugh, who spoke to Press Gazette about the group’s 2020 financial results.
And he said that while online subscriptions growth is helping to secure the future of the 165-year-old title, print will remain an essential part of the mix for the long-term.
New figures show Telegraph Media Group, which publishes the Daily Telegraph, Sunday Telegraph and Telegraph.co.uk, reported turnover of £235.2m for 2020, down 12% on the previous year. Hugh says the decline is due to the pandemic advertising downturn, felt across the industry.
Operating profit for the group was up 76% to £28.3m and pre-tax profit more than tripled to £22m, up from £6.2m in 2019.
The Telegraph now has more than 600,000 paying subscribers across print and digital (as of March 2021). It reported 71% year-on-year growth for digital subscriptions in 2020, with digital subscription revenues climbing by 77% to £31.5m for the year.
The Telegraph put on a third more subscribers over the year to December 2020 and a million more registered users, which now total 6.6m.
“That’s what I call sustainability,” Hugh (pictured) says of TMG’s 2020 financial results, which cover the twin peaks of the pandemic in the UK and some of the toughest trading conditions yet seen.
“This shift towards subscribers will continue and in fact in 2021, two things are likely to happen,” he says. “The first is the majority of our revenue is going to come from subscribers and the second is digital subscription revenues will be higher than all ad revenue. That will be a first for us and potentially the industry.”
Subscription revenues are set to account for about half of total revenues this year, the group says.
Telegraph’s core audience is in ’40s onwards’
Hugh continues to target 1m paying subscribers and 10m registered users – who must sign up with an email to receive free access to limited content – by 2023. He says a subscription model is “far less susceptible” to market shocks, such as Covid-19, adding: “It’s much easier therefore to forecast.”
The former Yahoo EMEA vice president sees registered users as a way of insulating the Telegraph against the death of third-party cookies, which will shift the internet to a privacy-by -default setting.
“It’s important that there’s a way to communicate with readers through alternate means, so you need to know who they are,” says Hugh. “If you have an email address it enables you to push out your journalism.”
The Telegraph’s aim is “driving that registrant through to a subscriber,” he says. “And what is particularly important is the 30/60 days after which they register, can they be engaged enough to increase their propensity to subscribe? Then hopefully they end up subscribing.
“That is the key reason that registrants are so important to us, because they are the subscribers of the future that you need to continue to engage.”
Given registered users’ importance to the future of the brand, it’s surprising to find that the Telegraph’s registrations page continues to accept any email, real or no, as first revealed by Buzzfeed in 2019.
Hugh points out in response that the Telegraph is “extremely transparent” on its numbers, regularly reporting subscriber volumes and average revenue per subscriber, adding that these are assured by financial services firm PWC – “that is where the quality controls are in that”.
Hugh says subscribers “are the most important numbers”, but when it comes to the make-up of that audience – the average Telegraph reader is widely seen as being older, white and male – he shows no concern. “We are very comfortable with what that core audience is,” he says.
“There will be some [misconceptions] that are based off what the typical print subscriber is, but the typical digital subscriber has a very different profile. We’re not concerned about whether we’ve got enough growth in the future, but we have always known that our core audience is in their 40s onwards. Those people, when they get to the more serious life stage, become more naturally interested in a right of centre operation like the Telegraph.”
Telegraph CEO on newsroom return
The pandemic has seen most publishers shift to remote working, with Press Gazette’s industry survey revealing most news industry professionals will only return to the office part of the time.
Hugh says TMG’s financial results for 2020 are “testament to how strong our editorial operation was throughout the pandemic and how much that was well received by the general public, but also how agile the overall business has been”. He says the pandemic had “undoubtedly accelerated our strategy” in moving towards a subscriptions-first model, but had also shown that the group was on the right track.
“Covid has been an extremely difficult time for people personally and professionally,” he says. “I would say that it has accelerated some changes in consumer behaviour that I can’t see how they will return – and that’s more than just new consumption.
“The successful businesses will be the ones that have adapted to that very effectively. For instance… we shifted our entire events business to be 100% digital and we did that within a matter of weeks. I think those companies that can act fast in response to changes in consumer behaviour are always going to be the ones that will do best in the future.”
During the pandemic the Telegraph ran a skeleton crew of core workers in its London newsroom, but while some publishers are moving to a decentralised, flexible working model that might spell the end of the newsroom as we know it, Hugh says that once Government guidance allows a full return he expects the Telegraph “to continue to be a predominantly office-based organisation with a newsroom in central London”.
Print remains ‘essential component’
A mark of the Telegraph’s resilience in the face of the coronavirus crisis was its early decision to repay money taken from the government’s furlough scheme, which paid a proportion of staff wages while they were on temporary leave.
Hugh says the Telegraph only took furlough money for a few weeks and says the group paid it back “because we felt that we had responded very effectively and that we were not in need of any type of government assistance, because actually our worst case forecasts hadn’t played out and we had responded [better].
“And we could do that because we were confident in how well the team and the whole company responded to the pandemic.”
In its outlook for 2021, TMG says that while its print circulations have “proven resilient” despite successive lockdowns (though it is no longer audited by ABC), “many of the fundamental structural changes in the industry are now well established, including how consumers engage with digital content”.
Along with digital subscriber growth for 2020, the Telegraph reports its Youtube channel doubled its subscribers to 1.5m while four of its podcasts were in the top 50 for the Apple news podcast charts, with total podcast listens more than doubling year-on-year to over 10m.
But despite this digital success, Hugh says print is “100%” part of the Telegraph’s future. Along with the FT, the Telegraph titles are the only remaining UK broadsheets.
“It’s an essential component,” Hugh says of the paper. “I know everyone talks about digital transformation, you’ve got to be 100% digital – actually, in a news environment, having a physical product with a brand that’s got the level of trust and strength that the Telegraph does is an extremely valuable asset in a digital world.
“I think it is the combination of the two and I’m delighted to say that I think that print has got a long future in front of it and we’ll continue to make sure that the [business] model that sits behind it is as efficient and sustainable as it possibly can be.”