The financial reporting season: A moment of truth at Recession Central

Have you noticed how bumpy it’s getting?

Yep: we’re navigating the final approach to a series of extremely negative financial announcements from the UK’s consumer-facing media groups.

The coverage is telling us that we’re in for a shocker. As Sir Alex Ferguson would say, it’s squeaky bum time.

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Visibly, we’ve reached the point at which struggling media groups concede the need to sell non-core assets for what they can, when they can.

That was the message delivered by Daily Mail & General Trust’s sale of the Evening Standard for £1. This morning, the Times announced that ITV wants out of ITN. So, too, does DMGT, which holds a 20% stake.

Both Johnston Press and Independent News & Media have announced fire sales of assets. INM hung out the ‘for sale’signs above a collection of ‘non-strategic core assets’a few weeks back.

The FT did the same on behalf of Johnston Press’s Irish newspapers on Friday.

We can expect more distress signals as we move through the reporting season.

Proceedings will kick off on Wednesday with a trading update from Daily Mail & General Trust.

Trinity Mirror will report its annual results on 26 February. Johnston Press will do the same a week later.

Archant’s annual report should also make an appearance in early March. ITV will report is full-year results on 4th March. And Independent News & Media will follow in late March.

The most crucial piece of news in each announcement will involve what’s been happening to ad revenues since consumer confidence fell off a cliff last October.

The IPA’s Bellwether Report, published in mid-January, suggested that marketing directors reacted ruthlessly.

Overall, the Bellwether Report implied a “sharp acceleration in the overall rate of decline” during Q4. According to the FT, the report suggested cuts of “one-third” to “main media advertising, such as television and print”.

Arguably, these cuts had only started to filter through when the UK’s consumer-facing media groups last updated the market during November.

Back then, Trinity Mirror told us that ad declines were accelerating toward -20% YOY. Reading between the lines, November’s interim management statement from Johnston Press suggested similar

DMGT last offered us a snapshot of conditions on 20th November. This told us that total ad revenues at Associated fell by 10% YOY during October. The decline at Northcliffe was a swingeing 28%.

Nothing that has occurred in the meantime suggests that ad markets have improved.

Last week, for example, Gannett disclosed a 29% YOY decline in constant-currency ad revenues — classified and display — at Newsquest between October and January.

The read-across from TV markets is worrying. A few weeks back, we reported Zenithoptimedia’s suspicion that Five suffered a 27% collapse in ad revenues during January.

That was an agency view. Sensibly, Campaign followed it up last week by talking with broadcasters directly. What it discovered about their projections for Q1 was worrying. 

According to Campaign, total TV ad revenues (including the cash attracted by fast-growing minority interest channels) are predicted to fall by 17%-18% between January and March.

ITV1 will suffer a 22% YOY hit. And Five is predicted to face a shortfall of 32% on last year’s ad revenues.

Ladies and gentlemen, fasten your seatbelts. We’re making our final approach to Recession Central. . .



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