By Gabriel Princewill-
Daily Mirror-owner Reach is expecting a major annual revenue hit amid lower newspaper circulation levels and dwindling advert sales. The company which has racked up 1.7billion page views last month, marking a 57 per cent increase year-on-year is concerned of incurring huge losses as a result of the pandemic.
Reach which also owns the Daily Star, the Daily Express and several other brands has seen revenues fall by 13.1 per cent in the four months to 26 April. In April alone, group revenue tumbled over 30 per cent due to hefty falls in both its print and digital business.
In a trading update on Thursday, the owner of the Daily Mirror and Daily Express reported that over April, revenues had tumbled 30.5%, with print revenues down 31.8% and digital slumping 22.5% as higher page volumes were unable to offset declines in advertising yields. The full drop was attributed to the full lockdown imposed in the Uk.
Reach reported dip in revenues by 13.1% for the first four months in April, despite having started the year well,the pandemic had caused declines in circulation sales, a fall in print advertising at national and local levels, event cancellations and falling digital yields as advertising demand fell.
However, the company said it had witnessed an unprecedented demand for news over the period, with April seeing total page views of 1.7bn, up 57% year-on-year. Looking ahead, the company said its revenue performance for the year is expected to be “significantly impacted” by the pandemic, although a number of cost-saving measures were expected to “partially protect profitability levels and cash generation”.
Reach also kept its guidance suspended due to “continued uncertainty about the severity and length of the crisis”. Chief executive, Chief Mullen said:
“Our teams continue to focus on producing the award-winning journalism and content that is so valued by our customers at this critical time. We continue to build on our position as the UK’s largest commercial national and regional news publisher”, said chief executive Jim Mullen.
“Our strategy is now even more relevant than before the crisis so we are accelerating plans to drive digital engagement and capture the customer insight and data that is so key. This will ensure a strong and sustainable future for Reach’s trusted news brands”, he added.
“Our forecasts may fall further today, but against a TV market decline of c40% in April this is not a materially worse outcome than feared”, the broker added.
In April, Reach said it would furlough 20 per cent of its staff, cut wages by 10 per cent and management pay by 20 per cent as it battles to keep its regional and national titles operating during the pandemic.
‘While in some areas we have recently seen a stabilisation in trends, circulation remains significantly below pre-COVID-19 levels and advertising remains very challenging and uncertain, with regional advertising particularly impacted,’ Reach said. Reach may have published some concerning forecasts today, its share price has surged ahead and is currently up 11.42 per cent or 8.10p to 79.00p.
Uncertainty
Reach warned that the uncertainty around the severity and duration of the crisis casts a shadow on the impact of print circulation, advertising and events.The company said it had a £33.2million cash stash, after cutting costs and drawing down £25million.
In the four months to April 26, revenue fell 13.1 per cent, despite a 4.7 per cent growth in digital sales for the period.
Reach, which is the country’s fifth biggest digital media property said:
‘Our teams continue to focus on producing the award-winning journalism and content that is so valued by our customers at this critical time,’ said chief executive Jim Mullen.
He added: ‘Our strategy is now even more relevant than before the crisis so we are accelerating plans to drive digital engagement and capture the customer insight and data that is so key.’This will ensure a strong and sustainable future for Reach’s trusted news brands.’