First national paper launch for 30 years
New Day launches as Trinity profits tumble
Trinity Mirror today launches The New Day, a new national newspaper as annual results from the owner of the Daily Record and Daily Mirror reports a 17.6% slump in annual pre-tax profits from £81.6 million to £67.2m. Revenue is down 7% to £592.7m.
Two million copies of the 40-page paper will be distributed free today. It will be priced at 25p for two weeks before rising to 50p.
Editor Alison Phllips said she is targeting 200,000 sales. The company said that “if successful” it is expected to move into profit this year.
Ms Phillips said the new title would be upbeat and optimistic and would reflect the multiple views of readers.
Its launch runs counter to recent closures and cutbacks in the newspaper industry as readers move increasingly to online sources of news. It is the first new national daily for 30 years and was unveiled after the decision by The Independent’s owner to cease print editions of the paper and its sister title in March. Trinity Mirror will lose revenue from the print contract it has for those papers.
The Daily Mirror circulation declined by 9.2% over the year and the national daily popular tabloid market by 9.6%. Trinity Mirror said: “The market for our other titles remains challenging with some individual titles performing well relative to the market.
“Our regional titles continue to experience difficult advertising markets, particularly national advertising in our metropolitan titles.”
Adjusted operating profit grew by 3.9%, adjusted profit before tax grew by 5.1% and adjusted earnings per share grew by 3.4% as a result of strong cost control including structural cost savings of £20m.
Group revenue fell by 6.9% with underlying revenue falling by 7.8%. Underlying publishing digital revenue grew by 21.9% and underlying publishing print revenue fell by 9.5%.
Trinity Mirror, which also owns the Daily Record, Sunday Mail and Business Insider, completed the acquisition of the 80.02% of regional newspaper group Local World not previously owned at an implied enterprise value for 100% of £220 million.
Local World revenue and adjusted operating profit for the full year 2015 were £208.2 million and £41.4 million respectively. The board has also concluded not to proceed with the on sale of certain titles of Local World which was announced at the time of the acquisition
Simon Fox, chief executive, Trinity Mirror, said: “I am pleased with the profit growth we delivered in 2015 despite the challenging print environment.
“Our significant efforts on improving our balance sheet over the past three years enabled the transformational acquisition of Local World. We are delighted to welcome the Local World team to Trinity Mirror and are making good progress with the integration of the two companies and finding opportunities to benefit from best practice.
“Whilst we expect print markets to remain difficult in 2016, the continued implementation of our strategy gives the Board confidence in our performance for the year ahead.
We have today launched, The New Day. It is an exciting and innovative initiative which we believe fills a gap in the market for a daily newspaper designed to co-exist in a digital age.”
Trinity said its strategy remains on track and continues to focus on digital investment and growth whilst protecting print revenue and supporting profits through the tight management of the cost base. It has targeted “structural cost savings” of £15m, including synergy savings, in 2016.
It said: “The launch of our new national newspaper, The New Day, is an exciting and innovative initiative which builds on our confidence in print media. If successful, the title is expected to move into profit by the end of the year. We will provide regular updates on this investment as we progress through the year.”
A final dividend of 3.15p per ordinary share is proposed bringing the total dividend for 2015 to 5.15p.
As previously announced the group has made a provision of £29m in 2015 for dealing with and resolving civil claims arising from phone hacking. This comprises a £16m charge on 21 May 2015 following the judgment of Mr Justice Mann and a £13m charge on 17 December 2015 following the judgment of the Court of Appeal.
Ed Bowsher, senior analyst, Share Radio, said: “At first glance you might think that Trinity Mirror’s shares are cheap. It made £67.2 million in profit last year yet its market cap is only £430 million. Today’s results beat market expectations and the company also has a strong balance sheet.
“Trouble is, Trinity Mirror also has a chunky £250 million pension deficit which is a huge burden for the company. And revenue from traditional newspapers is declining fast. The digital business isn’t growing fast enough to offset the decline in print.
“The decision to launch the ‘A New Day’ newspaper seems very strange. It doesn’t make sense to launch a new paper in a market that will probably be pretty much dead in ten years’ time. ‘A New Day’ doesn’t even have a website! So there’s no way I’d buy shares in Trinity Mirror right now.”
Russ Mould, investment director at AJ Bell investment, said: “The launch of Trinity Mirror’s new daily national paper New Day comes as the group’s full year results underline the problems facing its current print titles.
“Profits slumped from £81.6m to £67.2m and revenues fell by 7% to £592.7m – a figure which would have been much worse without a nearly 22% jump in digital revenues.”