Strategy plan for papers
Reach unveils customer targets as revenue falls
Paper talk: management will update the market
Reach, the owner of the Daily Record, Daily Mirror and Daily Express, saw its revenue fall by 5.3% last year to £702.5 million, on a like-for-like basis. This followed a fall of 6.6% in 2018.
The company said revenue from circulation was ‘resilient’ and that it had seen digital revenue grow 13.2% to £107 million, with average worldwide monthly page views growing by 25% year-on-year to 1.3 billion.
A statutory operating profit of £131.7m reversed a 2018 loss of £107.6m reflecting reduced adjusting operating items. Adjusted profit before tax increased by 6.1% to £150.6m (2018: £141.9m).
Print revenue fell by 5.1% or £32m to £591.3m (2018: £623.3m). On a like-for-like basis, print revenue declined by 7.9% (2018: down 8.3%), with the more resilient circulation revenue declining by 4.5%.
Circulation revenue now accounts for 61.2% of print revenue, while the more structurally challenged advertising revenue declined by 19.4%. The circulation revenue decline was part-mitigated by cover price increases and availability investment.
Circulation volumes for the national daily titles fell by 12.6% which compares to a decline for the UK tabloid market of 9.8%.
The national Sunday titles fell by 14.6% which compares to a decline for the UK tabloid market of 10.7%.
Volume declines for the regional titles were 14.1% for paid-for dailies, 21.2% for paid-for weeklies and 4.6% for paid-for Sundays. The circulation volumes for the paid-for magazines, OK! and New!, continued to face challenging trading. The circulation volume trend versus the market average have been impacted by cover price differentials and strategy.
Significant cost efficiencies were delivered during the year including structural cost savings of £12m and incremental acquisition synergies of £16m.
The provision for dealing with and resolving civil claims in relation to historical phone hacking and unlawful information gathering has been increased by £11m at the year end to reflect an increase in the estimate of the cost of settling claims.
This brings the total amount charged to the income statement since 2014 to £86.5m.
The company said that at the year end, £21.1m of the provision remains outstanding and this represents the current best estimate of the amount required to settle the expected claims.
It said: “Although it is not possible to provide a range of potential outcomes in respect of this provision, the board remains confident that the exposures are manageable and under control. Due to this uncertainty, a contingent liability has been highlighted in the financial statements.”
The group is proposing a final dividend of 4.05 pence per share, an increase of 7.4%, giving a total dividend for the year of 6.55 pence per share (2018: 6.14 pence per share), up 6.7%.
Reach is today making a presentation to analysts and institutional investors about its growth strategy.
The group hopes to capture customer insight and data to build an intelligent and relevant content business for the long term.
It is targeting 7m registered customers by the end of 2022 against s less than 1m at the end of 2019. At the 2020 interims the group plans to give an update on key monetisation themes, with an overall digital revenue target and timeline expected to be announced with the 2020 year end financial results.
Analysts will note the scale of the transition needed from print to digital with print still accounting for almost £600m of revenue against just over £100m for digital.
Jim Mullen, chief executive, said: “2019 was a year of good operational and solid financial progress with record growth in audience numbers, consistently good cash generation and a strong balance sheet.
We see significant potential to accelerate the diversification of our digital revenue– Jim Mullen, Reach
“This, along with unparalleled scale, underpins our drive to build an intelligent, relevant and trusted content business for the long term whilst continuing to deliver for our stakeholders.
“Content is at the heart of the new customer value strategy we are announcing today. We have an unmatched reach in UK media and will deepen our relationships via increased customer engagement.
“Through this, we see significant potential to accelerate the diversification of our digital revenue and capture more value to deliver on our sustainable digital growth ambitions.”
The owner of The Sun lost £68m last year as newspaper sales fell and the company continued to deal with the fallout of the phone-hacking scandal.
Daily sales of The Sun fell by 8% to 1.38 million in the year to July, but it remains the UK’s best-selling newspaper. The Sun on Sunday sold an average of 1.16 million copies a week, 111,000 fewer than the year before.
The paper’s owner, News Group Newspapers revealed a £26.7m legal bill related to phone hacking.