Reach blames Facebook for half-year plunge
Newspaper and online publishing group Reach took a big hit in the first half as Facebook relegated news content.
Statutory operating profit the 26 weeks to 25 June plunged 67.8% to £36.1m, driven by a 6.1% fall in group revenue and a rise in adjusted items.
Print circulation rose 2.4% but advertising fell 18.3% and revenue fell 2.7% to £217.3m. A 16% decline in page views saw digital revenue fall by 16.1% to £60.8m.
The company, which publishes the Daily Record, Daily Express and local papers across the UK, said print revenues remain resilient and predictable, with lower newsprint prices supporting profitability.
It has maintained its interim dividend as a reflection of the board’s confidence in the resilience of its business model and understanding of the importance of dividends to shareholders.
In a statement, the board said: “While we continue to deliver our Customer Value Strategy our first half digital performance reflects a significant reduction in page views from Facebook which is impacting the whole sector, and the impact of ongoing macroeconomic uncertainty.
“Print revenue has been robust, with growth in circulation revenues driven by cover price increases. The cost reduction plans we put in place at the start of the year have helped to mitigate the ongoing impact of inflation, with overall operating costs lower by around 3%, partly offsetting the impact of lower revenue on operating profit.”
Jim Mullen, chief executive, said: “We continue to execute on our Customer Value Strategy, which is driving higher quality, more sustainable digital revenues. Digital growth for the period has been materially affected by lower referral traffic across the sector, particularly following Facebook’s deprioritisation of news content, which has driven page view declines for publishers.
“In spite of this and continued macroeconomic uncertainty, our focus on customer data means we’re driving more diversified, higher performing revenues, with greater exposure to directly sold, higher value advertising.
“Our scale audience and base of registered customers supports the growth of first party data, a key advantage in a market moving closer to a future without third party cookies.
“The ongoing resilience and predictability of print underpins continued investment in a strong digital offering, with circulation revenue growing and newsprint costs starting to decline. Cash generation is supported by a focus on driving efficiencies, with cost reductions on plan and expected to support a stronger second half performance.
“We expect full year profits for 2023 to be in line with the current market consensus. The business has a strong balance sheet which supports long term growth, dividend and pension commitments.”