(Update recasts with comments from finance director)
LONDON (Thomson Financial) - Daily Mail & General Trust Plc. (DMGT) said the
newspaper advertising market weakened in the third quarter and is showing no
sign of an upturn.
The publisher of the Daily Mail and Mail on Sunday said in a trading
statement that advertising revenues in its Associated Newspapers national
newspaper and online business and Northcliffe Media, its regional newspaper
operation, fell by 3 percent and by 11 percent respectively, compared to the
third quarter last year.
Finance director Peter Williams said there was no sign of an improvement in
the market.
"We're not relying on any pick-up in the near future," Williams told
journalists in a conference call Wednesday.
Williams said Associated's business had held up "pretty well", although
Northcliffe, which owns local evening newspapers such as the Bristol Evening
Post and Leicester Mercury, was "definitely being hit".
All major categories of advertising at Northcliffe fell, with property down
25 percent, retail falling 9 percent on the back of an earlier Easter this year,
motors weakening by 7 percent and recruitment dipping 10 percent.
"Our customers (in regional newspaper advertising) are largely small
businesses and they simply don't have the confidence to recruit people at the
moment," Williams said.
Williams said Northcliffe appeared to be doing slightly better than some of
its rivals, although he said it was unlikely to buck the general market trend.
While the decline in advertising revenues is not yet as bad as it had become
in the early 1990s, it was worse than that experienced in 2000, he said.
The company had entered an unprecedented new phase because revenues from
property advertising had held up quite well in the early 1990s, whereas the
relative lack of mortgage availability was now restraining the market.
Williams declined to say whether the group was planning job cuts or other
cost-saving measures in its newspapers to offset the impact of the downturn.
He said the company was watching its costs "very tightly" and overall costs
in the regional division were running at a lower rate than they were last year,
which he attributed largely to non-replacement of staff who have left. There had
also been some reduction in newspaper print prices, he said. The company employs
about 4,500 people at Northcliffe and about 2,500 at Associated.
DMGT said group revenues in the third quarter rose 5 percent against the
same time last year, with continued growth in its business-to-business
operation.
It said its B2B business DMG Information continued to trade strongly, with
revenues up 6 percent to 78 million pounds. The group expects adjusted full year
profits in the division to grow year-on-year by about 5 percent and its margins
to fall "only modestly", from 24 percent to about 23 percent.
DMGT's other B2B operations, Euromoney Institutional Investor and DMG World
Media, increased quarterly revenues by 13 percent and by 43 percent
respectively.
Williams said the group was very comfortable with its level of debt, which
fell by 134 million pounds during the period.
The company is not considering disposing of businesses at the moment and is
not planning any acquisitions.
"We're very much in the mode of not spending money at the moment, unless
special opportunities present themselves," he said.
Chairman Viscount Rothermere said the well-publicised deterioration in the
British economy since the group last reported in May was "inevitably" affecting
its UK newspaper businesses.
"However, our strategy of creating a diversified international portfolio of
market-leading operations across both business and consumer products provides
considerable resilience and leaves us well-positioned to deliver long term
growth," he said.
philip.waller@thomsonreuters.com
paw/paw/sal
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