Shares in Mirror publisher Reach jump despite Covid-19 revenue hit
Shares in Daily Mirror publisher Reach jumped as much as 12 per cent this morning as “unprecedented” demand helped to offset investor concerns about a decline in revenue.
The newspaper group, which also owns the Daily Express and a host of regional titles, reported a 13.1 per cent decline in revenue in the four months to 26 April.
This was driven by a 15.8 per cent fall in print revenue as the company was hit by declining circulation and a slump in print advertising sales as a result of the coronavirus crisis.
The decline was partly offset by a 4.7 per cent increase in digital revenue as readers flocked to Reach publications for the latest news about the pandemic.
Reach, which is the UK’s fifth largest digital media property, racked up 1.7bn page views last month — a 57 per cent increase year on year.
But April also reflected the full impact of Covid-19, group revenue crashing more than 30 per cent due to sharp falls in both its print and digital business.
“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,” the firm said.
Reach has rolled out pay cuts and furloughed 20 per cent of its workforce in a bid to cut costs. It has also scrapped its dividend and negotiated a three-month freeze on pension scheme contributions.
At the end of April the company had a cash balance of £58.2m, less £25m drawn down from its revolving credit facility, which is available until December 2023.
“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.
“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.”
Reach, which also published OK magazine, has been shifting its focus to its digital offering.
Earlier this year it announced a radical strategy update with a target of hitting 7m registered customers by the end of 2022, up from fewer than 1m at the end of last year.
The firm today said that while revenue would be “significantly” impacted by coronavirus, it expected cost-cutting measures to partially protect profitability. It did not give guidance for the full-year.
Chris Morley, National Union of Journalists northern and midlands senior organiser, welcomed Reach’s “sound financial footing”.
However, he criticised the company’s decision to cut pay and furlough thousands of employees in spite of its strong cash reserves.
“It is concerning that the board is seeking to place such importance on protecting its very high operating profit margin of 21.8 per cent when there is a national emergency and huge public subsidy to support the business,” he said.
“We will be working hard with the company to make sure that improvements in the business mean a resumption to normal pay and conditions for staff at the earliest opportunity.”