In a trading update, the media firm warned of “a material reduction” in its full-year profits. The shares fell sharply to end 14% lower, valuing INM at €151m.
It cited as primary reasons various market challenges: Falling circulation and readership levels, a decline in advertising revenue, lower-than-expected digital revenue growth, and Brexit uncertainty.
Advertising revenue is now expected to fall by 7% this year, it said, with circulation decreasing at the same rate.
INM noted as additional reasons the costs associated with legacy libel cases and corporate governance investigations — undertaken following a high-profile board level dispute arising from the group’s proposed bid for national radio station Newstalk
The trading update comes as INM prepares to host its annual shareholders’ meeting next month.
Earlier this year it emerged that INM chief executive Robert Pitt used whistleblower legislation to complain as a dispute raged with chairman Leslie Buckley in 2016 over the potential acquisition of Newstalk.
INM had also confirmed the Office of the Director of Corporate Enforcement (ODCE) had asked it for documents involving plans it had to acquire Newstalk.
The controversy involved the value of the potential acquisition.
Denis O’Brien is a significant shareholder in INM and founder of Communicorp, which owns Newstalk.
In INM’s annual report published in April, INM also disclosed its board was not fully compliant with corporate governance rules.
“Profitability has been directly impacted by costs associated with the independent review and meeting the requirements of the Office of the Director of Corporate Enforcement and ongoing costs of the group’s cyber security and general data protection regulation projects,” the group said in the trading update.
Management is reviewing the provisioning of outstanding libel cases “to adequately protect against any risk”, while certain matters pertaining to the independent review and ODCE are “ongoing”, stated the group.
After failing to buy Celtic Media, INM said yesterday that strategic acquisitions had been curtailed.
It added that cost savings plans are in place to partially mitigate against revenue declines and said its Newspread distribution business continues to experience profit growth. The group intends to continue to diversify and grow profits at Newspread.
“The ongoing challenging trading conditions across all media and the accelerating move to digital — particularly mobile — will weaken the overall results for 2017,” said Mr Pitt.
“The ongoing uncertainty from Brexit, legal costs, and the impact of a very punitive defamation regime mean that it is prudent to adjust full-year expectations.”
Mr Pitt said that INM remains “operationally robust and cash generative” and its brands remain “relevant, trusted, and attractive”.
Darren McKinley, senior analyst at Merrion Capital, said it is difficult to price INM shares. “We think it is too difficult” to put a fair value on INM, “and therefore we no longer have a recommendation on INM”.