Emap looks to digital as profits decline

Magazines and radio group Emap today pledged to accelerate digital growth after "challenging trading conditions" left annual profits 13% lower.

Chairman Alun Cathcart, who is in temporary charge following the departure last week of chief executive Tom Moloney, said Emap would focus investment on faster growth opportunities, such as fashion intelligence website WGSN.

It will also look to build the online presence of business-to-business titles and leverage consumer magazine brands such as Closer onto other platforms.

Digital revenues, including from digital music TV channels and radio stations, online information products and other online services, was £122m (€179m) for the past financial year. Emap said it aimed to increase this to £200m (€293m) by 2010.

Emap said the past year had been a period of transition for the group, which posted profits of £193m (€283m) for the year to March 31.

Ongoing weakness in the UK advertising market meant the consumer magazines division experienced a 5% fall in revenues to £367m (€538m). The decline also reflected the disposal of some titles, such as Sneak and Bliss in the teen market, and weakness in the men's and automotive sectors.

Operating profits of £72m (€105.6m) for the division were down 11% due to investment in weekly women's news-based title First and Grazia, a women's weekly. Emap said Grazia continued to show strong growth, but First experienced a slower start than anticipated start following its launch in May last year.

Recent acquisitions, including WGSN, ensured Emap's business-to-business division grew total revenues by 11% to £285m (€418m). On an underlying basis, sales were flat as a result of continued weak performance from public sector recruitment titles.

Emap reported a mixed performance in radio, which operates as Smash Hits!, Radio Clyde, Radio Forth, Big City Network, Kiss, Magic, Kerrang!, Q and Mojo.

While recently-acquired stations in Scotland and Ireland performed well, Emap said national advertising revenues were down 8% for its UK stations. Operating profits of £34m (€49.8m) for the radio division were up 3% in total but 1% lower on a like-for-like basis.

Emap will review its ownership of Australian consumer magazines and its French exhibition business but overall analysts said the tone suggested Emap was looking to invest rather than a pursue a break-up or sale.

Citigroup's Rogan Angelini-Hurll added the trading figures from Emap contained few surprises: "While the market may have expected better cyclical signs given statements from other UK media owners, we believe that this reflects Emap's previous outperformance, making comparatives still relatively hard."