Daily Mail Group reports encouraging start to year

The publisher of the Daily Mail and the Mail on Sunday said today it made an encouraging start to the year after advertising revenues rose in its national newspaper division.

The publisher of the Daily Mail and the Mail on Sunday said today it made an encouraging start to the year after advertising revenues rose in its national newspaper division.

Daily Mail & General Trust (DMGT) disclosed the “marked improvement” in January after a dire past couple of years for media firms due to the slump in advertising demand.

Circulation improved at the group’s flagship national titles thanks to a subscription and home delivery marketing initiative, with the Daily Mail and The Mail on Sunday also claiming further market share.

But the group said it remained cautious about recovery hopes over the year ahead, particularly in the UK.

DMGT has taken drastic action over the past year to slash costs, axing jobs and selling-off underperforming businesses amid the recession.

Other groups are also transforming to survive, with the Guardian Media Group yesterday announcing the sale of the Manchester Evening News and most of its regional news titles to Trinity Mirror.

Since the beginning of last year, DMGT has sold the London Evening Standard to Russian oligarch and former spy Alexander Lebedev, shut London freesheet the London Lite and last month called time on its Teletext news and information service two years ahead of schedule.

More than 2,200 jobs have been lost in the past year, of which at least half were shed from its Northcliffe Media regional newspaper arm.

But today’s figures confirmed an improving picture, with underlying revenue declines easing to 8% across the group in the final three months of last year followed by the encouraging January result.

At Associated Newspapers, the national newspaper division, underlying revenues fell 6% in the quarter.

Northcliffe continued to see double digit falls, down 11% in the UK, although advertising revenues at the division improved from an 18% slump in the third quarter to a 13% drop.

Action to make savings across Northcliffe – such as closing three regional printing plants at Grimsby, Leicester and Bristol – have cut publishing costs by 18%, which helped the division’s profits rise on an underlying basis in the quarter to December 31.

Northcliffe publishes more than 100 newspapers such as the Leicester Mercury, the Bristol Evening Post, the Essex Chronicle and the Derby Telegraph.

Costs within the national newspaper business reduced by 7%, with a further 4% headcount reduction in the fourth quarter of 2009 after 334 roles were cut through losses at its Harmsworth Printing operation and the closure of London Lite.

Martin Morgan, chief executive of DMGT, said: “Trading in the first quarter has been ahead of our expectations and the new calendar year has started well, but we remain cautious about the outlook for the rest of the year, particularly in the UK.”

Shares slipped into the red on the cautious comments, but analysts praised the New Year improvement.

Media experts at Numis Securities said it was an “encouraging” first quarter update, which came in ahead of their expectations.

“We were encouraged by the ’marked improvement’ indicated by the group for January – we expect to hold our forecasts at this early stage in the year, but see clear scope for upgrades as we progress through the year,” they added in a note.

Gareth Davies, analyst at Investec Securities, added the update was “solid” overall, although he said the first quarter advertising fall for the national titles was “a little disappointing”.

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