Shares in DMGT fell by nine per cent today after the Daily Mail publisher reported a double-digit decline in print advertising led by cost-cutting supermarkets.
DMGT issued a profit warning after its DMG Media division – which houses the Mail and Metro newspapers as well as Mail Online and makes up around a third of turnover – reported a four per cent decline in revenues to £358m in the six months to 31 March.
The revenue of the Daily Mail and Mail on Sunday newspapers was down seven per cent to £242m, with print advertising down 13 per cent year on year. Mail Online’s turnover was up 24 per cent to £44m.
Speaking to City A.M., DMGT's finance director Stephen Daintith described the six months as a “pretty torrid time” for the newspaper industry.
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As a result of DMG Media’s struggles, the company has lowered its outlook for the full year, from an operating margin of 13 per cent to 10 per cent.
It has been a difficult year for the newspaper industry, with large print advertising revenue declines also reported at Trinity Mirror and the Guardian among others. This year has also seen the closure of the Independent newspapers and failed launch by Trinity Mirror of New Day. There have also been hundreds of jobs lost across Fleet Street this year.
“When you look at what’s happening within print advertising I think one of the key things that’s happened is that supermarkets are spending a lot less than they were previously,” Daintith told City A.M.
“Some of the big supermarkets that traditionally have spent quite significantly on print advertising are tightening their belts and protecting their margins and newspaper advertising has been one of the victims.”
Daintith said supermarkets were the “largest contributor” to the decline – with advertising spend down around 18 per cent – but he also pointed to the financial and motoring sectors as areas that have pulled advertising.
On the performance of Mail Online, Daintith said: “While print advertising is really struggling, we’ve got a digital advertising number now which represents over a third of our total revenues. And it’s not that far away from being a higher number than print advertising. Within a few years, digital advertising revenues will exceed print advertising revenues.”
He added: “Clearly we would hope that print advertising stabilises and digital advertising continues to grow. If anything we probably more expect that to happen. We haven’t seen a continued period of decline like this before. One would hope that as the comparatives start to get a little easier.”
Over the business as a whole, DMGT reported a total revenue of £950m, down one per cent on an underlying basis, and an 11 per cent dip in pre-tax profits to £129m.
Earnings per share were also down 11 per cent to 27.9p.
At around midday on Thursday, DMGT’s share price was down 9.2 per cent to 676p.