Advertising revenues dip at Daily Mail
Newspaper publisher Daily Mail & General Trust (DMGT) yesterday warned of a sharp fall in advertising revenues in the third quarter, with property and recruitment sectors performing particularly badly.
But the Daily Mail and Evening Standard owner also said that overall performance had been good, with revenue growing by 5 per cent due to strong results in online advertising and its business to business publications.
Overall advertising revenues at its Associated Newspapers division, which also publishes the Metro free paper, dipped by 3 per cent, although that figure included growth in online advertising. When internet sales are stripped out, advertising revenues actually fell by 5 per cent.
At Northcliffe, its regional newspapers division, property advertising was hardest hit, with June figures down 36 per cent on last year, reflecting the rapid deterioration of the housing market. Recruitment also suffered a double digit blow, down 17 per cent year-on-year. Retail and motoring advertising were down too, by 9 per cent and 7 per cent respectively.
DMGT refused to provide a breakdown of advertising revenues for the individual titles within its Associated Newspapers division.
Strong performances in the company’s business to business division helped to soften the blow, with third quarter revenue at DMG World Media up 43 per cent to £49m. Revenues at Euromoney Institutional Investor, which is 70 per cent owned by DMGT, rose 13 per cent to £95m, driven by subscriptions. Shares in DMGT have fallen 37 per cent this year.
Analyst Views: Are newspapers stocks a good buy at the moment?
Sam Hart (Charles Stanley): “I tend to feel that it’s still too early to buy Daily Mail shares as the advertising market has the potential to deteriorate further, particularly at the regional level which is particularly vulnerable through their exposure to classifieds. These are moving more online so regional papers are being hit by a double whammy.”
Gareth Thomas (Collins Stewart): “In the last two downturns, the newspaper sub-sector recovered materially in advance of all other media sub-sectors. Our newspaper index bottomed between 18-21 months before our advertising index. We expect the current downturn to see similar recovery timing across media sub-sectors. We have a buy recommendation for Daily Mail.”
Lorna Tilbian (Numis Securities): “Newspaper advertising is deteriorating and we expect to downgrade forecasts for the year to September 2009. While Daily Mail shares are on a historically low PE ratio (around six times) our recommendation remains hold until we see signs of stabilisation in newspaper advertising.”