A marketing “blackout” in the UK after the death of Queen Elizabeth II hit advertising sales at Reach, the publisher of the Daily Express and Daily Mirror said on Tuesday as it also announced the departure of its finance director.
In the first sign of how the mourning period affected UK media groups, Reach said print advertising plummeted almost a third while digital revenues fell 8 per cent during September, the month of the funeral.
The hiatus in advertising was the latest financial setback for Reach, which was hit by a strike early last month before it struck a pay deal with staff to avert further industrial action.
Alongside the trading update, Reach said Simon Fuller, chief financial officer for three-and-a-half years, would leave at the end of this year. The 45-year-old is to be replaced by Darren Fisher, a senior executive at ITV.
The company said it and Mr Fuller had mutually agreed that was an “appropriate time” for him to move on but declined to comment on the reason for his departure.
Reach’s trading figures are the first public benchmark for how the advertising slowdown during the funeral may have hit other media outlets in the UK, including Rupert Murdoch’s Sun, Lord Rothermere’s Mail titles and commercial broadcasters such as ITV.
While coverage of the queen’s death drove a sharp rise in newspaper sales, Reach said the additional revenue was more than offset by big brands deferring or cancelling scheduled campaigns. As a result, a decline in group revenue accelerated to 4.1 per cent in September, resulting in a 1.9 per cent drop in the third quarter overall.
Reach said “underlying” revenue trends during the quarter were “broadly as anticipated” but that it was mindful of a “potential impact of changing consumer behaviour on trading”.
Concerns over advertising spending, together with cost inflation and a deteriorating UK economy, come at the end of a difficult year for Reach, which was previously known as Trinity Mirror and has titles including the Manchester Evening News, Birmingham Mail and Liverpool Echo.
Shares in the group were down almost 3 per cent by midmorning on Tuesday, extending a precipitous decline that has wiped out about three-quarters of its market value in less than a year.
The sell-off signalled a sharp reversal in Reach’s fortunes, as hopes that the company was making a successful transition to digital media had propelled its shares last year to their highest price level since 2007.
The strike last month by hundreds of journalists was the culmination of long-standing concerns about pay and workload. The terms of the subsequent pay deal with the National Union of Journalists were complex, although some editorial staff received double-digit percentage increases.
Reach said it expected print circulation revenue over the coming three months to be supported by higher prices while advertising sales should be lifted by the World Cup and Black Friday.
In a statement chief executive Jim Mullen said the company had “made further good strategic progress as we continue to deliver quality content to a growing and increasingly engaged digital audience”.
He thanked Mr Fuller for his contribution, saying he “played an important role for Reach, helping to steer the business through the pandemic”. — Copyright The Financial Times Limited 2022
