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London listed publisher Reach continued to feel the impact of declining online views and lower print circulation, as the company continues to navigate the changing media landscape.
The group’s share price sank 19.5 per cent in early trading to 47.4p, bringing the stock down 13.6 per cent since January after the company suffered a sharp decline in group revenue.
The owner of publications including the Daily Express and Liverpool Echo recorded a nine per cent decline in revenue to £232.9m, down from £256m the prior year.
The fall was caused by revenue slides in both its print and digital arms. Print revenue decreased by £16.1m to £178m, while circulation volumes dropped 22 per cent.
The small-cap pinned this decline on its decision to hike issue prices twice over the course of the period, coupled with the “continued cost of living pressures” affecting customers.
Print advertising dropped 11.1 per cent to £24.6m, but increased commercial spend from the World Cup and campaigns from food companies and the public sector caused the group to dodge a broader decline.
The group slashed its dividend to 1.4p per share from 2.8p the previous year.
Reach’s digital crunch
Despite the firm having poured investment into boosting its digital reach and capabilities, revenue from this channel tumbled 11.4 per cent to £54.2m.
Digital page views shrunk after a decline in Google referrals, online traffic the publisher receives from users accessing the site through the search engine, caused a 40 per cent drop in on-platform views.
This was coupled with revenue generated off-platform declining 16.2 per cent, despite the group attempting to mitigate this “with improved monetisation”.
Duncan Ferris, analyst at Freetrade, said: “Reach is a business in a very strange position, cutting costs to keep profits afloat as readers bail out at a frightening pace.
“Its revenue deterioration has accelerated, with digital headaches only worsening as declining Google referrals caused web traffic to tumble and dealt a heavy blow to programmatic advertising.
Surviving the shift
Cost management also remained a key focus, admitting its approach “must reflect the trading conditions we are operating in”.
The company admitted its savings push will lead to reductions in some teams in the second half of the year, and the end of some third-party contracts.
The consolidation of its print manufacturing facilities, following the closure of its Scottish site, are also on track to deliver savings.
Piers North, chief executive of Reach, said: We are moving forward with a renewed editorial brand focus, and our teams will be moving away from volume and instead focusing on producing original content, on topics distinctive to their brands.
“It is a more targeted approach.”
The group attracted 40,000 paid subscribers since launching the initiative, pushing it closer to its 75,000 target.
Studio revenue also rose 37 per cent, as it reaffirmed its commitment to investing in video production after two of its podcasts secured commercial sponsorships. The publisher plans to launch additional brands in the second half of the year, but Ferris argued shareholders may be impatient to see if the business can survive being less dependent on Google clicks.
He said: “The central issue is failing revenue across both parts of its business. Neither print nor digital currently look up to delivering growth. Reach can cut costs to preserve profit, but there’s only a limited amount it can do here before it runs out of road.
“For shareholders, a halving of their interim dividend may make this hit home, as they face leaner returns while Reach tests its less Google-dependent business.”
North added said: We are moving forward with a renewed editorial brand focus, and our teams will be moving away from volume and instead focusing on producing original content, on topics distinctive to their brands.
It is a more targeted approach and it is showing early promise with our subscriptions push.”
