The boss of Daily Mail and General Trust today delivered a further hint that it may be prepared to sell its regional arm Northcliffe Media.
DMGT chief executive Martin Morgan was speaking to reporters after a trading update showed the regional publisher’s revenues down 6pc year-on-year.
He said: “As far as local papers are concerned we’ve been quite clear that we are not interested in putting fresh capital into that sector.
“We are open to any worthwhile approaches concerning consolidation if they were to occur.”
The comments are the latest sign that DMGT may be prepared to offload the regional media group which includes 115 newspaper titles.
In an interview last September, Mr Morgan said: “We can see that there could be benefits from consolidation … [however] we don’t see ourselves putting additional capital in for us to be a consolidator.”
Today’s interim management statement for the three months to 2 January, the first quarter of its financial year, showed Northcliffe’s revenues down down 6pc year-on-year to £59m while headcount fell by 8pc in the quarter.
For A&N Media as a whole, the division which includes national and regional newspapers, headcount was down by 332, with most of the reduction accounted for by Northcliffe Media.
Its results from the same period last year showed profits at the publisher had increased despite a fall in revenues of 15pc because costs fell by 18pc.
And its 6pc fall in revenues is consistent with the performance of the company in its trading statement on the 11 months to the end of August.
The latest statement shows advertising revenues were 6pc down on the same period last year and recruitment was the worst hit – with recruitment revenues 26pc lower than the same period last year.
It said public notices were down 13pc but property revenues were up 1.5pc.
The statement says digital revenues were marginally lower, with a 21pc decline in recruitment revenues offset by strong growth in property, motors and services revenues.
And it adds visitor numbers to the ‘Thisis’ websites grew by 28pc in December, while a further 83 Local People websites have been launched in the year.
At DMGT as a whole, revenue for the quarter was £497m, up 3pc on last year and up 5pc on an underlying basis.
Mr Morgan said: “Trading in the first quarter has been in line with our expectations, despite our consumer businesses being hampered by the poor weather in December.
“We remain cautious about the medium term outlook, given the external economic environment.”
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Still a profit-making business remember…
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Never mind the quality, feel the headcount. Cuts, cuts and more cuts and still losing money, although profits up because of, yes, you guessed it – more cuts. What about investment? Invest in good staff, treat them well and see them bring in the exclusives. And not the easy ones that many Northcliffe papers claim great credit for.
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How is £59m not enough revenue?
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As one of the 332, I’m happy to have lost my job and to be facing extreme financial hardship if it means my salary can go towards the company directors £90k payrise (each). I was happy to make that sacrifice, as were my children at Christmas.
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When I read this article this morning the headline was “Northcliffe Media sees revenues fall 6pc”. Well, no wonder they’re looking for “worthwhile offers” now eh? I’ll take Northcliffe off their hands for a fiver. I have a feeling it’s the best offer they’re going to get.
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I’m not sure that “open to worthwhile offers” counts as a ‘further hint’. Short of putting a For Sale sign outside their offices I can’t see that they can be much clearer it’s up for sale.
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‘Still profit-making’? – Er yes, but only because the headcount has fallen faster than the decline in revenues. But death by a thousand cuts is not much of a strategy for long (or even medium) term survival – the directors must be keeping fingers crossed they can sell the company before they run out of staff to sack, pages to cut and furniture to flog. Come to think of it, the staff must be praying for that too.
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Well said Ex Northcliffe hack. I’ve been a Northcliffe employee just three years and there is no investment, no reward and no loyalty to staff. And the editor wonders why staff come and go quicker than our deadlines.
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I work in a reasonably senior position in Northcliffe and these comments from Martin Morgan are no great surprise, but the public starkness of them does hit home. Morgan is a clever man so it’s something of a surprise he appears to have been ‘bounced’ into these rather open comments. Unless he is being cleverer than I give him credit for and is trying to force potential buyers to act. At the minute the major players all seem to be participating in some kind of corporate ‘last dance’ where no-one wants to step up and finally ask the girl for a date. Meanwhile there is an unhealthy inertia throughout Northcliffe, stemming right from the very top, where everyone is watching their back and scrambling to protect their own position and business, rather than truly working on a plan to modernise the company. We have seen no encouragement of innovation and/or revenue growth ideas in the company for the past three years. Cost-cutting is the only big idea. The majority of Northcliffe’s newspapers are good, solid businesses which will provide healthy returns for many years to come. The trouble is they will not be the sort of returns which keep the shareholders of a plc happy. A while ago I heard talk that one of our papers returning £250,000 profit a year was now being described as “a marginal business”. Try telling that to an SME in any community who would bite your hand off for such figures. The days of 20-30% returns in most of our businesses have gone forever – and therefore so has the reason for us to be part of a major corporations. Whoever buys all or part of Northcliffe – and the smart money remains on Trinity – will probably manage to maintain such levels of profitability across an enlarged group for a period due to economies of scale and restructuring management, but it will only be for a relatively short shelf life. Then the inevitable break-up of the industry will truly start, hopefully with papers being returned to the communities who truly love and value them. This could be in the form of buy-ups by local entrepreneurs who want the kudos of being a local media owner and the reasonable profits it brings, or by community trusts/action groups etc. One thing is for certain in all this: DMGT needs to act – and act quickly. To boldly state you don’t want local papers as part of the portfolio any more is entirely the company’s prerogative, but to then sit by and watch Northcliffe die a death by a thousand cuts is corporate vandalism which ill serves a company which for many years provided its parent with vast profits to go out and expand.
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I worked for Northcliffe until fairly recently and found it a good solid operation. God help you all if Trinity or JP get hold of you and cut staff to their “acceptable” levels.
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For many years I worked as a refuse collector for the Corporation of London. Every three months they gave me a brand new high visibility tabard. Does this help the discussion at all?
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Well what a sad state of affairs!! I worked for Northcliffe for more than 23 years. I left a couple of years ago. Not my choice you understand but one of the casualties of “senior management” changes of the new era. The real problem besides the obvious economical one is that the company dumbed down it’s management teams, allowed to fragment into quasi independent sectors with regional MD’s who had rather large egos and always knew best!! No real focus other than to look to have improved the P&L in their region ( job cuts – no investment etc)without really looking at the strategic issues and opportunities. Once this ethos took hold the weak central management just appeared to “float” from one position to another without ANY concentrated focus on the needs of the business and the dynamics of the market. They just agreed to very short term gains by cutting head count across the board and pulling out of any serious investment both in print and online. I always thought that was what accountants did – oh I forgot about them. I suppose this was inevitable when they started to get rid of the heavy hitters that Northcliffe used to employ at a senior level. I could name names but they too lost interest many years ago – and who can blame them – not me. Referring to ” John St R’s (Old offices at John St – I wonder) thoughts do you think that any of the Regional MD’s will put in offers?
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