A regional publisher is set to shed 200 jobs due to what it has called “unprecedented cost and inflationary pressures”.

Reach plc has announced the planned redundancies, the majority of which are understood to be in editorial, with an unspecified number of job vacancies also being withdrawn.

The decision was announced this morning by Reach chief executive Jim Mullen, pictured, alongside a trading update, which revealed the group is aiming to make £30m of cost savings during 2023.

Reach has declined to reveal at this stage how many editorial roles will be affected by the plan, but HTFP understands the redundancies are likely to be roughly proportional to the number of employees in each of its divisions.

According to the company’s 2021 annual report, published in March, 3,119 out of its 4,671 staff are based in editorial – around two-thirds of its workforce.

Reach has also been unable to confirm whether its slated expansion into the USA will be affected by the plan, although it understood the move is still considered a major priority for the publisher.

In a message to staff, which has been seen by HTFP, Jim said: “In recent months our business has been impacted by a significant increase in input costs.

“The unit price of newsprint, for example, has increased by around 60pc in the last 12 months.  This increase in a major input cost for us has aligned with a consumer downturn due to inflation and cost pressures.

“Our business is being subjected to stresses at both ends of our finances – that is revenues and costs negatively impacted, and at a rate of change our company has quite simply never seen before.

“To put this into some context; during Covid, our revenues were severely impacted due to national lockdowns and a closure of a number of business sectors, with a resultant reduction in consumer and advertising spend.

“However, costs remained relatively stable. We now have a similar impact to consumer spend for different reasons, but also input cost inflation making it a double whammy.

“All of this on top of the significant cash outflow relating to historical legal issues and pension deficit obligations, between them around £70m per year, puts us in an extremely challenging position.

“We’re not alone in facing these challenges and we have a way through this, but I want to be honest with you now about the fact that it will mean us taking some very tough operational decisions and strong actions on costs.

“As part of this, having explored all practical alternatives, we have made the difficult decision to begin consultation on a proposal to make around 200 roles across the group redundant, and withdraw a number of vacancies.”

This morning’s update revealed group revenue had decreased by 4.2pc in the fourth quarter of 2022 and 2.3pc for the whole year.

It showed fourth quarter declines of 5.9pc in digital revenue, 3.6pc in print revenue and 20.2pc in advertising revenue, although circulation revenue increased by 1.8pc.

For the full year, print revenue experienced a 3.5pc decline, while circulation revenue was down by 1.7pc and advertising revenue 15.9pc.

Digital revenue increased by 1pc during 2023.

Reach cited cover price rises for the recent increase in circulation revenue, while “significantly lower” Black Friday and Christmas campaigns were blamed for the advertising revenue slump.

The publisher says it aims to make the savings through “simplification of central support functions, supply chain efficiencies in print and distribution, and accelerated removal of editorial duplication”.

A Reach spokesperson told HTFP: “We expect the macroeconomic climate to remain challenging in 2023 and have therefore taken decisive action, putting a comprehensive cost reduction plan in place.

“While this regrettably includes around 200 redundancies, in addition to removing a number of open vacancies, this early action will allow us to protect our organisation and ensure we continue to deliver on our Customer Value Strategy.

“We will continue to review all aspects of our ongoing strategic transformation to ensure we are well placed to benefit once industry trends return to more normalised levels of activity.”

Below, in full, is Jim Mullen’s message to Reach staff.

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Good morning,

Today we’re sharing a trading update for our Q4 performance and I would ask you to read it as it will give you some context to this morning’s note.

As always I want to talk to you about what the update means for our employees, and today I want to be very upfront about the fact that we’re announcing plans that affect some members of our team.

First I will outline where we are today. While our results provide continued evidence of our strategic progress, progress that I may add is largely in line with where we expected it to be at this point in our journey, it is set against a post-Covid environment that has seen our business subjected to unprecedented cost and inflationary pressures.

In recent months our business has been impacted by a significant increase in input costs. The unit price of newsprint, for example, has increased by around 60% in the last 12 months. This increase in a major input cost for us has aligned with a consumer downturn due to inflation and cost pressures. Our business is being subjected to stresses at both ends of our finances – that is revenues and costs negatively impacted, and at a rate of change our company has quite simply never seen before.

To put this into some context; during Covid, our revenues were severely impacted due to national lockdowns and a closure of a number of business sectors, with a resultant reduction in consumer and advertising spend. However, costs remained relatively stable. We now have a similar impact to consumer spend for different reasons, but also input cost inflation making it a double whammy.

All of this on top of the significant cash outflow relating to historical legal issues and pension deficit obligations, between them around £70m per year, puts us in an extremely challenging position.

We’re not alone in facing these challenges and we have a way through this, but I want to be honest with you now about the fact that it will mean us taking some very tough operational decisions and strong actions on costs.

As part of this, having explored all practical alternatives, we have made the difficult decision to begin consultation on a proposal to make around 200 roles across the group redundant, and withdraw a number of vacancies.

I want to emphasise that this is not a reflection of the hard work of our teams and quality of output that you deliver. I am fully aware of the impact this decision will have on those of you affected and the uncertainty this will cause to others within the business, and even though I have been advised and supported by my ExCo and our plans have been approved by the Board, ultimately the decision has to come from me.

As we work through this process we will consult meaningfully, work proactively with employee representatives, and offer personal support to all of our colleagues whose roles may be impacted. If this is the case for you then your line manager will be in contact with you directly, as soon as practically possible.

The plans we’re outlining today are, I believe, the right course of action to protect our organisation. With that in mind, I believe our company will succeed and prosper beyond this current economic crisis, as we did through Covid thanks to the strength of our plans and the resilience of our teams.

My belief is based not on hope but on evidence in the performance of our customer value strategy, the continued cash generation of our business, our best-in-class journalism, commercial and operational excellence, and the eventual ending of our pension and historical legal issue obligations.

As we look ahead to 2023, despite the challenges, we fully intend to continue our investment in our strategy, which is at its heart about brilliant content and journalism. While this period of economic uncertainty means making some tough decisions in the short-term, our long-term commitment to journalism will not wane.

I accept of course that that doesn’t make this announcement any easier for you to hear and we’ll be working hard to support you all through this challenging period. I know that you will have lots of questions; we have prepared for some of them here and will continue to add to them, and keep the communication lines open.

Your local leader will be in touch with you shortly to follow up on what the plans mean for you, and I will also share some more information and context on this announcement in our livestream town hall at 9:30.

I’ll stay in touch.

Thank you

Jim

Jim Mullen CEO