Reach looks to US growth amid revenue and profit falls
Reach expects growth from its expansion into the US to help buoy the publishing company amid persistent macro headwinds acting as a drag on its earnings.
In its full-year results reported on Tuesday, the Daily Mirror publisher saw total revenues fall 2.3% to £601.4m and operating profits fall 27.4% to £106.1m as compared to the year before.
Print revenue fell 3.5% in 2022 to £448.6m; while print circulation revenue stayed more robust (-1.7%), print advertising fell substantially (-15.9%). On the other hand, digital revenue grew 1.0% to £149.8m, helped by 56% growth in “data-led revenues”.
In its earnings report, Reach added that “trading for January and February has been in line with our expectations. As anticipated, we have continued to see decline in demand for digital advertising.”
Though Reach attributes the decline in near-term performance to “external factors” including inflation in newsprint production that it is mitigating through increases in cover prices, the company says its “consistent strategic delivery is supporting the growth of higher quality digital revenues.” Namely, the company believes its US expansion will provide a lift.
Reach CEO Jim Mullen said: “We expect uncertain macroeconomic conditions to persist during 2023 but, as shown during the pandemic, we are effective at managing them, with an action plan in place to help mitigate the current headwinds. We will continue to invest in areas which support digital expansion, such as the US, where we’ll leverage our scale and apply the proven Customer Value Strategy playbook which is positioning us favourably to benefit when economic conditions improve.”
Reach was forced to cut costs following underperformance in the fourth quarter of last year. Cost savings came from around 200 redundancies and the “simplification of central support functions and supply chain efficiencies in print and distribution.”
An additional strategy Reach is exploring is using ChatGPT to help draft news coverage for local and non-local reportage, which could improve work efficiency.
Reach named Alex Wellman and Karl Holbrook as editors of Mirror US and Express US, respectively, last month.
Speaking to The Media Leader in January, chief digital publisher David Higgerson, who is leading the effort to expand Reach’s titles to the US market, expressed optimism despite the company’s recent financial challenges, saying: “2023 is going to be a tough year — and we’ve already had to make some difficult decisions because of that. But moves like this give me great optimism about our business is just continuing to grow. This launch has already created so many genuinely exciting opportunities for our journalists — we’ve been overwhelmed by the internal interest alone.”