Jeremy Warner: Daily Mail sees signs of stabilisation

Outlook: More than half of Daily Mail's profits now come from business-to-business activities, which for the time being are proving relatively resilient
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The Independent Online

Is that a "green shoot" Daily Mail and General Trust sees before it? Well perhaps not quite, but the "signs of stabilisation" in some areas of classified advertising reported by the company yesterday in a trading update is about the best news the printed media has had in ages. Unfortunately, that's not saying much. For the quarter to March, advertising in the national newspapers was down an underlying 24 per cent, and at Northcliffe Media – the regional newspaper interests – by a stomach-churning 37 per cent.

Prospects for display remain highly uncertain, but Daily Mail says that outside recruitment, which continues to bomb, classified advertising seems to be stabilising. The big question is whether, having stabilised, such advertising will ever come back again.

Well-run companies can survive even the most devastating of recessions, but when a deep downturn is combined with profound structural change the cocktail may prove lethal to all but the strongest. The cyclical problem tends to accelerate existing structural change. It may be that much of Northcliffe's missing classified has been lost on a permanent basis to rival digital media.

In any case, the chairman, Viscount Rothermere, is taking no chances. The jobs cull at Northcliffe is being doubled to 1,000 for this year. A couple of years back, Daily Mail tried to sell Northcliffe but the auction went nowhere and whatever was on offer seemed too stingy to accept. Today, almost any price would be acceptable, but there are plenty of companies in this position.

Fortunately, Daily Mail is no longer just a newspaper group. More than half its profits now come from business-to-business activities, which for the time being are proving relatively resilient and are also benefiting from the strong dollar. Daily Mail has meanwhile taken steps to defend its position in classified, having acquired a number of market-leading specialist websites, which may help offset some of the classified being lost to the internet.

In any case, Daily Mail still expects profits this year to meet consensus forecasts. These are obviously much reduced on a year earlier, but in these markets any profit north of £100m is reason for celebration. As for signs of stabilisation, is this the bottom, or just another ledge on the way down? And if it is the bottom, how quickly will the advertising market climb back out again? Sir Martin Sorrell, chief executive of WPP, doesn't expect any recovery this year and a pretty anaemic one the year after. Even for Daily Mail, it will be a long old haul.

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