The management stance at the Daily Mail, which sells at 32p, is viewed as critical in deciding whether the middle market follows the broadsheets and tabloids into the financially damaging and escalating price- cutting war that last week led to drastic reductions in publishing groups' share prices.
Preliminary circulation forecasts at the Daily Mail indicate that sales dropped less than 2 per cent on Friday, despite the Times bringing its price down to 12p below the Mail. The Times, which began the price war, dropped to 20p in response to last week's price cut by the Daily Telegraph from 48p to 30p. The Mail sold around 1.8 million copies a day in April.
Executives at the Daily Mail calculate that if sales for the year drop by 3 to 4 per cent, the revenue loss will be around pounds 2m to pounds 3m. A substantial price cut, however, would knock millions off annual revenues. However, like other newspaper groups, DMGT is watching the situation closely, and may be forced to act if United Newspapers, publishers of the Daily and Sunday Express, cuts prices.
The Telegraph said that it expected its daily title's move to 30p to cost pounds 40m in annual revenue - and that was before the Times' latest price cut.
Share prices in most newspaper groups plunged on Thursday and Friday after the Telegraph's price-cutting move was announced on Wednesday. Telegraph shares were worst hit, falling 191p to 349p after 6.3 million changed hands, the biggest daily turnover since their flotation at 325p two years ago. On Friday, the shares closed a further 17p down, at 332p. United Newspapers shares lost 83p on Thursday and 25p on Friday, to close at 485p.
Mirror Group, which publishes the Mirror titles and is part of a consortium that controls the Independent and the Independent on Sunday, saw its shares fall 31p to 134p on Thursday and a further 4p on Friday.
Sources at the Mirror acknowledged that any attempt to raise cash in the stock market via a rights issue would have to be put off. The market has long rumoured that Mirror Group would like to launch a share issue to reduce group debt, which stood at more than pounds 300m at the year-end.
The Telegraph price cut upset fund managers who had bought Telegraph stock in a sale of 12.5 million shares by Hollinger, the controlling company, on 19 May.
But Conrad Black, the Telegraph chairman, said the company did not decide on the cut until three weeks after the sale, when May circulation figures showed the Daily Telegraph below a million for the second month running and the Times above 500,000 at a record high.
On Friday, the Stock Exchange, which had begun an inquiry into the affair, took the unusual step of putting out a statement saying that it was satisfied that 'there is no evidence to connect the placing by Hollinger of shares . . . to the announcement by the Telegraph plc on 22 June 1994 that it was reducing the cover price of the Daily Telegraph.'
However, analysts in the City have warned that the Telegraph may have trouble selling shares to institutions and fund- raising in future.
Cazenove, the Telegraph's stockbroker, declined to comment on stories that it was considering resigning from its role as a result of the fiasco.
Meanwhile, the Telegraph directors, some of whom were not consulted about last week's price cuts, are expected to be called to a board meeting this Tuesday where they will be able to question Mr Black about the events that led to last week's shattering fall in the company's share price. Early estimates suggest that the Telegraph put on sales of 5-6 per cent on Friday, while the Times' sales were said to be up 13 per cent.