MGN pays out but suffers in price war

Click to follow
The Independent Online
MIRROR Group has finally shaken off the depredations of the Robert Maxwell era, paying the first dividend since the death of its former proprietor. The effects of the recent newspaper price war, however, were reflected in lower circulation and flat advertising revenue which led to a 5 per cent fall in trading profits.

Having moved into the broadsheet newspaper market in March through the acquisition of a 28 per cent stake in Newspaper Publishing, owner of the Independent, MGN also announced its first foray into television.

It has teamed up with five cable and telephone companies to launch Live TV, a national subscription channel with a planned local offshoot in Birmingham.

David Montgomery, chief executive, said: 'These arrangements mark the beginning of our strategic move into television.' He added that MGN would be looking into a possible bid for Channel 5, which the Independent Television Commission is readvertising. MGN's partners in the planned 10- year cable venture are Comcast, Nynex, Southwestern Bell, TCI and US West.

Pre-tax profits in the six months to July fell from pounds 69.9m to pounds 34.7m, although last year's figure was boosted by pounds 36.1m of exceptional items, mainly relating to released pension fund provisions as assets taken by Maxwell were recovered.

Trading profits of pounds 54.5m ( pounds 57.3m) suffered from lower news- stand sales after a cut in the price of the Sun to 20p. The Daily Mirror maintained its cover price at 27p.

Mr Montgomery said that, compared with the estimated pounds 1m a week cost to News International of maintaining a cut-price Sun, a pounds 7m fall in circulation revenue to pounds 142.5m was a strong performance.

A pounds 1.4m loss was taken as MGN's share of Newspaper Publishing's losses between March and July. MGN also took a pounds 21m charge against reserves to cover the goodwill element of the Independent stake purchase.

(Photograph omitted)