Mirror Group Newspapers yesterday suggested it had successfully emerged from the newspaper price war as it reported across-the-board circulation increases for the first time ever, and higher-than- expected interim results.
David Montgomery, chief executive, said the group, which publishes the Daily Mirror and part-owns the Independent, had been vindicated in not following others in cutting prices. "In May, June and July the circulations of all the eight titles we manage were up, year-on-year. This has never been achieved before in the Mirror Group and demonstrates that quality has prevailed."
Regarding the Independent and its Sunday stablemate, Mr Montgomery said: "Circulation is holding up well, despite price rises on the daily and competition from Sunday rivals, who are putting millions into television advertising."
Targets were being hit on the Saturday magazine, he said, and they were achieving budgeted levels of advertising. But he suggested that the daily paper would not break even until the cover price rose to at least 40p and even that would be dependent on sustaining circulation, increasing advertising revenues and keeping costs under control.
His comments accompanied interim results showing group pre-tax profits up from pounds 34.7m to pounds 57m, inflated by an pounds 18.2m gain on the sale of a stake in Canadian forest products group Donohue Inc. Stripping that out, profits rose 12 per cent to pounds 39m - well above analysts' expectations - and MGN has decided to hoist the interim dividend 20 per cent to 1.2p.
Margins slipped by nearly 2 percentage points to 21.7 per cent under the impact of an additional pounds 4.6m on the cost of newsprint, and another pounds 6.8m supplying services to Newspaper Publishing, owner of the Independent, although there were offsetting savings.
The figures included pounds 1.1m start-up costs for Live TV, the cable television network which was launched in June, with pounds 2.9m of the development costs being capitalised. The new venture, which will start local opt-outs in Birmingham in November, is expected to start contributing to profits in three years, when the current 900,000 viewers are expected to have swollen to almost four million.
Mr Montgomery said he was "not interested" in buying The Scotsman, which was put up for sale earlier this year by its owners the Thomson Corporation.Reuse content