DMGT looks to halve 'Standard' losses
Friday 04 June 2004
Losses at London's Evening Standard newspaper should halve from the £10m-plus deficit seen last year as a result of cost-cutting and improving market conditions, the paper's owner said.
Daily Mail & General Trust, the newspaper group that publishes the Standard, yesterday reported a 29 per cent jump in underlying pre-tax profits to £107.3m, for the six months to 4 April. Despite continuing losses at the Standard, the company said it was performing well in its national and local newspaper divisions.
There is speculation that DMGT may be preparing for a rights issue to help fund the acquisition of The Daily Telegraph, which has been put up for sale. It is thought that the winning bid would be more than £600m.
Lorna Tilbian, an analyst at Numis, said: "We believe the first equity issuance since 1931 [at DMGT] is the most likely route for financing a winning bid for the Telegraph."
The Rothermere family holds 88 per cent of the voting shares and 26 per cent of the non-voting shares. In the past, the Rothermeres have not been prepared to see their holding diluted but industry sources pointed out that buying the Telegraph was a once in a lifetime opportunity. However, others have suggested the purchase could easily be financed by taking on more debt. DMGT yesterday reported that debt had fallen by £64m to £809m.
Peter Williams, DMGT's finance director, would not comment on how the acquisition would be financed. But he warned that the company would pay only a "sensible" price for the deal. Many believe that Sir David and Sir Frederick Barclay, one of the two other bidders, are willing to pay a "trophy" price for the title.
Mr Williams said: "We are only interested in an investment that you can see providing a decent return. There is no necessity for us to buy it."
He added that losses at the Standard would fall more than £5m this financial year and that "with luck" it would be profitable next year. "The Standard is a cyclical product. London is very cyclical. It has gone into loss before and come out if it," Mr Williams said.
Operating profits at DMGT's national newspaper division, which holds the Standard, Daily Mail and the Mail on Sunday, rose £14.4m to £50.2m, in the interim period. Advertising revenues at the nationals were up 6 per cent. March was 13 per cent higher and April was up 12 per cent.
DMGT said the advertising recovery was "patchy" with some categories, such as retail, growing, while other advertising sectors, such as personal finance, remained negative.
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