Plunge in advertising revenue leads to Trinity Mirror warning

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The Independent Online

Trinity Mirror, the national and regional newspaper publisher, revealed yesterday that advertising revenue has plunged and it warned of further tough times ahead.

Ad revenue dived by 16 per cent at its national titles - which are led by the Daily Mirror - in the second half of 2005, a stark indication of the troubles the company faces. In a gloomy analysis, the news giant reported an advertising recession, making job losses and further cost-cutting inevitable, it said.

Trinity reported profits of £221m for last year - up 6 per cent despite a slight dip in revenues to £1.1bn - but otherwise it offered little in the way of optimism for the newspaper industry.

A "sharp decline" in highly profitable recruitment advertising, as companies flock to Craigslist and other internet sites, is at the heart of the malaise.

Sly Bailey, the chief executive, said conditions will be "difficult" this year, while denying that newspapers are in terminal decline. "I defy you to say we are not growing the business. Demonstrably, we are. The overwhelming evidence is that this advertising downturn is cyclical, not structural. It mirrors previous ad recessions," she said.

Tweedy Browne, the aggressive US fund manager that first stirred trouble for the Telegraph Group, eventually leading to the ousting of its chairman Conrad Black, has a 5 per cent stake in Trinity Mirror. It has called for the sale of the Daily Mirror and the other national titles. Yesterday Ms Bailey said there had been no approaches to buy the Mirror and denied an industry rumour that it will be sold when the chairman Sir Victor Blank departs. But she did not rule out a sale at some point.

Sir Victor will leave in May. There is speculation in the City that the replacement will be the P&O chairman Sir John Parker.

Newspapers are threatened by the rising costs of newsprint and the dramatic decline in classified advertising, much of which now goes on the internet.

For the full year, ad revenue at the regional papers fell nearly 3 per cent to £404m, and 9 per cent to £176m at the nationals.

The recent decision by the Daily Mail group to abandon the sale of its local newspapers business, Northcliffe, set investors on edge.

Trinity also abandoned its £250m share buy-back programme, after spending just £50m on the scheme. Its shares underperformed rivals, even while the company was buying them up. Yesterday they lost another 5p to 575.5p.

The Bridgewell Securities analyst Andrew Walsh said: "There is little to reverse sentiment over the pattern of recent downgrades."

Despite remarks in the results announcement about managing "circulation decline", Ms Bailey insisted the business can grow and the Mirror papers can prosper. The Sunday Mirror's circulation fell by 4.5 per cent, while the Daily Mirror lost 5.5 per cent. "They are mature brands. It does not mean they are not good businesses," she said. She added that internet acquisitions were possible this year.

The final dividend was 15.5p, taking the total payout to 21.9p, up 8.4 per cent.

In more bad news for the industry, circulation figures yesterday showed that every daily regional newspaper in Britain lost sales in the second half of 2005.

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