Price war among nationals hurts United Newspapers: Falling circulation at Express titles holds back group profits

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The Independent Online
UNITED Newspapers' national titles barely pushed up profits enough to cover inflation last year as the price war launched by Rupert Murdoch's News International and higher spending on new supplements took their toll.

While group operating profits were up 9.7 per cent at pounds 130.4m, on turnover 9.3 per cent higher at pounds 908.5m, the national newspaper division's profits rose by 2 per cent to pounds 33.7m and sales increased by only 1.7 per cent to pounds 300.4m.

In the face of stiff competition from the price-cutting Times and Sun, sales of the Daily Express and Sunday Express fell by around 6 per cent to 1.35 million and 1.6 million respectively. That compared with a slighly higher fall of 6.4 per cent at the Daily Mirror - though to a bigger circulation of 2.4 million - while the Daily Mail held the decline to 1.3 per cent at 1.7 million copies.

Graham Wilson, United's managing director, said: 'I don't think we can deny the Times price-cutting has had an effect on our circulation and that of all the middle-market popular newspapers.' But a 6 per cent rise in advertising revenues had broadly offset the loss of circulation income, he said.

Regional papers put in a better performance, with profits rising 9.3 per cent to pounds 29.5m, thanks to a strong second-half performance. Turnover was up 6 per cent to pounds 157m.

Profits at United's other main division, magazines and exhibitions, took a battering, rising by just over 3 per cent to pounds 25.7m despite a 22 per cent increase in turnover to pounds 284m.

Lord Stevens, United's chairman, said magazines had proved slow to emerge from recession. Advertising volumes at Morgan Grampian, the specialist magazine publisher, had fallen in many of its markets although this was offset by rising circulation.

Group pre-tax profits before exceptionals were up 18.7 per cent at pounds 118m. After a pounds 19.6m exceptional credit from (principally) the sale of the Extel Financial news wire, they rose 25 per cent to pounds 137.7m. Earnings were up 15.1 per cent to 44.9p and the dividend is 14.5p, making 22p (20.9p). The shares rose 5p to 641p.

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