Price war with 'The Sun' has cost Trinity Mirror £7.6m

Trinity Mirror's controversial cover price-cutting strategy for the Daily Mirror had shown a circulation increase of 4 per cent at the tabloid, the company revealed yesterday in response to widespread criticism of the campaign.

Reporting interim figures, the newspaper publisher said it had invested £7.6m in a marketing and editorial promotional initiative for its national titles launched over the last 10 weeks. A major plank of this strategy has been to reduce the price of the Daily Mirror in some regions from 32p to 20p or 10p. The price cuts have cost the company up to £1m a week but analysts have complained that there appeared to be no corresponding benefit in circulation figures. Although not yet apparent in the official ABC audited circulation statistics, Trinity Mirror said yesterday that since the price cuts had come in, there had been a 4 per cent uplift in daily circulation, compared with the two weeks before the initiative was launched.

The move has been followed by the Mirror's rival The Sun, which has slashed its cover price even further. Philip Graf, Trinity Mirror's chief executive, said he was unconcerned about The Sun's response.

"We're focused on what we're doing – developing the long-term frequency of readership. It's a three-prong strategy, not just about price cuts and it's far too early to judge it," said Mr Graf.

The company has said it is not trying to poach readers from other newspapers but to entice its current customers to buy the paper more often. Analysts remain sceptical, however, that the strategy can tackle the long-term circulation decline in the national market.

Dan Roberts, of Commerzbank, said: "It would be very hard for anybody to grow circulation revenues. Success would be for Trinity Mirror to simply arrest the rate of decline."

For the six months to 30 June, turnover slipped 3.7 per cent to £559.6m, while operating profit was 4.7 per cent lower at £96.3m. The regional titles saw advertising revenues fall 2.2 per cent to £202.9m. At the national titles, advertising sales dropped 8.4 per cent. However, in May this shortfall was only 1.1 per cent and there was a little growth in sales in June and July for the national titles. Analysts said that by the fourth quarter, the company's national advertising sales should be well into positive territory, as this period in 2001 had seen a very steep fall.