Mirror reveals plunge in advertising revenues

Any doubts that the UK newspaper advertising spend is in a sustained downturn have been dispelled by Trinity Mirror, owner of the Daily Mirror newspaper, which reported an alarming decline in advertising revenue for the first few months of 2006.

It follows similar news at rivals Daily Mail and Johnston Press, which both reported double-digit declines in advertising revenue in recent weeks. The data has led a number of analysts to suggest that the newspaper industry is in the grip of a structural decline in advertising revenues, triggered by a migration of ad expenditure to the internet.

But this view is vehemently denied by the companies, which claim they are just seeing a cyclical downturn. Trinity Mirror said that excluding acquisitions, its group advertising revenue for the first four months of the year slipped almost 12 per cent.

Advertising revenue at its UK national titles fell nearly 16 per cent, while its regional titles suffered a 10 per cent decline driven by sharp falls in its recruitment and motor titles.

Speaking at the company's annual general meeting in London, Sir Victor Blank, its outgoing chairman, said: "The difficult advertising market conditions experienced in 2005 have continued into 2006." He added that Trinity Mirror's management will continue to run the business on the assumption that the advertising environment will "remain very challenging".

The chief executive, Sly Bailey, said that despite the doom and gloom in the sector, the company remained confident. "We have no plans to roll over and die - quite the opposite," she told shareholders.

Group advertising revenue slumped nearly 14 per cent in January but over March and April, the decline was slightly higher than 10 per cent. It also grew its circulation revenue over the period as newspaper price rises offset volume declines.

Numis Securities said the first four months has been sufficiently difficult that Trinity Mirror will probably miss the revenue guidance it provided in March. The company guided for a regional advertising revenue decline of between 3.5 per cent and 4 per cent and for a 5 per cent drop at its national titles. The broker said the declines could be offset by higher cost savings, adding that most of the bad news has been priced into the shares.