Bailey Moves To Stop Mirror-Sun Price War As Costs Hit

These figures follow a tabloid price war between the Mirror and arch-rival, the Sun. The cover price cuts come alongside a broader revamp and repositioning of the Daily Mirror newspaper which began early last year (see Trinity Mirror Results Beat Expectations, Mirror Relaunch Announced), which Trinity today says has “improved and refined the brand proposition” and has been “well received” by readers. However, national circulation revenues dropped from £282.1 million to £260.7 million year on year.

Operating profit at the national newspaper division fell by 18.6% to £77.6 million; turnover fell 4.9% to £494.0 million. Despite the cover price cuts, the Daily Mirror’s circulation also fell by 3.4% over the 12 month period.

New chief executive, Sly Bailey, makes her first presentation to investors with the release of these results. Reports from a news conference this morning quote Bailey as saying that she is ‘not a fan of price wars’ and that she will be putting a stop to the current battle with the Sun.

Advertising revenues at the national newspaper division picked up in the second half of the year, with a growth of 2.3%. Nevertheless, the full year saw a 3.3% decline in adspend. This is slightly weaker than the overall advertising market, which is forecast by Initiative Media to fall by 1.7% in 2002 (see UK Advertising Forecasts From Initiative Media).

Regional newspapers During the course of the year Trinity Mirror has implemented its From Biggest To Best strategy for the regional newspaper division (the UK’s largest regional publisher). The group says that this has consolidated the division – previously 13 autonomous business units – to operate with common aims, objectives, policies and controls.

Total turnover at the regional division fell by 0.9% to £506.8 million in the year, whilst operating profit grew by 4.4% to £120.4 million. Advertising revenue declined by 1.4% to £394.5 million and circulation revenues dipped by 0.9% to £81.1 million.

Group figures Trinity Mirror’s total group pre-tax profits grew by 1.9% to £155.5 million on a like for like basis, but dropped by 14.2% post exceptional items. Turnover fell by 3.4% to £1,092 million.

The figures are slightly ahead of predictions made by analysts at ABN AMRO, who forecast a decline of 3.0% in pre-tax profits and of 3.7% in turnover (see Analysts See Trinity Mirror Profits Down By 3% In 2002).

Outlook The company says that the uncertain and volatile advertising conditions experienced throughout 2002 have continued into the first two months of 2003. Whilst there is still limited visibility, the Board says it is anticipating a satisfactory performance during 2003, partly due to cost reduction measures.

“The Trinity Mirror businesses have tremendous potential. My job is to unlock this potential and position the business to deliver enhanced shareholder value. I will be reporting back on my plans in due course,” said Bailey.

Shares in Trinity Mirror were unchanged at 385.5 by mid-morning today.