Associated and Northcliffe hit by profits meltdown

LONDON - Operating profits at Associated Newspapers dropped 59% after revenues fell by £53m, according to the October-March financial results for the Daily Mail and General Trust.

The 10% fall in Associated's overall revenues included the contribution of the Evening Standard to February, when a 75.1% stake was sold to Russian Alexander Lebedev.

Ad revenues were down 15% to £184m. This figure, however, is an underlying one and does not include the contribution of the Evening Standard.

January-March was the worst quarter for advertising, with a 23% drop, and Associated said April and May ad revenues were down 15%.

There was an increase in revenue for Associated's online business, up 15% to nearly £5m. Associated also remarked that London Lite's display revenues were up 11%, but did not say what the total was.

Online classified ad focused Associated Northcliffe Digital made an operating loss of £1.6m after revenues fell by 14% to £40m. Associated said the loss was also due to the cost of its large scale marketing campaign for Jobsite.

Teletext made an operating loss of £3m, the same as last year.

In DMGT's regional newspapers business Northcliffe the picture was even grimmer than its national newspapers, though the business just held on to profitability.

Operating profits fell 85% from £40m to £6m, after revenues fell 23% from £216m to £166m.

Circulation revenues were down 6%, compared to a 0.6% rise at Associated.

UK ad revenues fell 31% to £103m and in contrast to Associated there was no abating of the rate of decline in April, which was down 36%. No figure was supplied for May.

Northcliffe reduced its headcount by 500 during October-March and after "further significant reductions" since then, operating costs are now running more than 20% lower than last year.

DMG Radio Australia made a £2m operating profit on flat revenues of £26m.

DMGT's business to business divisions continued to show strong growth, but the extent of the declines in its consumer media operations harmed its overall performance.

Martin Morgan, chief executive of DMGT, said: "The overall first half result has been badly affected by the impact of the recession on our consumer media advertising revenues."

Revenues were down 7% to £1.09bn, while on an adjusted basis pre-tax profits fell 47% to £77m.

However, with the group writing down the value of its assets by a collective £175.4m, its statutory profits figure revealed a pre-tax loss of £239.4m.

The value of Northcliffe was written down by £68.3m and that of Associated by £9.4m.

DMGT's share price was little changed this morning, down 0.88% as of 9.15am to 308.25p.