DMGT hopes for rising share price

DMGT issued a trading statement in September that pointed to the continued weakness in the advertising market, and showed that Associated Newspapers had suffered accordingly.

Display advertising revenues for Associated Newspapers declined by 3.5% year-on-year for 11 months to the end of August, compared with the same period the previous year. Classified advertising revenues were up 3.3% to the end of August, but the Evening Standard’s levels saw a decline, of nearly 10% on the same period the previous year.

Circulation figures for the Daily Mail and the Mail on Sunday increased, however, according to the statement, and the group’s business-to-business division DMG also held out.

Northcliffe Newspapers – the group’s regional papers division – fared better, with advertising revenues up 3% and circulation revenues up 4%, largely due to the resilience of the UK property market.

Even though advertising revenues proved volatile, the group’s half-year results in March looked strong. Adjusted profit before tax for the six months to 30 March 2003 was £77.4m, a rise of 19% on the same period the previous year.

Hilary Cook, director at Barclays Private Clients, described the group’s trading statement as ‘pretty mixed’. While the Daily Mail has done well, the group’s share price hasn’t performed. Cook said that other media companies seem to be faring better. ‘(DMGT is) not seeing the recovery that other companies have in the last year. It seems to have missed out and it’s under a lot of pressure.’

Cook said she expected to see more consolidation in the media sector, as advertising spending continues to diversify into sponsorship and internet opportunities. ‘It may be that traditional advertising income is in long-term decline, and in that kind of environment you would expect to see more consolidation,’ she said.

According to reports, the group is looking to acquisitions to prompt growth. Northcliffe is reportedly weighing up a bid for Independent News and Media’s London papers. Northcliffe has asked the DTI to consider the competition implications of a bid and the DTI has invited comments. Independent has put 23 local titles up for sale in a bid to cut its debt.

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