Revenue at Stylist and Press & Journal publisher DC Thomson stayed steady last year but a significant increase in costs contributed to a major pre-tax loss.
While revenue was flat year on year at £161m, the DC Thomson group of companies’ accounts for the year to March 2023 report a pre-tax loss of £161.5m (compared with a pre-tax profit of £7.2m in 2022). Some £149.9m of losses were due to a fall in the value of financial assets.
There were also one-off restructuring costs as the group refocused around digital and core specialist areas.
The newspaper and magazine publisher cut 309 jobs, closed five print magazine titles based in Dundee, and planned to close magazine arm Aceville as a result. About 30 jobs and at least 12 of Aceville’s print and online brands were saved at the end of March when it was sold to specialist publisher Enthuse Group for £1.
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DC Thomson said in its new accounts for the year to 31 March 2023, filed at Companies House, that it made decisions about titles “that do not have a future with DCT” in direct response to increases in inflation and pressures on the cost of living hitting consumer spending.
The publisher said: “Performance has been impacted by the effects of high inflation in both our cost profiles and in depressed consumer spending limiting the ability to increase prices. Inflation continues to increase costs both internal and external. Our leadership teams are however engaged in mitigating these effects focusing on preserving profits and building growth revenues.”
DC Thomson chairman Christopher Thomson said the accounts, in particular subscriptions growth, showed the “biggest growth in our regional news business for decades”.
DC Thomson publishes a portfolio of Scottish newspapers including the Press & Journal, The Courier, The Sunday Post and the Evening Express. Its magazine brands include the Beano, The Scots Magazine, Stylist and Puzzler, while it also has B2B brands such as Energy Voice and radio stations including Original 106 FM.
DC Thomson digital subscriptions revenue up almost 50%
Recurring trading revenues held at £143m, steady year-on-year, although the mix of revenues was different with print down and replaced by digital streams or markets that have improved post-Covid such as events.
Overall continuing revenues, excluding Aceville and including dividends and interest, were marginally up to £161.4m.
Circulation revenue was down 1% from £73m to £72.3m with falls in newspaper and magazine newsstand sales “largely compensated” by print and digital subscriptions.
The Press & Journal, previously the biggest-selling regional newspaper in the UK, was down to second place after its circulation fell 13% year-on-year in the first half of 2023. The Courier was in third place, also after falling 13%.
Print circulation revenue (excluding Aceville) was down 3% to £55.4m but would be down 6% with Aceville included.
The exceptions to the circulation revenue decline were Beano and Puzzler. DC Thomson chief brand officer Ella Dolphin told Press Gazette’s conference in September that Beano had grown by concentrating on its purpose – boosting literacy and representing all children.
The insight service Beano Brain, which initially informed DC Thomson’s own decisions about its young audience before becoming a B2B agency for other brands, is seeing success and similar services will be rolled out to other elements of the publisher’s media offering, it said.
[Read more: How DC Thomson turned community + purpose into a winning publishing formula]
Digital subscriptions increased 47% year-on-year to £3.2m but only made up 4% of all circulation revenue.
DC Thomson now has a target of reaching 626,000 total subscribers by 2027. “This figure is a target but roughly based on maintaining a retailing revenue of some £52m,” the accounts said. “This will allow us to continue making the quality of our journalism and content delivery a key element of the future as it has been in the past.”
DC Thomson previously set a target of reaching 75,000 digital subscriptions by 2025 and hit 25,000 in October 2022.
Advertising revenue, encompassing print and digital, fell by 7% from £16.5m to £15.4m, which the publisher said was “broadly in line with market trends as consumer spending changed”.
Print advertising (excluding Aceville) made up £10.6m of that total, down from £11.4m, with digital advertising on £4.7m, down from £5m.
Events revenue was up 20% from £2.6m to £3.1m as the market continued to be reinvigorated post-pandemic. DC Thomson also saw revenue growth in marketing services, cloud services and B2B while its genealogy division stayed steady.
Inflationary increases contributed to an increased cost of sales of £6m, in particular due to paper and external print costs.
This led to a fall in gross margin, meaning the portion of revenue left over after direct costs are subtracted, from 62% to 58%.
"Our direct materials are commodities, and we are used to cycles of market changes but the increase in energy costs had a significant effect on the cost of materials and the changes in consumer patterns led to paper mills changing production to packaging materials for the internet consumption stimulated by social changes during Covid-19, which have continued," the accounts said.
This compares to an £8m increase in direct costs of "raw materials and consumables" in the prior year to March 2022.
This year there was also a "significant" increase to "other costs", which include marketing, IT, utilities, travel, vehicle costs, professional fees and further indirect overhead costs, due to inflation, increased costs from the digital transformation, and the "continued reopening of activities post-pandemic".
Costs of the overall redundancy programme were £4.9m, with a further £1.6m from severance costs at Aceville specifically. The redundancies will reduce staff costs by £9.8m, or about £7m after salary inflation this year of about 6% overall.
The company now has around 1,300 employees.
Financial investments increase DC Thomson losses in 2023
In the year to 31 March 2023, DC Thomson had a loss before tax on continuing operations (excluding Aceville) of £161.5m - in large part due to a net loss of £149.9m on the value of its financial investments.
In the previous year, the company reported a pre-tax profit of £7.2m.
The overall loss after tax from continuing operations was £120m, up from a £27m loss the year before.
DC Thomson paid a total dividend to shareholders of £24.9m, made up of an interim dividend of £5.7m and a final payment of £19.2m.
"Key management" received remuneration of £1.6m, up from £1.3m the year before, with the highest paid member of the team paid £459,000, up from £398,000.
DC Thomson chairman Christopher Thomson said in a statement: "While the print market remains challenged, the acceleration of our transformation in the digital space is seeing some real success."
He added: "Our strategy is focused on protecting traditional print revenues, while diversifying in growing new revenue streams in digital, B2B and events – and building a profitable subscriptions-centred business.
“Our approach has seen the biggest growth in our regional news business for decades, with communities willing to subscribe to a quality digital news service."
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