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  1. Media Business
March 5, 2024

Reach results 2023: Revenue falls 5% as print outperforms digital

Prince Harry ruling and falling pension deficit provide grounds for optimism.

By Charlotte Tobitt

Falling referral traffic from Facebook and Google and lower yields from programmatic advertising contributed to a revenue decline of 5% at Reach in 2023 to £568.6m.

The publisher of the Mirror, Express, Star and more than 100 local newsbrands reported adjusted operating profit of £96.5m in 2023, down 9% from the year before. Profit before tax was down 10% to £93m on an adjusted basis.

Digital revenues were the hardest hit, falling by 15% to £127.4m. Print revenues were more resilient, down by 2% to £438.8m as newsprint costs reduced by 21% compared to 2022 when they rocketed up, and cover price increases offset the impact of continued circulation decline.

Print still makes up 75% of Reach revenues, with digital on 25%.

Chief financial officer Darren Fisher said in the accounts: “We will continue to carefully balance cover price increases and availability to deliver a robust circulation performance despite the falling demand for print. Print revenue funds the Group’s financial commitments and enables investment as we continue to build our digital business.”

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Chief executive Jim Mullen described the print business as “predictable and reliable” while Reach works on “becoming a data-driven, digitally-focused business”.

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Revenues at Reach have declined by 19% over the past five years.

Reach results 2023: Print and 'data-driven' digital most robust

Mullen said "data-driven" digital revenues had been more robust, falling by 4% to £55.3m. This revenue is derived from advertising activity using first-party data gathered under Reach's customer value strategy (CVS), which asks users to share some of their personal information such as email address or postcode. Reach now has 12.3 million registered customers, of which around four million are active over each four-week period.

Reach has also launched a secure audience strategy, which "focuses newsrooms on increasing the number of page views which come from reliable sources - those built on intentional relationships with us by readers".

The CVS has meant the average revenue per thousand pages (RPM) from digital page views is up by 11% compared to 2022 and the "return on data-driven advertising is currently ten times more valuable than volume-related programmatic advertising returns".

These data-driven digital revenues now make up 43% of all digital revenues, compared to 38% in 2022.

However other digital revenues, including open market programmatically-driven advertising, were down 24% due to a 24% drop in page views and open market yields down 25%.

The drop in page views was attributed to the "volatility from a higher than usual high number of Google core updates" as well as referrals down from social media sites, primarily Facebook.

Reach continues to reach 36 million adults online each month, or 72% of the UK online population. It is the biggest news publisher in the UK and Ireland and has the sixth biggest audience of any online organisation in the UK. The only online publishers reaching more people in the UK are Alphabet, Meta, Amazon, Microsoft and the BBC.

Mullen said the CVS and Reach's proprietary contextual advertising tool Mantis will put Reach "significantly ahead of the curve" as Google phases out third-party cookies this year.

Reach said it was also growing revenue streams outside its traditional advertising revenues including affiliates and e-commerce.

In print, advertising revenues were down by 12% to £76.6m but circulation revenue was up by 2% to £312.5m.

Reach cuts costs and tackles areas of uncertainty

Reach reduced its headcount by 14% in 2023, with labour costs down 5% as it made more than 700 redundancies during the year. This means there was a net reduction in headcount over the year of around 650 to just over 4,000 employees.

Reach made a 5.7% reduction in operating costs on a like-for-like basis after targeting 5-6%. It is now targeting a further 5-6% reduction in costs for 2024.

"In the wider industry context, with many organisations now making similar decisions to those we took in late 2023, we believe our early action demonstrates responsible foresight and planning," Mullen said. Some of the Reach job cuts announced in 2023 included 450 redundancies in November, including as a result the closure of 13 small local websites.

Operating costs overall were down 6% on a like-for-like basis.

Last year had an extra week in the financial year compared to 2022, with this week contributing £6.2m to revenue and £0.8m to operating profit.

Mullen said Reach had got rid of two "long-term uncertainties" in 2023. The Prince Harry privacy trial judgment put a limitation on future claims meaning, he said, "a significant number of outstanding claims can be resolved, and this should largely bring an end to future claims".

In addition, Reach has agreed a pathway to fully funding its pension deficit, which stood at £219m for the Mirror Group Newspapers scheme at the end of 2022. It will now make payments of around £46m each year until January 2028 after which its commitments are expected to reduce by around £40m a year. An agreement with Reach's other pension schemes will be completed by 31 March this year.

Overall, Mullen said: "This year we have successfully gained clarity on two significant long-term uncertainties in pension funding and Historical Legal Issues. With the end of these issues in sight, we have significantly reduced our obligations and have a clear path forward for the business.

"The success of our strategy also came to the fore this year. Despite the macroeconomic pressures, we have continued to build a stronger digital business with an increasing portion of much higher yielding revenues, reducing our reliance on the open market.

"At the same time, we have expertly managed our print business, maintaining circulation revenues as well as delivering necessary cost and efficiency plans across the group."

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Select and enter your email address Weekly insight into the big strategic issues affecting the future of the news industry. Essential reading for media leaders every Thursday. Your morning brew of news about the world of news from Press Gazette and elsewhere in the media. Sent at around 10am UK time. Our weekly does of strategic insight about the future of news media aimed at US readers. A fortnightly update from the front-line of news and advertising. Aimed at marketers and those involved in the advertising industry.
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