DC Thomson swung from a pre-tax profit of £21m in 2019 to a loss of £180m in the year ending March 2020 after the initial Covid-19 lockdown caused a temporary slump in the value of company investments.
The company also booked a £79.5m write-down in the value of its Wild & Wolf gifts and retail business and on its print newspaper and magazine titles. Because of the severe impact of Covid-19 on retail, DC Thomson has said it plans to sell Wild & Wolf.
The company said its investments more than recovered their March drop in value later in the year.
Dundee-based DC Thompson publishes titles including The Press and Journal, Sunday Post and The Courier.
Its revenue for the year ending 31 March was £214.8m, down 2.8% from £220.9m in 2019. Recurring sales revenue fell by 1.6% to £198.5m.
Chairman Christopher Thomson said the company had been preparing for the decline in traditional revenues to continue and Covid-19 had accelerated this trend.
Despite recovery in the second quarter the publisher decided to write down the values of its newspaper print titles and free magazine Stylist, which was forced to go digital-only and then lean into home deliveries as commuters stayed at home.
The Stylist free magazines division saw a 40% drop in advertising revenue caused by the closure of men’s weekly Shortlist in November 2018.
In new full-year accounts filed with Companies House, Thomson said: “The Covid-19 pandemic has been, we expect, a one-off event but even so we have taken a cautious accounting view which does not affect our consistent view that our titles and brands have a long term future and value to our stakeholders.
“We still have strong belief in all of our established brands and are engaged in both strengthening the underlying brands by continued cost efficiencies and in working on building new valuable revenue streams in all businesses.”
Thomson said the company had seen stronger than expected copy sales during lockdown and good growth in both digital and print subscriptions in almost all areas.
Pre-Covid, advertising revenue fell by 7.5% to £34.3m and circulation revenue grew by 3.1% to £82m with the inclusion of Aceville Publications and PSP Media Group, bought in September 2018 and April 2019 respectively. Without these, advertising revenue fell 10% and circulation revenue fell 2.4%.
Newspaper circulation revenue fell by 5%, with cover price rises offsetting volume declines, while like-for-like magazine print copy sales fell 1%.
The company was “encouraged” by brand loyalty shown to some of its magazine brands during the pandemic, pointing in particular to Puzzler (growing by 2.7% with puzzles one of the most “resilient” sub-sectors), women’s weekly People’s Friend and flagship children’s title Beano.
However the publisher closed five women’s and children’s magazines – Sweet, This Is, No. 1, Scottish Wedding and Slime Factory – it says were “marginal” in March and by September had become “commercially unsustainable” because of the coronavirus pandemic.
Between April and June, at the height of the UK’s strict lockdown, advertising revenue fell by more than 60% year-on-year and newsstand circulations were down 16%.
Thomson said the ratio of 71% circulation revenue to 29% advertising in the 2020 full-year (from 68% to 32% in 2019) gave the business “some additional protection against declines compared to other publishing businesses and is important in the context of the competition from businesses such as Facebook and Google”.
Events revenue grew by 32.2% to £4.1m but was largely brought to a halt by lockdown.
Other revenue streams include consumer products, down 1% to £35.4m, contract printing which fell by 8.6% to £3.2m, and a genealogy business which grew by 3.6% to £18.7m.
DC Thomson has launched a transformation programme including in its newsrooms, which will become “built around specialist teams serving specific audiences” so they can “better serve communities compelling, relevant content digitally and in print”.
Thomson said: “In a long-term family business, there is a balance of strength from our heritage and innovation and this can be seen in the strong performance of our much-loved brands and the way our companies and employees have rapidly adapted to the changes of the past year.
“Throughout our business, there is a constant and essential thread of innovation, diversification and adaptation. Our recently launched transformation programme will ensure our colleagues are better supported than ever to use their talents, insights and experiences to enable them and our brands to thrive in the ‘new normal’.