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June 29, 2018

Reach increases phone-hacking money pot by further £7.5m bringing total provisions to £70.5m

By Charlotte Tobitt

The publisher of the Daily Mirror has announced it is increasing the amount of money set aside for settling historical phone-hacking claims by £7.5m, bringing its total provisions to £70.5m.

Reach, formerly Trinity Mirror, has faced more than 100 civil claims for phone-hacking over a sustained period perpetrated by journalists on its national titles: the Daily Mirror, Sunday Mirror and the Sunday People.

It said today that it is making progress on settling the outstanding civil claims but that the associated costs, especially the legal fees of the claimants’ lawyers, are expected to be higher than previously estimated.

In a statement, the company said: “Although there remains uncertainty as to how these matters will progress, the board remains confident that the exposures arising from these historical events are manageable and do not undermine the delivery of the group’s strategy.”

In its annual report released in March, Reach said its provision for settling historical claims increased by £10.5m during 2017, with £10.7m of the money pot still unused.

The report said: “It remains uncertain as to how these matters will progress, whether further allegations or claims will be made, and their financial impact.”

Reach also said today that, for the year so far, classified advertising has fallen by 19 per cent. But, digital display and transactional revenue is expected to grow by 7 per cent.

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The company issued a trading update for the first half of the year ahead of its 2018 interim results set to be published at the end of July.

It said group revenue is expected to grow by 11 per cent, reflecting the acquisition of Express Newspapers from Richard Desmond’s Northern & Shell on 28 February.

The £127m deal was cleared by Culture Secretary Matt Hancock last week after initial investigations into issues of media plurality, free expression of opinion and competition.

Reach is still awaiting a decision from regulatory authorities in Ireland.

It said in a statement that the impact of “higher than anticipated newsprint prices” in the second half of the year is expected to be offset by savings from cutting duplicate roles following the Express/Star takeover.

However, group revenue on a like-for-like basis, excluding the Express and Star newspapers,  is expected to fall by 8 per cent for the year so far.

Publishing revenue is expected to fall by 8 per cent with print falling by 10 per cent and digital increasing by 1 per cent.

For the period from the completion of the Express Newspapers buyout to 1 July, revenue for the newly acquired newspapers is expected to fall by 3 per cent on a like-for-like basis, with print falling by 5 per cent and digital growing by 25 per cent.

Chief executive Simon Fox said: “We have seen some improvement in May and June driven by stronger national print advertising.

“Following the welcome clearance by the Secretary of State, we will start the process of integrating Express and Star in order to accelerate the benefits that our combined scale will deliver.”

Reach announced yesterday that it had combined its two sales teams, Trinity Mirror Solutions and the former Northern & Shell team.

The national sales team is now being led by Reach’s chief revenue officer Andy Atkinson after the departure of Northern & Shell’s commercial director Toby Morris.

Picture: Yui Mok/PA Wire

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