The Economist says it has reached 1,122,000 subscribers following record growth of 9% in the year to the end of March – its largest ever increase in a single year.
This addition of 90,000 subscribers saw an uptick in print/digital subscriber revenues at the weekly current affairs magazine of 6% in the financial year, which reflects a full year of the Covid-19 pandemic.
The group said a renewed focus on readers and clients lay at the heart of its “multi-year investment programme for sustainable growth”.
However, overall Economist Group revenues were down 3% to £310.3m as the growth in higher-margin subscribers only partially offset the decline in client marketing solutions and events revenues, which were both impacted by Covid-19 lockdowns and uncertainty.
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This was despite a pivot from face-to-face to virtual events resulting in the hosting of 171 events, 141% more than the year before, with a record 70,000 attendees and 366 sponsors.
Adjusted operating profit was up 27% from £32.9m to £41.8m which Economist Group chairman Paul Deighton said had “exceeded all expectations” in the annual report.
The “better than feared” performance led to The Economist Group paying back the £100,000 it had claimed from the Government’s job retention scheme, under which it pays 80% of the wages of furloughed employees up to £2,500.
Deighton put the profit improvement down to reduced operating costs during the Covid-19 pandemic, including lower travel costs and marketing expenditure, and the closure of two loss-making businesses – PR agency TVC and consulting firm Canback – last summer.
“We believe that the transformation of the business, however, will unlock growth potential over the longer term,” Deighton said.
Profit before tax was down 63% from £53.4m in 2020 to £19.8m.
More than two-thirds (68%) of The Economist’s revenue now comes from subscriptions – £209.5m. Advertising, research and other revenues account for £100.8m.
Lockdowns and the collapse of business travel “eroded” Economist newsstand sales, which fell by nearly half year-on-year but did begin to experience an “uptick” in the final quarter, the annual report said.
[Read more: Economist Group cuts 90 jobs and stops printing 1843 magazine]
Growth in subscribers at The Economist, plus lower acquisition marketing expenditure, increased the magazine’s contribution to overall group profit.
Following a restructure the Economist Group is now split into four core customer-facing brands, which as well as the magazine comprises research and analysis division Economist Intelligence, client solutions brand Economist Impact, and the fledgling Economist Education.
Bob Cohn, president and managing director of The Economist, said the news brand’s subscriber trial conversion and one-year retention rates had been “significantly boosted”, in part due to more active engagement with those who said they wanted to cancel.
There was also a new programme of subscriber-only content which included newsletters and webinars. In August a conversation with Bill Gates hosted by Economist editor Zanny Minton Beddoes drew in some 24,000 subscribers on Zoom.
The majority of new subscribers were digital-only and Minton Beddoes said a “rapid improvement in our digital capabilities” is planned and much-needed. Some of the brand’s own products including its website and apps were “laggards”, she said, adding: “That is now changing fast.”
The Economist website homepage has been redesigned and its Espresso daily news briefing app has been upgraded. Other digital investment has gone into new newsletters and interactive data journalism while a “future customer experience” platform was designed to “transform and improve the subscriber experience and increase engagement and retention”.
Minton Beddoes said: “The commitment to faster product and tech investment as well as intensive collaboration between the editorial and business sides of the group will ensure a continued rapid improvement in our digital capabilities and mean that our subscribers can consume our journalism in a form and at a cadence that suits them for years to come.”
Chairman Deighton said that, overall, “significant steps” have been taken in the past year to reach a “sound financial position” after which top-line growth can follow.
The group sold its stake in US tech company FiscalNote in December, delivering proceeds of $7m which helped it reduce its net debt before lease liabilities from £86.2m to £2.1m.
The group suspended its dividend payments at the start of the pandemic given its level of debt and concerns over the possible impact on the business, but is now proposing a final dividend of 100p per share to reflect the better-than-expected performance.
Chief executive Lara Boro said the group’s “solid profitability” was “underpinned by much-improved balance-sheet strength, with significantly reduced net debt”.
“Between them, our strong performance and reduced balance-sheet constraints give us the platform to continue with our transformation of the business – an ambitious multi-year programme that will drive sustainable growth for the group and ensure the future of The Economist’s journalism, which spearheads our pursuit of progress.”
The Economist Group now has 1,379 members of staff based at 25 offices in 14 countries.
It said it is likely to keep a hybrid model of office and home working after the pandemic after remote working brought on a “rethinking” of how Economist journalism is created. For example, its more than 50 foreign correspondents could more easily get involved in editorial meetings on Zoom.
Minton Beddoes told the FT’s Future of News event in October she was enjoying the current work pattern forced by Covid-19: “I actually like working from home and partly in the office. I’m okay with the Zoom world. I miss the chats at the coffee station.”
Looking ahead past the Covid-19 pandemic, Boro said in Monday’s report: “Some of the headwinds we faced this year – especially in advertising and events – will ease. But by the same token, we cannot always rely on the repeat of this year’s news agenda, which helped deliver record growth in subscriber numbers, nor this year’s significant reductions in costs.
“That makes it all the more important that we continue to focus on top-line growth that is truly sustainable in the long term – which means continuing to invest in delivering indispensable products that delight our existing readers and clients, appealing to new ones, and maintaining our momentum in transforming the business while holding true to our purpose of enabling progress through all that we do.”
The Economist’s latest circulation figure according to ABC is 1,583, 9665 which comprises:
- Print: 709,153
- Digital: 874,802.
Some 53% of its circulation is in North America versus 17% in the UK.
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