Summary:

Have the wheels finally come off newspapers’ big online dream? In the last three months of 2008, DMGT says online sales in its Mail Online…

image Have the wheels finally come off newspapers’ big online dream? In the last three months of 2008, DMGT says online sales in its Mail Online publisher Associated Newspapers were down three percent from the previous year. That’s a shocker as we’ve got used to seeing quarter-on-quarter online gains.

The year before, DMGT overall saw a 90 percent uplift in online sales – so, despite confidence online ads will continue to grow while print sales suffer, it seems advertisers put the brakes even on web spend in the last quarter with Associated.

DMGT isn’t panicking — it’s said several times it’s more interested in investing in its B2B assets than newspapers. But the fact remains – digital is not replacing revenue lost to a chronic downturn in newspapers’ fortunes. With even the most optimistic of analysts expecting online to make up only 15 percent of advertising by 2013, would anyone bet on publishers making strong online gains in recession-mired 2009?

Northcliffe Media: Unlike Associated, the regional division posted a six percent year-on-year gain in digital revenue, but it’s simply not enough to counteract a 27 percent overall ad revenue drop for the quarter. Property ads alone were down 52 percent and in January the group was 40 percent behind January 2008 ad revenue.

Associated Newspapers: Overall sales were down eight percent to £237 million and profits fell five percent, as advertising revenue of all kinds continues to flee newspapers. Total advertising sales dropped eight percent – print down eight percent and classifieds by 17 percent. The best-performing title was not the 2.2-million selling Daily Mail but London Lite, which grew its print display revenue 21 percent.

Release

B2B: Reflecting the company’s priorities these days — DMGT just sold one its most famous newspapers for £1 — its B2B assets held up well despite falls in property advertising revenue. B2B division DMG Information saw revenue fall one percent in the quarter — 11 in constant currency terms — to £52 million with operating profit lower than Q107.

DMGT will step up its aggressive programme of cost-cutting. The company says it has reduced headcount by six percent at the recently formed A&N Media division as part of its £100 million cost-cutting programme – but CEO Martin Morgan “expects to exceed” that original programme with further “substantial” reductions promised in Northcliffe, for instance.

Overall, DMGT revenue for the three months to December 31 was up two percent at £568 million, helped in part by the strength of the dollar. Trading was “ahead of our expectations”, according to Morgan, with operating profit only marginally lower than last year, but Morgan only sees “weaker trading conditions” ahead.

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