They were two of the country’s biggest publishing companies and both were known for returning high margins to shareholders and investors. But now Trinity Mirror (LSE: TNI) and Johnston Press are set to fall out of the FTSE 250 list of the country’s most valuable companies after months of ever-decreasing share prices and huge revenue losses. Trinity exited the FTSE 100 index of blue chip stocks in September and as Guardian.co.uk reports, a London Stock Exchange Committee is meeting this afternoon to decide whether it and Johnston deserve relegating further, based on their overall value. UK-listed European newspaper publisher Mecom also faces ejection from the FTSE 250.
The drop in these companies’ fortunes is staggering. Trinity’s shares closed at 56p today, a seventh of the 52-week high price of £3.54, ten times less than the March 2007 price. As for Johnston, its shares have in recent weeks fallen to as low as 7.15p but closed trading today at 12p — quite a reduction from its April 2007 price of £4.84. Both have invested millions in transforming their newsrooms, re-training journalists and making the transition to online publishing as print circulation races downward. Like Newsquest and DMGT, they are both cost-cutting, reducing headcount and unnecessary outgoings, partly in response to the economy and partly as an acknowledgment that old-style, once-a-day newspaper publishing is over.
But one thing is clear from looking at the companies’ earnings: while digital revenue growth is expanding, the rate of growth is not nearly enough to replace the money lost from print classifieds and display advertising — and that’s the main reason why their stock continues to fall. Daily Mail (LSE: DMGT) and General Trust, considered by many in the City to be more robust due to its non-print assets and B2B titles, remains a FTSE 250 company but was itself relegated from the FTSE 100 a year ago.
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