Most publishers were surprised by the speed and ferocity of the advertising recession when it hit the UK in Q3 and Q4 last year — and this week we’ll find out just what effect the emergency cost-cutting measures of the last six months have had on the fortunes of newspaper publishers when two of the sector’s key players, Trinity Mirror (LSE: TNI) and Johnston Press, file Q1 trading updates on Wednesday.
— Trinity Mirror: In H208 Trinity announced 1,200 job cuts, saving £30 million, and in February it announced an extra £25 million in savings for this year. CEO Sly Bailey has been forced to act to prevent the share price from even further downward spiraling — two years ago they were worth £5.47 compared to today’s £0.80, though has been a slight recovery in the last few days. She’s also keen protect revenue overall — and if there hasn’t been any impact from such cost-savings so far, or there isn’t some predicted soon, shareholders will have a right to ask why not.
Trinity suffered a 30 percent drop in ad revenue for the first two months of 2009 and we’ll be thoroughly surprised if the pictured changed dramatically in March. Trinity made digital revenues of £43.6 million in 2008, a 27.1 year-on-year rise and five percent of its total revenues — so look out for whether that figure is increasing. If digital earnings are not increasing — as was the worrying case for DMGT’s national newspaper websites in Q408 — then alarm bells should be ringing not just at Trinity’s Canary Wharf HQ but across the the industry.
— Johnston Press: The only comfort for Johnston is that it can’t get much worse: the company slashed £511.4 million from the value of its assets last year and profits were down 27.9 percent. Like Trinity, Johnston has laid off a good number of staff — more than 1,000 — and is looking to sell off the titles it bought in the care-free, credit-rich 1990s when it expanded across the UK and into Ireland. So we may get an update on Johnston’s efforts to sell its Irish titles and evidence that the cost-cutting is doing its job and helping the bottom line. Digital advertising grew 31.1 percent to £19.8 million in 2008 and CEO John Fry will be hoping that trend at least continues as newspaper ad revenue refuses to return.
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