Like pubs, newspapers had fallen on hard times before the pandemic hit. But the virus created new reasons for Britons to forsake daily newspapers: all sold under 1m print copies in April. Advertisers have followed readers out of the door. Reach, publisher of the Daily Mirror, Daily Express and many local titles, is to axe 550 jobs after second-quarter revenues fell 27.5 per cent.
Critics who carp about the death of newspapers are nonetheless guilty of peddling fake news. Digital media did not swing the wrecking ball as predicted. Newbies such as BuzzFeed and Vice never lived up to their early promise. Facebook and Google outflanked them. Old school media at least has the underpinning of familiar brands as it tries to make the difficult switch online.
The New York Times, one of the oldest of them all, illustrates the point. Like many other publications, it is smarting from lost ads, projecting that ad revenues will halve in the second quarter. But the title has received welcome underpinning from digital subscriptions. These are rising, suggesting consumers are happy to pay for reliable information that reflects their world view. A surging share price shows that investors buy the business model too.
After a succession of failed transformation attempts, Reach is rolling the online dice again. It is targeting a fourfold increase in registrations to 10m by 2022. Split into categories, readers will be delivered to advertisers for a suitably juiced-up fee. Does that model sound familiar? It should: Facebook is a better-known exponent.
Reach shares fell 13 per cent on Tuesday. It is the cheapest title on the newsstand with an enterprise value of 1.6 times trailing operating profits. That is far below Daily Mail and General Trust, whose pre-tax profits nearly halved in the six months to March. The latter trades at 16.8 times compared with NYT at 40 times, according to S&P Global. But DMGT has healthy side hustles in events and professional publishing, and strong readership for Mail Online.
Reach is no bargain, unfortunately. Investors fear that if it could reinvent itself, it would already have done so.
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