DMGT predicts hard times

by MediaWeek, Media Week 31-May-05, 00:05

The Daily Mail and General Trust is predicting a tougher advertising market despite strong financial results, but hopes to weather the storm better than most of its rivals.

Although the group last week reported a rise in profits in its results for the half-year ending in April, in line with market expectations, DMGT finance director Peter Williams suggested that the UK advertising market for newspapers was in for some difficult times.

"In December, we said the second half of this year would be quite tough. Inevitably consumer advertising is linked to consumer spending. I can't tell you when it is going to recover," said Williams, who added that he believed the group was better placed than rivals to cope.

The results showed that while advertising revenue overall was up by 2% and classified revenue was up by 4%, display revenue dipped by 2%.

Lorna Tilbian, head of media at Numis Securities, believes the group is currently feeling the side-effects of middle England's burgeoning credit card debt, but that this would be short-lived and that the DMGT would indeed be better placed than competitors to benefit from a recovery.

"I think interest rates will come down in August, so hopefully that will make people feel a bit better," said Tilbian.

According to Tilbian, the DMGT is in the midst of "mid-cycle blues" – what happens when people take stock following a period of heightened spend.

Tilbian added: "We expect DMGT to out perform its peers as it benefits from more stable circulation and enhanced colour capacity."