Advertising outlook remains difficult at Trinity Mirror
LONDON - Revealing that its ad revenues for 2005 are likely to be down by almost 4%, Trinity Mirror has said it expects the downward trend to continue and wants to cut £15m from costs in 2006.
The national and regional newspaper publisher has already acted to reduce costs by beginning a redundancy process this month that is expected to cut up to 770 jobs across the group.
In a trading update to the City today, it revealed the extent to which advertisers have reduced their adspend at its national and regional papers and websites.
At its national newspapers division, housing the Daily Mirror, ad revenues were down 14.4% in the five months to November 2005.
The regional division was less affected, with ad revenues falling 4.9% during the same period. Recruitment ad revenues dropped steeply, down 20.5%, but property ad revenues rose 6.4% and the change in the alcohol licensing laws led to more ads. Trinity attributed the drop in recruitment ads to the slowing economy and increasing unemployment.
The company's other ad streams from its sports and magazines and exhibition divisions were also hit, the former down by 11.2% and the latter by 9.1%.
Trinity Mirror's strategy has been to raise cover prices where possible, and this helped circulation revenue to increase by 1.4% in the five months to November 2005, growing on the regional titles but down slightly on the Daily and Sunday Mirror.
The company warned it did not expect the advertising picture to improve and said that it would have to cut costs in 2006.
In a statement, Trinity Mirror said: "The downward trend in the advertising market continues and there will be inflationary and other cost pressures in 2006, including higher newsprint prices.
"Management is running the business on the assumption that the advertising environment will continue to be challenging and is therefore taking action now on the cost base, which will deliver further cost savings of up to £15m in 2006."
The board said that its recent acquisitions, which include several recruitment websites, among them Workthing.com and Gaapweb.com, and property website Smartnewhomes.com, were performing "in line with expectations".
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