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Associated's summer marred by 21% ad revenue drop

LONDON - Advertising revenue at Associated Newspapers fell 21% in July and August compared with the same period last year, according to a trading update from its parent company Daily Mail & General Trust.

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In the statement, which covers the 11 months to August 31 2009, DMGT noted that September had been better, "although trading remains volatile from week to week with little visibility on future advertising performance". It did not break down the peformance of individual titles such as the Daily Mail and Metro, nor its digital revenues.

Overall, group revenue at DMGT was down 9% for the period, year on year, while Associated Newspapers, publisher of The Daily Mail, and Mail on SUnday, posted a 16% drop in total revenue.

The report comes two months after Media Week reported that DMGT chairman Viscount Rothermere had taken the step of meeting media agencies for the first time, in a bid to stem declining ad revenue at The Mail on Sunday.

September also ushered in a "less bad" trend at Northcliffe, DMGT's regional publishing arm and the owner of the Nottingham Evening Post, with an improvement in the property sector.

However, ad revenues in July and August had brought Northcliffe a 26% drop year on year.

DMGT highlighted an increase in Northcliffe's operating profits for August and September due to the reduction of its cost base.

It said the cost of this restructuring would in large part lead to it taking an exceptional charge approaching £100m in its full year 2009 results, which it will report on November 26.

Associated and Northcliffe shed more than 1,500 staff between the end of September 2008 and the end of August 2009.

In that period DMGT's consumer media revenues fell 15% while its business-to-business revenues rose 2%.

DMGT's consumer division has also been hit by revenue drops at its central European newspapers division -- down 10% compared to September 2008 -- and its Australian radio division -- down 2% on September 2008.

The London stock market's reaction to the update was to send DMGT's share price up 2.7% by 8.45am to 452p.

Andy Viner, head of media at BDO Stoy Hayward said the update was "very respectable" and indicated DMGT's "strategy of diversification of a balanced portfolio business to business media as well as consumer operations is working well".

"Industry observers will also be keen to see more evidence of DMGT's digital strategy at the full year results, which will be an important factor in the next few years as the newspaper industry continues to face structural decline," he addded.

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