Mirror owner warns over Brexit as it makes £200m writedown
Reach, the publisher of the Daily Mirror and Daily Express, has warned about the impact of Brexit on advertising, as it made a £200m writedown on its newspaper business that pushed it into the red for 2018.
The company, formerly known as Trinity Mirror, posted a pretax loss of £120m last year after writing down the value of its goodwill, publishing rights, titles and buildings, against a profit of £82m in 2017. Excluding the writedown, it made a profit of £142m.
Total revenues increased by 16.2% to £723.9m following the acquisition of the Brexit-supporting Express and Star titles from Richard Desmond last year.
However, on a like-for-like basis focusing only on Reach’s pro-Labour, pro-EU titles the Daily Mirror, Sunday Mirror and Sunday People, revenues were down by 6.6%.
This reflects the continuing long-term decline in print sales and advertising income that all newspaper publishing companies face.
Simon Fox, the chief executive, said the writedown reflected the difficulties in generating advertising revenues locally and Brexit uncertainty. He said: “If there is a no deal there is a chance we could see a downturn in advertising.”
Reach has prepared for Brexit by increasing stockpiles of newsprint imported from Norway and Canada, he said.
The company said while average monthly page views for its websites grew by 6% to more than 1bn last year, digital advertising revenues had been hit by “algorithm changes made by Facebook and Google early in 2018”, which reduced the amount of Reach content being distributed via these platforms.
The company has also increased its provisions for costs related to the phone-hacking scandal by a further £12.5m, taking the total bill to £75.5m.
The actor Hugh Grant, the comedian Steve Coogan, the model Danielle Lloyd and the former footballers Dwight Yorke and Andrew Cole are among those who have received undisclosed damages and an apology from the company over phone hacking.
The firm led the biggest consolidation in the UK national newspaper industry since the 1990s a year ago when it acquired the Express and Star national titles and the celebrity magazine OK! from Desmond for £200m.