Daily Mirror publisher Reach to cut 550 jobs amid slump in advertising and circulation
REACH, Britain’s biggest newspaper publisher, is making more than one in 10 staff redundant as hundreds of millions of pounds of advertising and circulation income are lost to the coronavirus pandemic.
The publisher of the Mirror and Express titles, as well as scores of regional newspapers, said it will cut 550 jobs, equivalent to 12pc of its workforce, to save £35m per year.
Jim Mullen, chief executive since last summer, who had been riding a wave of renewed City optimism in Reach’s prospects until Covid-19 struck, said the redundancies were necessary to safeguard its finances.
They are likely to raise concern on regional news coverage especially, which is also facing hundreds of job cuts at rival publishers and the BBC.
Among major newspaper publishers Reach is particularly exposed to the slump in advertising, as its focus on tabloid and local newspapers has left it without a digital subscription business able to profit from the massive interest in coronavirus news.
Its regional arm is also dependent on the small businesses that have been among the hardest hit by the lockdown. Turnover in the second quarter was down 27.5pc and is expected by analysts to be down by a fifth for the full year, or about £140m, with a lasting impact in subsequent years.
June showed only a small improvement on the peak of the pandemic, with sales down 23.9pc, compared with 30.5pc in April.
Print revenues, which last year accounted for four fifths of Reach’s business, were already in sharp decline before lockdown. Digital advertising, which had been growing and is at the centre of Mr Mullen’s plans for the future of the publisher and its titles, is now also shrinking.
However, Numis, Reach’s in-house broker, still expected the company to report a pre-tax profit of more than £100m this year and have a cash reserve of more than £20m by its end. Reach said it “recognises the importance of a dividend to shareholders” but said it will remain suspended, despite liquidity that Mr Mullen said puts the publisher in “much better shape than some if not all of our competitors”.
The company’s largest shareholder is Richard Desmond, the former owner of its Express and Star national titles.
Its shares closed 14pc lower at 76.2p.