News group Reach has boasted that it has “exceeded market expectations” on the back of rapid digital revenue growth in the second half of 2020 – glossing over a decline in revenue as a whole.
In a trading update issued today the publisher hailed digital revenue growth of 16.2% across the five months to 22 November 2020.
A ‘strong and growing’ digital business
The newspaper and magazine empire, which counts the likes of the Daily Mirror, Daily Express and OK! Magazine among its stable of titles, stands taller this morning after beating market expectations for the year to end-November.
The publisher seized upon a 16.2% rise in digital revenues, built on the back of 4.25m registered online readers, but this was eclipsed by a 19.6% collapse in print revenue.
As a result, group revenues slumped 13.9% in the five months to 22 November.
Despite weathering a double-digit decline, bosses believe the print performance was 'resilient' given the disastrous amplification of long-term downward trends by the coronavirus pandemic.
There is still no light at the end of the tunnel for print which is expected to extend remorseless declines through December, nullifying strong digital growth.
These trends have forced Reach to pare back costs via a strategic transformation plan which promotes a single editorial operation at the expense of regional and national products.
Fat has also been trimmed from print operations through a programme of consolidation, leading to the closure of six sites, the upshot of which is an expectation of second-half operating profit margins being 'materially ahead' the first.
‘A digital future’
For Jim Mullen, chief executive officer at Reach, the direction of travel towards a 'digital future' is clear. He observed: “The headwinds from Covid-19 have been considerable, but while we remain mindful of potential impacts from the current lockdowns, we approach the end of the year with a strong and growing digital business, resilient print circulation sales, and a new, efficient operating model."
Looking ahead, Mullen sees Reach entering a 'new phase' defined by a growing focus on business intelligence and insight, notably the relaunch of Reach ID in December which will unify customer data from its national and regional network to provide 'enhanced data and insight that will support further digital revenue growth'.
Mullen concluded: “2020 has been a pivotal year for Reach and the response of our colleagues to the challenges of 2020 has been first-class. Whilst macroeconomic uncertainty remains, we approach 2021 with confidence in the long-term value of our loyal audience and trusted brands and with strong digital momentum.”
Reach's second-half performance is notable for coinciding with the imposition of a national lockdown and the gutting of its circulation base and advertising revenues, indicating that it is well placed for growth in a more favourable trading environment.
Reach was buoyed by a pronounced rebound in digital advertising from the third quarter which jumped 12.9% as confidence returned.