The parent company of the Daily Mirror and Daily Express predicts its operating profit will come in “ahead of market expectations” for 2020 on the back of record-breaking Q4 digital earnings.
In a bullish update, Reach said it expects operating profit for the year to lie between £130-£135mln after revenues from its digital division surged 24.9% in Q4, up from 13.4% growth in Q3.
A record-beating digital performance
A drive for digital saw revenue declines moderate to 10.2% in the fourth quarter, a marked improvement on the 14.8% decline clocked up in the third quarter.
A torrid year was capped by an 11.7% fall in print circulation over the final quarter, a slight uptick on the 12.6% shrinkage recorded in the three months prior.
The final upshot of these movements is a leveling off of total revenue declines which eased to a 10.2% contraction in the fourth quarter after hitting 14.8% in the third.
In a sign of the strides being made in the digital sphere, Reach celebrated hitting 5m online customer registrations in December. At the same time, it has finished development of Reach ID, a proprietary customer insight platform for tracking users across the Reach digital family.
Reach was left with no choice but to innovate after weathering a slump in pre-tax profits from £58.2m to £25.2m between January and June, with revenues sliding a corresponding 18% to bottom out at £290.8m.
Faced with these negative trends statutory operating profits were only ever going to head in one direction, slumping to £28.9m versus the £63.7m achieved just six months prior.
In a sea of negativity, Reach hailed a strong bounce back in digital advertising in the third quarter after the initial Covid-19 shock dissipated, aided in no small part by increased customer engagement and loyalty.
Why it matters
Publishers are beginning this year in afar more confident mood than they were last spring on the back of record digital readerships, even if monetising this fickle audience is notoriously difficult.
Chief executive officer Jim Mullen commented: "It is a testament to our people that Reach has not only dealt with the unique challenges 2020 has presented, but we have accelerated our strategy and we are ahead of where we expected to be. The new COVID-19 restrictions bring macro-economic uncertainty, but the changes made in the business during 2020 to develop a new, more efficient operating model put us in a strong competitive position."
Throughout the past year, Reach has been busy behind the scenes enacting a transformation programme which seeks to reign in costs by streamlining editorial, advertising and office functions to claw back £35m per year.
Keen to hold onto its newfound digital base Reach has also pursued a Customer Value Strategy which harnesses data and insights to inform the development of new products, targeted brand opportunities and other commercial tie-ups.
Later this month the media conglomerate will launch a suite of new regional websites covering the Bedfordshire and Buckinghamshire regions as well as expanding its MyLondon editorial team.