Newspaper publisher Reach (RCH) is to cut 12 per cent of its workforce in a bid to save millions in costs. Structural change in the media sector has picked up pace during the coronavirus crisis, with a decline in print circulation being counterbalanced by strong demand for online products. But a fall in advertising during the pandemic means that the group “[has] not seen commensurate increases in digital revenue”.
The owner of the Mirror and Express titles saw revenues plunge by 27.5 per cent during the second quarter, with print contracting by 29.5 per cent and digital slipping by 14.8 per cent. True, the situation improved somewhat towards the end of the three-month period – with June’s sales down by 23.9 per cent, against April’s 30.5 per cent plunge. But Reach believes that a “transformation” is necessary to tackle the challenges it faces, and to establish “a strong platform” to boost online customer registrations.
Said registrations have already exceeded the group’s end-of-year target of 2.5m – leading it to raise its 2022 goal from 7m to 10m. Chief financial officer Simon Fuller says that Reach aims to monetise the digital customer base by giving users a more personalised experience on its sites, thereby offering more targeted advertising while identifying opportunities around e-commerce.
Reach will axe around 550 jobs, with a 45-day consultation on these plans due to start imminently. The group hopes to achieve £35m in annualised savings, at a one-off cost of £20m. It seeks to create a more “streamlined, efficient” business, comprising a more centralised editorial structure whereby national and regional teams come together to avoid overlap - all the while aiming to maintain the identities of its news brands.
Reach will also cut down on its locations, and move to a “simpler” management structure. This strategy means that the group can put a stop to temporary pay-cuts for all workers, except for board members who will continue to be subject to a 20 per cent reduction. Bonus schemes remain frozen.
