- The Daily Mail owner’s profits slumped in 2020, as coronavirus hurt the whole newspaper industry
- Growth in the company's online service is promising
Newspapers do not typically fare well during times of economic uncertainty, and Daily Mail & General Trust (DMGT) has been no exception this year. The group’s adjusted pre-tax profits fell back by half in 2020 to £72m, as coronavirus blew a hole in advertising sales.
At its main Daily Mail and Mail on Sunday titles, revenues fell 12 per cent to £356m and overall circulation volumes for print titles fell 7 per cent. Yet, it is perhaps not surprising that its digital service, MailOnline, managed to post revenue growth of 3 per cent to £144m, with its online audience up by almost two-fifths to 17.3m daily global unique browsers. That is excluding its growing presence on social media platforms such as Snapchat (US:SNAP) and Facebook (US:FB), which are increasingly used by some users as the primary source of news.
This represents a wider move to digital consumption across the industry. A report from national regulator Ofcom found that while TV remains the most accessed platform for news at 75 per cent, it is closely followed by the internet at 65 per cent – which is also the most used platform for news consumption among 16 to 24-year-olds.
The shift has sparked flurry of corporate activity in so-called ‘new-media’ companies. There were three major acquisitions in the industry last year, with Vice Media buying Refinery29, Vox Media buying New York Media and GroupNine Media Inc. buying PopSugar.
This bodes well for DMGT’s online proposition, which has proved this year that it can grow its audience to phenomenal numbers on important digital platforms: the Daily Mail title has 1.3m followers on Instagram and 2.5m on Twitter (US:TWTR).
Yet, a reliance on advertising still leaves the company particularly exposed to downturns in the economic cycle. Despite the fact that digital sales accounted for 65 per cent of total advertising in the 'Mail' business, revenues here still fell 9 per cent. Ad-funded titles, including print-focused Metro and online-only The 'I', suffered worse falls, down 40 per cent and 10 per cent, respectively. It is also worse remembering that the print version of the Daily Mail still contributes more than half of revenues in the company's consumer media division.
Following the sale of its stake in Euromoney, the group is sitting on net cash of £168m, excluding the £117m paid to reduce the pension deficit and £100m of lease liabilities. Going forward, the pension scheme is expected to absorb a more reasonable £11m of cash annually, which may be why management had the confidence to increase the dividend by 1 per cent to 24.1 pence per share. While the past 12 months have clearly not been easy for the group, we think that its robust digital product can pave the way for more reliable growth. Hold at 695p.
