Trinity Mirror share price dips as it suffers death by a thousand cuts
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Version 0 of 1. Trinity Mirror’s share price is in the doldrums. Today it hit 119p, its lowest point since September 2013 and, should the downward trend continue, chief executive Simon Fox could well face tough questions at the annual general meeting next month (5 May). At current rates, the company is valued at little more than £340m. But is it really Fox’s fault? Is the publisher doing worse than its newspaper rivals? If it is, what is specifically wrong at Trinity Mirror? In share price terms, Fox got off to a good start after taking over in September 2012. At the time, its shares were priced at barely 50p. Within a year, he had raised it to 125p and was able to celebrate its high point in February 2014 when it reached 229.50p. Since then, despite occasional spikes, it has fallen slowly away. Stockbroking analysts are not surprised. There is little City enthusiasm for newspaper companies because of the pressure on their two major forms of revenue: advertising and sales. Print advertisers stubbornly refuse to buy space, and digital advertising has slowed. Circulation revenue can be maintained, and even increased, through cover price rises - but the inevitable downside is that it leads to a fall-off in sales. And, of course, fewer sales make papers even less attractive to advertisers. In order to find a way out of this impasse, Fox has - like his rivals - been ruthless with costs across the company’s national, regional and local titles. Cuts here, cuts there, cuts everywhere. At the same time, again like other groups, he has pursued a digital strategy in order to try to build as large an online audience as possible. In so doing, he has had the advantage of owning three national titles - the Daily and Sunday Mirror, and the Sunday People - plus the Scottish Daily Record and many of England’s largest regional papers, including the Manchester Evening News. These act as a sort of digital spine for the rest of its 230 news brands. Fox’s other major move was to turn Trinity Mirror into the UK’s biggest regional newspaper publisher by spending £220m in October 2015 to acquire full ownership of Local World, thereby adding 83 titles to its portfolio. It was, he said at the time, “transformative” because it would “empower” the group to increase the scale of its digital investment and enable it to present a larger audience to advertisers. “Size does matter,” said Fox, “giving us a stronger capability to invest in order to build better digital products. It will therefore help to accelerate change as we cope with a world that’s far from easy.” In that uneasy world, the acquisition certainly doesn’t appear to have transformed the company’s fortunes. And, as if coping with those business problems were not enough, Trinity Mirror also faces a substantial bill for the misbehaviour of its former national paper journalists, who were responsible for intercepting the voicemail messages of a host of celebrities. Although the Crown Prosecution Service decided not to prosecute Mirror Group staff on phone hacking charges, it faces large payouts to hacking victims. Legal attempts to reduce the amounts it must pay have been foiled. Having been ordered to compensate eight victims awarded a total of £1.2m, it appealed and lost. Then it sought to argue its case before the supreme court only to be refused its application to mount an appeal. After the ruling, on 23 March, Trinity Mirror issued a statement saying it would cost the company about £41m to settle the hacking claims. Meanwhile, Fox - aware of ever-decreasing sales at his two main dailies - the Mirror and the Record - came up with a counter-intuitive initiative. Despite his belief in a digital future, he authorised the launch of a new newsprint daily, The New Day, which was aimed at finding an audience among people who do not generally buy papers. That experiment, which involved only a relatively small investment, has thus far proved to be a dud. Although no firm sales figures have been published since the launch on 29 February, rival circulation departments say it has sometimes sold as few as 30,000 copies a day. Fox is used to reverses. Trinity Mirror launched two websites in 2013, the BuzzFeed-alike UsVsTh3m and the data journalism outlet, Ampp3d. Both failed and were closed down in 2015. In these dark days for newspaper publishers, nobody can be blamed for experimenting. But it’s hard not to conclude that Fox is thrashing about in the vain hope of finding a magical remedy for a disease that is incurable. Investors looking dispassionately at Trinity Mirror would appear to agree. To recap: print sales down, advertising down, digital revenue on a plateau, at least £41m earmarked to cover hacking claims and a failed newspaper launch. On the other hand, its newspapers remain profitable, filling the coffers with a lot of money every day. So there is no crisis, just a depressing reminder that a once mighty group, with a flagship paper that set unsurpassed sales records, is suffering death by a thousand cuts. |