Reach's share price has taken a pounding, plummeting by 19.5 per cent in early trading to settle at 47.4p, marking an aggregate decline of 13.6 per cent since January as the publisher struggles to come to terms with a rapidly shifting media landscape.
The company's latest set of financials reveal a stark reality: group revenue has slumped by nine per cent to £232.9 million, down from £256 million in the previous year. This downturn is evenly spread across both print and digital operations, with print revenue falling by £16.1 million to £178 million amidst a 22 per cent contraction in circulation volumes.
The publisher attributes this decline to two recent price increases for its publications, coupled with ongoing cost-of-living pressures that are undoubtedly taking their toll on consumers. Meanwhile, print advertising revenue took a hit of 11.1 per cent to £24.6 million, although increased commercial spending – partly driven by the World Cup and campaigns from food companies and the public sector – helped temper a more significant decline.
Reach's digital arm also faced considerable headwinds, with revenue tumbling by 11.4 per cent to £54.2 million. Digital page views contracted sharply due in large part to a substantial 40 per cent drop in on-platform views, primarily caused by fewer referrals from Google – indicating a significant impact from changes in how users access content via the search engine.
In response to these financial pressures, Reach has halved its interim dividend to 1.4p per share, down from 2.8p last year. Cost management remains a critical focus for the company, which is adapting its approach to current trading conditions. This includes planned reductions in some teams during the second half of the year and the termination of certain third-party contracts.
Piers North, Chief Executive of Reach, stated that the company is moving forward with a renewed editorial brand focus, shifting away from a volume-driven approach to concentrate on producing original content distinctive to each brand. This more targeted strategy is showing early promise with a push for subscriptions, which has attracted 40,000 paid subscribers – well on its way towards a target of 75,000. Additionally, studio revenue has increased by 37 per cent, with the company reaffirming its commitment to video production after two of its podcasts secured commercial sponsorships.
Analysts like Duncan Ferris of Freetrade suggest that shareholders may be growing impatient for clear evidence that the business can thrive despite these challenges. As Reach navigates this uncharted terrain, it will be essential to monitor its progress closely and assess whether its strategy is paying off in practice.