Reach highlights slump in ad demand, shares tumble

Reach shares tumbled on Thursday after the Daily Mirror owner reported a drop in group revenue and said advertising demand had taken a hit as brands have been reluctant to place ads alongside news about the Ukraine war.

In the four months to 24 April, group revenue declined 0.9% year-on year. Within that, digital revenues were up 9.3%, while print revenue fell 4.2%. Circulation and advertising revenue dropped 5.7% and 10.1%, respectively, while printing and other revenue was up 21.6%.

The company, which also publishes OK magazine, among others, said that over the past two months the market has experienced reduced advertiser demand and lower average yields, with the war in Ukraine significantly reducing the level of 'brand safe' content for news publishers.

While this has led to lower growth than expected, Reach said it was improving the quality of its digital sales, with strong growth in higher yielding revenues, such as PLUS+, becoming a bigger part of the mix.

Reach still expects revenue for the year to be broadly flat, but with a higher mix of circulation revenues and lower digital contribution than previously anticipated due to more challenging trading conditions.

Chief executive Jim Mullen said: "We're developing a more sustainable and profitable long-term future for the business, with delivery of the strategy progressing well, despite a more challenging economic backdrop.

"The effective collection and use of data are supporting the growth of our higher yielding digital products, which are becoming an increasing part of our revenue mix. We've taken swift action to address the impact of inflation on our cost base and the business remains strongly cash generative, supporting the investment in data and technology that is key to future growth."

At 0900 BST, the shares were down 20% at 127.20p.