The owner of the Daily Mail is to cut __more than 400 jobs and launch a strategic review of its businesses as it continues to face a tough advertising market.
Daily Mail & General Trust said that it will take a £50m exceptional charge this year relating to the reorganisation of the business, more than triple the £15m it said it expected in May.
The company said that “just less than half” of the job cuts will come from its consumer division, DMG Media, which is the home of the Daily Mail, Mail on Sunday, Mail Online, freesheet Metro and US site Elite Daily.
Stephen Daintith, DMGT’s chief financial officer, said the cuts at DMG Media, which employs 2,700 staff, will come from all functions including ad sales, marketing, human resources and finance.
“Editorial [job cuts] are not a significant part of the mix,” he said. “We are continuing to ensure we are investing in editorial to deliver the highest quality content to our readers.”
About 40% of the total job cuts will come from the company’s DMG Information business in the US, with the remainder coming from its Euromoney, RMS and head office.
Overall, DMGT employs about 10,000 staff globally.
Daintith also said Mail Online will report revenues of more than £90m when it announces its results for the year to the end of September in December.
He said that in the final quarter of DMGT’s financial year Mail Online made £25m, meaning it is on a run-rate of £100m annually.
DMGT also announced a strategic review of its entire operation sparked by the arrival of Paul Zwillenberg as chief executive.
Zwillenberg intends to give his “initial observations” on the review at the company’s annual results announcement on 1 December.
Daintith did not explicitly rule out the potential sale of the Mail, or a stake in Mail Online, but said that it was an “extremely unlikely” outcome of the review.
“It would be wrong to have a completely closed mind,” he said. “I wouldn’t rule it out. I think [a sale of the Mail or Mail Online] is unlikely. I’d go so far as to say extremely unlikely.
“[The review] is more likely [to] identify growth assets and invest even harder. We have a new chief executive in Paul Zwillenberg and think it is a very sensible move to look at the complete portfolio from top to bottom.”
Print advertising across the Mail and Metro titles fell by 19% in September, compared with 12% in the 11 months to the end of August.
Daintith said the deterioration in print advertising was primarily to do with an unusually strong September last year.
Mail Online’s ad revenues grew by 18% in the 11 months to the end of August.
“Given the challenging market conditions facing certain businesses within the portfolio, reorganisation initiatives are being implemented to protect their profitability,” the company said in a trading update.
“These initiatives will create a greater strategic focus and enable more effective decision-making across the group, with the aim of generating future benefits and opportunities for long-term growth.”
David Reynolds, an analyst at Jefferies, said: “DMG Media is still a thorny problem, it almost feels as if the legacy journalistic approach for the Daily Mail hampers Mail Online.”
Reynolds has argued that DMGT should be split into media and business-to-business operations.
“Split the group in two: DMG B2B and DMG Media,” he said in a note to investors. “Very different dynamics, no synergies, unlocks value as investor can value the assets properly. As we wrote in June, potentially much to be done at DMGT, perhaps widened scope implicit in the £50m exceptional charge starts DMGT on that path.”
In May, DMGT issued a profit warning driven by a double-digit decline in its print advertising business in the first half of the company’s financial year to the end of March.
Last week, the company announced its finance chief Stephen Daintith would be leaving to take up the position of chief financial officer at Rolls-Royce.
In May, DMGT announced that Zwillenberg, a senior executive at Boston Consulting Group, would take over from Martin Morgan as chief executive.