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UPDATE 1-Deteriorating advertising markets hit Britain's Daily Mail
May 26, 2016 / 10:32 AM / a year ago

UPDATE 1-Deteriorating advertising markets hit Britain's Daily Mail

* Daily Mail warns that media margins to fall this year

* New CEO must try to increase revenue from popular websites

* Media industry suffers from falling advertising income (Adds details on industry, shares, analyst reaction)

By Paul Sandle

LONDON, May 26 (Reuters) - The publisher of Britain’s Daily Mail warned that profit would be hit this year by weak print advertising revenue, the latest evidence of the growing pressures weighing on the newspaper and digital media industry.

The bleak outlook comes just days after the rival Daily Telegraph cut a number of jobs as media groups struggle to replace declining print and circulation revenue with income from online advertising.

Daily Mail and General Trust, which also publishes the free Metro newspaper, said print advertising revenue in the six months to the end of March fell by 18 million pounds, or 13 percent, with the decline accelerating in the second quarter.

Advertising at MailOnline, whose 14.4 million average daily users make it among the most popular in the English language, grew 23 percent, but that was not enough to close the gap.

Paul Zwillenberg, a digital media specialist, will take over as chief executive next month and will have the job of driving up revenue from the group’s websites.

The slump in advertising is not only hitting traditional groups. New online businesses that have built big followings on social media are also being hit by the shake-out, as more digital advertising money goes to platforms like Facebook.

Ad sales at Britain’s national newspapers have fallen from 1.54 billion pounds ($2.26 billion) in 2008 to 1.02 billion pounds this year, according to Group M estimates reported by industry title Campaign.

FORECASTS TRIMMED

DMGT, which also has business information and events units, said that “given the weak UK print advertising market”, its operating margin for the media division in the year to the end of September would be around 10 percent. That is below the 13 percent it achieved last year and had expected this year.

Its shares fell 8.8 percent to 678.5 pence by 1005 GMT trade, as Numis analysts trimmed their already cautious forecast for full-year profit by 3 percent to 250 million pounds.

Citi said advertising trends remained “stubbornly negative” going into the third quarter.

Daily Mail’s rival Telegraph Media Group announced a round of senior job cuts on Tuesday. The group’s chief executive told staff in an email quoted in the Financial Times that “conditions have continued to markedly deteriorate across the sector” over the past three months.

Guardian Media Group, publisher of The Guardian title, which like the Mail has expanded rapidly online, said in March it would cut 250 roles in an attempt to reverse losses. ($1 = 0.6802 pounds) (Reporting by Paul Sandle; editing by Kate Holton and Keith Weir)

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