Mecom narrowed its losses in 2011 despite dwindling advertising revenues, as the pan-European newspaper publisher pushed ahead with its change of strategy.
Mecom has moved to introduce a digital pay model across its best-selling papers following a strategic review implemented by Tom Toumazis, who took over as chief executive in August.
The London-listed publisher, which owns hundreds of titles in the Netherlands, Denmark and Poland, will introduce a pay model for its top 10 newspapers, close up to 65 titles, and could offload its Polish operation.
The review was sparked by falling advertising revenues, which contracted by 7 per cent to €494.5m in 2011. That trend has continued into the new year, with an 8 per cent fall in the first two months of 2012.
The publisher on Wednesday reported a narrowing of pre-tax losses from €94.8m in 2010 to €33.4m for the 12 months to December 31.
The worsening ad market dragged down full-year revenues at Mecom by 4 per cent year-on-year to €1.1bn, in spite of non-advertising revenues rising by 1 per cent to €594m on the back of higher subscriptions.
“The results emphasise the value of our 1.2m subscribers that deliver more than 80 per cent of our earnings before interest, tax, depreciation and amortisation, particularly in an environment where advertising revenues continue to be under pressure,” said Mr Toumazis.
The group also announced a deal to buy a 13.3 per cent stake in Dutch subsidiary Wegener, in return for a 7.1 per cent stake in Mecom.
The deal will “simplify group structure, provides operational and commercial efficiencies and enhance earnings per share”, Mecom said. After the deal, Mecom will own 99.7 per cent of Wegener.
On Monday the European newspaper group terminated its commercial relationship with Dutch free sheet group De Pers, after chalking up large losses due to the deteriorating conditions in the daily free sheet market.
“In the case of De Pers, [the contract termination] will remove a considerable, and growing, operating and financial risk,” said Mr Toumazis. “We can now focus unambiguously on the modernisation plan that we set out in our Strategy update.”
The diluted loss per share almost halved from 40.3c to 21c, and a maiden final dividend of 9.9c was proposed, bringing the total for 2011 to 15.4 cents.
“In what has been a difficult year for newspaper advertising across its markets, the company focused on cost savings and the development of a new digital media strategy,” said Patrick Yau at Peel Hunt. “Supported by its existing 1.2m subscribers, this strategy will come to the fore this year as the company moves into the mobile apps market with paid-for content.”
Mecom shares rose by 4.3 per cent to 170p.
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