18 August 2019 Business

UK magazines continue slow decline

UK magazine circulations continue to slip, causing problems for printers. Though results prove that Walstead is continuing to ride the wave.

The decline in magazine circulations continues, highlighted by the ABC figures for the first six months of the year.

While there are brightish spots in children’s titles, news led magazines, and some special interest areas, the overall downward trend continues with an average fall of 6%. Titles showing any kind of increase in sales were few and far between. In women’s magazines only three of the 17 titles showed a period on period sales growth.

Some titles are dropping even faster than the average: Cosmopolitan was down 32% after the publisher tried to inflict a price increase; OK! is down 19%, worse than Hello which fell 16%; National Geographic down 21%. These are the big beasts of consumer publishing, arguably the titles that are bought regularly rather than as a discretional purchase.

TV Choice with sales of 1.1 million is the only title with a sale above 1 million. This is 4% lower than in the previous period. Radio Times and TV Times both lost 10% of their sales to 520,000 and 142,000. And so it continues.

Publishers have tried to talk up the performance of their magazines as better than the trend and have pledged continuing investment in the printed product. But there is little sign that this investment can do any more than slow the steady decline in print sales.

What it can do is underpin revenue growth in live events, digital and other brand extensions built on the print product. What the ABCs do not show is how the drift away from print is marked in terms of paginations. Fewer sections to print will have a greater impact than a 6% decline in sales for a magazine with a print run above 100,000.

This can be seen in the crisis that is affecting Europe’s web offset printers. Last week, Mark Scanlon, chairman of Walstead, pointed to the demise of Circle Media in announcing record results for the group. “Hopefully, the latter [the closure of factories] will create a better balance between supply and demand in the various countries it operated in – we will see,” he says.

“For some of our remaining competitors, insolvency is a real threat. I am confident that in contrast to this Walstead will continue to thrive because of our low cost base, economies of scale and sound financial footing.”

This fixation with cost and cash control has enabled Walstead to make acquisitions. In the first six months of the year it pushed revenues up 35.1% to €328.1 million (€242.8 million) thanks to acquisitions in central Europe. At the same time it reported static pretax profits at €20.0 million (€20.1 million) as the group had to absorb continuing increases in paper costs. In expects full year profit will be €50.0 million, an improvement because of cost saving measures already implemented and seasonal increases in volumes.

The next six months will continue to be challenging he says, though Scanlon is confident that Walstead is well placed. “Our business model and financial structure are very different to the opaque ones Circle operated. We do not overpay for acquisitions - we synergise, improve and restructure them; we manage our cash very tightly; we maintain serviceable levels of debt; our working capital is positive; and we have the cash headroom to effect restructuring should it become necessary.”

By Gareth Ward

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