What Trinity Mirror’s consolidation signals about the UK news industry

Trinity Mirror’s latest earnings call this week revealed another news publisher facing the structural challenges of falling print revenues and platforms like Google and Facebook sucking up the majority of digital ad growth.

The group cut costs of £20 million ($28 million) as revenue declined 12.6 percent in 2017 from the year before, to £632 million ($876 million). The earnings call was the company’s first since its long-expected acquisition of the Northern & Shell’s Express newspapers for £126.7 million ($176 million). Consolidation is a way to cut further costs and grow audience, but whether it’s enough to help a legacy publishing group thrive remains to be seen.

Here are four challenges that the acquisition highlights about the shrinking newspaper industry.

The need to diversify
Publishers are wary of being too reliant on too few revenue streams. While Trinity Mirror had the second largest U.K. news audience in January, according to comScore, it’s been hard to effectively monetize this digital audience, with digital ads — which include revenue from video, programmatic and digital marketing services — making up 10 percent of the group’s total revenue. According to Alex DeGroote, media analyst at Cenkos Securities, Trinity Mirror’s acquisition of classified companies like TotallyLegal.com and TotallyFinancial.com, have not helped grow the publisher’s classified revenue, which is just 2 percent of total revenue. The publisher hasn’t responded to requests for comment. More events, content verticals and ticketing services are in the pipeline for 2018, however.

Publishers are no match for the duopoly’s reach
The merger puts Trinity Mirror on a more even playing field with other publishing groups, according to Steve Goodman, md of print trading at GroupM. Trinity Mirror is changing its name to Reach, lest anyone miss the point, but name changes, often forgotten or mocked (see Tronc, Tegna) are rarely a huge success, and reach isn’t a point of differentiation in the duopoly’s shadow.

“It’s a misnomer that doesn’t reflect the origins of Fleet Street’s papers,” said DeGroote. “While Trinity Mirror has a valuable, sizeable audience, the biggest advertisers are moving toward more measurable media models, and newspapers don’t stack up there.”

The threat of homogenization
Managing three national titles — The Daily Mirror, the Express and Star — with different demographics and histories will be a challenge in allocating resource while cutting costs. On a call with analysts on March 5, chief executive Simon Fox said each paper’s front pages and politics will remain distinct, but content production for sections like sports will be centralized.

“This is the thin end of the wedge before centralizing more aspects,” said DeGroote. “Each title could end up losing its distinction for advertisers and readers.”

Collaboration has its limitations
Facing strong headwinds, some publishers agree that by working together, they are stronger than alone when up against Facebook and Google. Unfortunately, fiefdoms exist within ad sales, and publisher consortiums face recurring challenges, even if this does make buying at scale more convenient for advertisers. When Trinity Mirror acquired Local World it pulled the publisher out of 1XL, a regional newspaper programmatic ad sales alliance.

“The paradox is that it’s known it’s a dying industry,” said DeGroote. “Yet The Mirror could still compete with The Sun rather than working together as a consortium, leading to downward ad pressure.”


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