Typically, we are not fans of name changes at Shares. Often, they seem a less-than-subtle effort to divert the market’s attention away from the patchy track record under a previous title.
For the most part, the same problems crop up at the renamed entity. Time will tell if this proves the case at Daily Mirror publisher Trinity Mirror (TNI) as it announces a proposal to become Reach PLC - with shareholders set to vote on the issue in May.
RESULTS AS EXPECTED
The plan for a new name accompanies 2017 results which were no worse than the market expected with revenue down 12.6% and underlying operating profit down 8% to £122m - a slight increase in operating margin to 20% helping to shore up the bottom line.
The main problem is that revenue from print advertising is falling significantly faster than revenue from digital ads is growing.
Trinity is scaling up to respond to the challenge - recently confirming the acquisition of Northern & Shell’s media titles including the Express and Star newspapers. The deal is set to complete later this year - although it is being looked at by the Competition and Markets Authority.
RECOVERY PINNED ON COST SAVINGS
The hope is to save costs through the combination and to provide a more compelling offering to potential advertisers.
The company remains cash generative, pays a generous dividend and the shares look cheap on several metrics. However, despite rising 2% today to 77p, the stock is down 75% over the last ten years. Given the structural pressures on newspaper publishing, its hard to see where a more tangible recovery will come from.
