(qlmbusinessnews.com via news.sky.com– Tue 7th July, 2020) London, Uk – –
The group said more readers are turning to digital but a downturn in advertising means revenues are not keeping pace.
Newspaper publisher Reach is to axe 550 jobs, or 12% of its workforce, in an overhaul designed to cut costs by £35m a year.
The group includes the Mirror, Express and Daily Star titles, as well as Scotland's Daily Record and regional dailies such as the Liverpool Echo and the Manchester Evening News.
Reach's announcement came as it reported a 27.5% plunge in quarterly revenue and said it was facing “structural change” in the sector accelerated by the coronavirus pandemic.
Online readership has grown but reduced demand for advertising means this has not been matched by growth in revenues.
Reach said the shake-up would create a “more centralised structure bringing together national and regional teams across print and digital”.
It said the changes would “significantly increase efficiency and remove duplication while maintaining the strong editorial identity of our news brands”.
The cuts will also affect commercial and finance operations, which will see a switch to “fewer locations and a simpler management structure”.
Chief executive Jim Mullen said: “Structural change in the media sector has accelerated during the pandemic and this has resulted in increased adoption of our digital products.
“However, due to reduced advertising demand, we have not seen commensurate increases in digital revenue.
“To meet these challenges and to accelerate our customer value strategy, we have completed plans to transform the business and are ready to begin the process of implementation.
“Regrettably, these plans involve a reduction in our workforce and we will ensure all impacted colleagues are treated with fairness and respect throughout the forthcoming consultation process.”
Reach said revenue for the second quarter to 28 June was down 27.5% on the same period last year.
The group saw a 29.5% decline for print and a 14.8% fall for digital.
“Circulation remains significantly below pre-COVID-19 levels with local advertising continuing to be challenging,” it added.
Reach said there had been “modest but encouraging improvements in circulation and national digital revenue” in June as lockdown restrictions have eased.
It said its shake-up meant that temporary pay cuts imposed in the face of the pandemic would be ended though senior managers including the chief executive will still be subject to a 20% reduction, and annual bonuses remained suspended.
Shares fell 14% on the day.
The cuts are the latest to be announced across the economy as the pandemic bites.
Thousands of jobs have been affected as companies from Pret A Manger to Airbus see the pandemic take a heavy toll on business activity.
Michelle Stanistreet, general secretary of the National Union of Journalists, said: “Today's announcement is a shock and body-blow for our members in Reach who have, in the words of the chief executive today, shown ‘heroic' efforts to sustain the company through the massive problems arising from a pandemic lockdown over the last three months.
“It will be poor reward for hard-working journalists who have shown great flexibility and adaptability to uproot from their offices to switch to working from home, with all the stress and difficulties that have arisen, to then find there is no job for them in a redundancy process that they have now been pitched into.”
By John-Paul Ford Rojas