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Reach, the UK’s largest commercial news publisher with titles such as the Mirror and Express, has blamed a strategic decision by Facebook to pull back from news for a drop in digital revenues in the first half of the year.
Reach on Tuesday said pre-tax profits were £6.7mn, down from £32mn in the same period last year. Revenues fell by £18mn, or 6.1 per cent, with print down 2.7 per cent and digital revenue down 16.1 per cent.
The publisher said it faced “significant external headwinds” that inflated operating costs and suppressed revenue growth.
Digital sales were hit by a decline in traffic following recent changes to Facebook’s news feed — including a decision in April to shut down Instant Articles, a mobile-friendly format that quickly loaded news articles on the Facebook app — which led to a “significant decrease” in readers referred to its news sites.
Page views during the first half fell by 16 per cent — but just 2 per cent excluding Facebook-related traffic — to 1.4bn, which it said was a material driver of digital revenue decline in the period.
Chief executive Jim Mullen said: “Digital growth for the period has been materially affected by lower referral traffic across the sector, particularly following Facebook’s deprioritisation of news content, which has driven page view declines for publishers.”
Despite some analysts forecasting the demise of print media, Mullen said this business continued to show “resilience and predictability” that had helped underpin investment in its digital products, with circulation revenue growing and newsprint costs starting to decline as energy prices stabilised.
“People have said that newspapers are dying, we don’t see that,” he said. “That cash flow is reliable.”
Reach said full-year profits for 2023 were expected to be in line with market consensus given cost savings that would mainly boost its financial position in the second half of the year.
Shares in the group rose 16 per cent on Tuesday after it confirmed its outlook for the full year and stuck to its dividend plans.
Analysts said the decision by Facebook owner Meta to shut down Instant Articles had affected Reach more than other publishers.
Media analysts at Enders said many publishers had already ditched the format due to lower monetisation compared with articles loaded on an external site, but Reach was one of few publishers that continued to see the benefits of using the tools to increase audiences.
When Meta announced its plans for Instant Articles in October last year, a spokesperson said: “Less than 3 per cent of what people around the world see in Facebook’s feed are posts with links to news articles . . . As a business it doesn’t make sense to overinvest in areas that don’t align with user preferences.”
In results for the 26 weeks to June 25 2023, Reach also said it was exploring the use of artificial intelligence in its ad tech, product and editorial teams, with several pilot initiatives.
The company last week used AI to produce about 150 articles that were checked by its editorial team, with disclaimers making clear to readers when AI tools were used in creating a story.
Mullen declined to comment on whether Reach would be interested in bidding for the Telegraph, which has been put up for sale by its new owners Lloyds Banking Group.
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