The cost of Trinity teaming up with Telegraph sales

Is contracting out sales to another newspaper stable a sign of Trinity Mirror’s weakness, as it rebrands its flagship title, or could it be a strategic alliance against The Sun?

Braced for a tough year ahead, Trinity Mirror has chosen to contract out national advertising sales for The Mirror, Sunday Mirror, Sunday People, the Daily Record and the Sunday Mail, to a new sales house owned by the Telegraph Group.

The move comes as the newspaper group prepares to relaunch The Mirror brand. The aim of the relaunch is to encourage existing readers to buy the title more often and to attract younger readers, rather than poach readers from The Mirror’s red-top rival The Sun. The relaunch will be part of a £25m investment in marketing, editorial and products across the group’s national titles.

Advertising revenues for Trinity Mirror’s national newspapers division fell 4.2 per cent to £200.9m last year, while regional advertising revenues rose four per cent to £408.5m.

Chief executive Philip Graf made it clear that the advertising market for 2002 is likely to remain tough, as the company announced its full year results of a 4.8 per cent rise in turnover to £1.13bn for 2001, with pre-tax profits before exceptional items at £155.5m.

While the editorial repositioning of The Mirror – as a campaigning, questioning and more serious tabloid – and its closer alignment to the Sunday Mirror has been undertaken to help build the Mirror brand, Trinity Mirror has also embarked on a review of the titles’ overheads.

It is this review that has resulted in the move to contract out sales to the new Telegraph-owned Apollo Sales house, which will also sell space for The Daily Telegraph and The Sunday Telegraph. Apollo will be headed by Telegraph sales managing director Len Sanderson and staffed by up to 180 people from Trinity Mirror’s national newspaper sales team as well as by the Telegraph Group’s sales team. Apollo will also handle sales for Barclay brothers-owned The Business, which contracted out its sales to the Telegraph Group in August last year.

On the face of it, it appears that Trinity Mirror is ceding control, although it is understood that Trinity Mirror itself made the approach to the Telegraph Group about setting up the venture.

Trinity Mirror refuses to say whether there will be any job losses as a result of the deal. However, Trinity Mirror has warned it will cut 300 more jobs across the group by 2003 on top of the 800 already announced. Trinity Mirror’s regional sales house, AMRA, is not part of the Apollo deal.

Apollo will receive a payment from Trinity Mirror to handle its advertising sales and also to cover the cost of employing staff to run the business. It is also entitled to receive commission on revenue that comes in above a set target.

Trinity Mirror, along with other newspaper companies, is facing rising newsprint prices. It is also investing £90m up to 2004 in replacing four regional press facilities. Cutting overheads must be a priority when facing this kind of expenditure, especially in a climate where advertising revenues are down.

Lorna Tilbian, media analyst at Numis, says: “Newspapers are competing on product, so if there is some way to cut costs in the back office and put the investment into the product that’s the best option.”

While print buyers recognise that the Telegraph has an efficient and effective sales team, one buyer suggests that The Mirror team below senior level are not as switched on as they could be.

Sanderson says that The Mirror team may find easier access to certain clients with which the Telegraph has established a positive relationship. He also sees sponsorship opportunities across all the titles for advertisers that want two different sets of readership profiles.

Back in 1996, the Telegraph was involved in discussions to set up a sales house to handle its titles as well as what was then United News & Media’s Express Newspapers. The two companies had already merged their printing operations.

Sanderson blamed the lack of tangible benefits to the Telegraph for the collapse of the deal, although there was speculation that the parties could not agree on a management line-up. This time around, as Apollo will be a Telegraph-owned operation, the management issue should not be a hurdle.

Neil Hurman, advertising director for Trinity Mirror’s national titles will remain at the group in “a broader strategic commercial role”. He will also be on the Apollo Sales directorial board with another Trinity Mirror colleague and three other representatives from the Telegraph Group.

Sanderson does not believe the move will signal further consolidation among newspaper companies because “most newspapers are proprietarily owned” and are not set to relinquish control of any part of their operations. A spokesman for Express Newspapers, now owned by Richard Desmond, says the company is not investigating any such ventures, while Chris Pelekanou, ad manager for the Observer, says: “We would not contract ourselves out because we believe we can do better in house.”

Print buyers seem warily receptive to the idea. One says: “On the face of it this [consolidation] is not really welcome, but when you look at the day-to-day implications I don’t think Apollo will really be able to abuse its position.” She says that the readership profiles of the titles is so disparate there is no real common ground for cross-selling.

Pelekanou adds: “It takes a lot of work to create cross-sales, even for the same audience.” Both Sanderson and Hurman deny that Apollo will be seeking cross-selling opportunities.

Another buyer points out that page-yield policies of the titles are unlikely to be married. She says that The Mirror goes for immediate revenues and will discount ad rates in order to sell space, while the Telegraph attempts to hold its page rates as part of a long-term strategy.

Buyers don’t think that Apollo Sales has been created as a counterweight to News International’s sales operation, as they claim that The Sun and The Times operate as separate entities in the ad sales arena.

Both Trinity Mirror and Telegraph Group maintain that they are concentrating on their own products rather than looking at the opposition.

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