In a bold and self-assured move, Trinity Mirror Group has announced a six per cent hike in the cover price of its flagship newspaper, the Daily Mirror, to 35p. It is a long way from the strategy adopted in 2002, when the tabloid instigated a price war with The Sun.
Curiously, the increase comes in spite of the group’s failure to arrest the Daily Mirror’s declining circulation, despite scoops such as the serialisation of Paul Burrell’s book, an interview with Tony Martin and the infiltration of Buckingham Palace by a reporter posing as a footman. Average circulation for the six months to January was down 7.98 per cent year on year, to 1,934,216 (Audit Bureau of Circulations).
The move to increase the Daily Mirror’s price coincides with better than expected financial results for Trinity Mirror, which last week posted a 10.9 per cent increase in pre-tax profits, before exceptional items, for last year to &£172.5m. The price rise is only one of the revenue growth initiatives unveiled by Trinity Mirror chief executive Sly Bailey as part of her “Stabilise Revitalise Grow” strategy. The higher cover price is expected to bring in a further &£17m a year to Trinity Mirror, but could cause it to lose readers to The Sun. It is not known whether The Sun will respond by dropping its 30p cover price even further.
Last week, Bailey also announced the Daily Mirror’s launch next Wednesday of a free mid-week celebrity magazine supplement, 3am, building on the newspaper’s showbusiness gossip column. Trinity Mirror hopes the launch will soften the impact of the price rise and help revive circulation at the paper, which stood at 1,919,125 in January (ABC).
This attempt to pull the Daily Mirror out of a tough period, in terms of circulation and advertising revenues, has been welcomed by the City. Last week, Trinity Mirror reported a fall of 2.1 per cent in advertising revenue at its nationals division, which also includes the Sunday Mirror and The People.
Richard Hitchcock, a media analyst at Numis, says that the announcement of new initiatives is the most upbeat message the group has announced since the merger of Trinity and Mirror Group in 1999. “The cover price increase could be a high-risk strategy, but it is expected to boost profits, which could be then invested in the editorial development of the existing portfolio,” he says. “It is unarguable that the market is in decline, but the focus on new initiatives could drive revenues in circulation and advertising.”
But not all media experts are convinced by the changes.
MediaCom board director Sanjay Shabi says: “This could be a little too late. Bailey has done a good job of getting the business back on its feet, but my worry is that the focus has been on the business alone – on increasing shareholder value and appeasing investors. Not much time has been spent in getting the products right. The Daily Mirror is the worst-performing national newspaper in terms of circulation.”
Another expert adds that pre-tax profits growth at the group has been made possible only by measures such as tight cost controls, which include 550 job losses and the divestment of the Northern Irish newspapers last year. Shortly after coming on board, Bailey also axed M magazine, which was distributed free with the Daily Mirror.
Zenith Optimedia general manager Oliver Joyce says that although the group seems to have got its priorities right by focusing on its flagship title, the increase in cover price is somewhat confusing. He says: “In the past, the product was revised to become more serious and the price was slashed to combat The Sun. With Bailey’s arrival, the tabloid went back to its populist roots, but now the price is going up. It might confuse some readers. I think the jury is out on both the price hike and the launch of 3am, which does not sound earth-shattering to me.”
This is not the first time the tabloid has been blamed for confusing its readership. Editor Piers Morgan has been accused of being inconsistent in his approach. It was Morgan, too, who entered into a very public and vicious price war with The Sun, which embarrassingly failed to improve his paper’s declining circulation.
To this mess was added another management blunder when Morgan last year took an anti-war stance on the Iraq conflict, in an attempt to distance the newspaper from its red-top competitors. The move coincided with a fall in the newspaper’s circulation to below 2 million, when it reached 1,997,846 in March last year.
One press buyer says: “Morgan has lost all credibility as editor, having tried unsuccessfully to revamp the paper several times. Bailey’s arrival changed all that. How much of it is his newspaper now? He needs to go.”
Bailey has other issues to contend with apart from the Daily Mirror. Shabi says that once the Mirror is back on track, the focus should then shift to The People, which has for too long been treated like a “neglected third child”. He adds: “In terms of National Readership Survey data, there are some pleasantly surprising figures. The People’s readership is much more affluent and younger than is generally thought. Bailey needs to revisit it and reinvest in it.”
In the past, a merger of the Sunday Mirror and The People has been widely predicted. Both have seen significant circulation declines – the people’s circulation is now about 1.08 million. A spokeswoman for Trinity Mirror rules out a possible merger, however.
Hitchcock adds that, as the advertising environment begins to improve, there will be no need for Bailey to divest any titles from the group’s stable.
But the national newspaper market is one that seems to be in terminal circulation decline, with only the Daily Star able to buck the trend. The cynics will only be won over if Bailey is able to stabilise Trinity Mirror’s national titles and deliver a loyal readership that is prepared to stomach price hikes.