Sport Media Group, publisher of the Daily Sport and Sunday newspapers, has seen pre-tax profits slump by £18.2m in its full-year results to July 31. It comes a day after the company announced it was trying to renegotiate the terms of its debt after it breached a banking covenant.
The media company has also announced that it has taken a goodwill impairment charge of £20.7m relating to the whole business, including its photographic and film rights and database licences, which has reduced the value of its newspapers by £18.4m. After the charge, the company reported a 7% rise in its pre-tax profits to £6m.
The results are the first since the newspapers were acquired at the end of 2007 for £50m. The company has since carried out a major review and relaunch of The Daily Sport and has stripped out £1.6m in annual savings. It adds that it will maintain this policy over the next year.
The group says that it considers the write-downs to be “an appropriate reflection of the current trading position of Sports Newspapers” and the unprecedented business circumstances over the last year.
SMG says sales of the Daily Sport at 75,000 copies were about 30% less than at the time of its acquisition, but it adds that the Daily Sport “has a very particular niche” and that the company can “develop it and grow the circulation from its current levels”. The Sunday Sport, with an 80p cover price, sold 76,009 copies and was down 16% year on year.
It adds that although it has suffered some “setbacks” on the way, its board is “encouraged that the recipe we now have is beginning to gain acceptance and credibility in the market”. It is expanding its distribution, including a trial in a number of Tesco stores, and is seeking to increase it presence with other retailers. It is also looking to grow its digital and mobile businesses, following the soft launch of the paper’s website in November and it is considering other projects.