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Daily Mail-owner targets more 'content-led' investment

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By Reuters
Daily Mail-owner targets more 'content-led' investment
FILE PHOTO: A clock face is seen outside of the London offices of the Daily Mail newspaper in London, Britain, April 28, 2018. REUTERS/Toby Melville   -   Copyright  TOBY MELVILLE(Reuters)
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By Paul Sandle

LONDON (Reuters) – Daily Mail-owner DMGT <DMGOa.L> said it could invest more in content-led businesses after buying the “i” newspaper as a robust performance from its MailOnline website, Metro freesheet and Mail titles helped underlying pretax profit rise 19%.

DMGT has invested in the editorial content of its newspapers to maximise its share of a paid-for print market which is in gradual decline. The Saturday edition of the Daily Mail now out sells Rupert Murdoch’s Sun.

Growth at MailOnline, one of the world’s most popular newspaper websites, and video platform DailyMailTV more than offset a 3% decline in circulation revenue and 1% decline in print advertising revenue, resulting in 2% growth in consumer media revenue, the company said on Thursday.

Chief Executive Paul Zwillenberg, who has consolidated DMGT’s portfolio of businesses and repaired its balance sheet, said the next phase of his strategy would target investment as well as shareholder value.

It agreed to buy the “i” newspaper and website from JPI Media for 50 million pounds last Friday, representing around 0.7 times sales and 4.5 times 2018 core earnings.

“The recent acquisition of the ‘i’ demonstrates the opportunities we have to invest in high quality, content-led businesses with a compelling strategic and financial rationale,” Zwillenberg said.

Morgan Stanley analysts said DMGT would be able to hold earnings from “i” at 10-11 million pounds a year within the DMGT stable despite sales forecast to decline by about 4% a year.

A bigger prize in the British newspaper market is the Daily Telegraph and Sunday Telegraph, broadsheet rivals to the Mail titles, which reports say have been put up for sale by the billionaire Barclay brothers.

The Barclays paid 665 million pounds in 2004 for the titles and reports say they now want around 200 million pounds for the group, which reported pretax profit of 0.9 million pounds on revenue of 271 million pounds in 2018.

Asked if DMGT was interested in the titles, Zwillenberg did not rule it out, but said he was “pleased” with its existing brands – Metro, MailOnline, and the Daily Mail and Mail on Sunday – and was “completely focused” on investing in those as well as the “i”.

The “i” deal is expected to be scrutinised by competition regulators, although DMGT has pledged to retain its editorial independence.

An acquisition of the Telegraph titles would face a far higher competition hurdle, industry analysts have said.

DMGT reported profit before tax of 145 million pounds for the year to end-September, in line with market expectations, on revenue up 2% to 1.41 billion pounds. It increased its full-year dividend by 3% to 23.9 pence.

Its shares were trading up 4% at 828 pence in early morning deals.

(Editing by James Davey and Jane Merriman)