(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Liam Proud-mareeg.com- LONDON, Dec 1 (Reuters Breakingviews) – Daily Mail and General Trust has submitted a vague New Year’s resolution. The parent company of the British tabloid and its celebrity-obsessed website wants to slim down a flabby portfolio that spans media, events, property and education information. If
new boss Paul Zwillenberg doesn’t offer more detail, the pledge could end like many post-Christmas diets.
DMGT shares have outperformed the FTSE 100 this year, shrugging off concerns about the effects on the UK advertising market of Britain’s vote to leave the European Union. Even so, they languish on a forward price-to-earnings multiple of just over 13 – well below the publishing sector’s average of 17, according to Eikon data. The company’s dependence on the Brexit-supporting Daily Mail is one worry. Though the newspaper and its Mail on Sunday cousin accounted for more than a quarter of the group’s 1.9 billion pound annual revenue in the 12 months to September, print advertising was down 12 percent.
Zwillenberg’s promise of “increasing portfolio focus” is therefore laudable, even if the specifics are fuzzy. Lord Rothermere, DMGT’s largest shareholder and the fourth member of his family to be executive chairman, is unlikely to want to sell
any of the flagship media assets. However, some of the group’s disparate businesses, which include risk management for insurers, an events company and information services for energy markets, might benefit from a change of ownership.
One candidate for the chop is DMGT’s 31 percent stake in listed property website Zoopla, which has a market value of more than 430 million pounds. Jefferies analysts attached a potential enterprise value of almost 1.3 billion pounds to DMGT’s
information services business in June this year, and 390 million pounds for the events division.
The next challenge is getting the 2.6 billion pound group beach-ready for summer. Options include increased payouts to shareholders, buying small firms related to core businesses, or ploughing more cash into MailOnline, which is still in the red
despite attracting 211 million unique visitors per month. However, the website’s display-advertising model looks far from secure given the increasing grip that Facebook and Google have on online readers.
Without details on exactly how Zwillenberg plans to free up capital, talk of slimming down is about as useful as an expired gym membership.
On Twitter https://twitter.com/liamwardproud
– Daily Mail and General Trust on Dec. 1 reported an 11 percent fall in operating profit for the year ended Sept. 30, adjusted for constant exchange rates, disposals and non-annual events.
– Revenue of 1.9 billion pounds was flat on an underlying basis.
– The media division, which includes the Daily Mail, Mail onSunday and MailOnline, saw print advertising decline by 12 percent, while financial publisher Euromoney reported underlying revenue down 4 percent.
– Chief Executive Paul Zwillenberg, who joined DMGT in June 2016, put forward a strategic review of the group, which he said would focus on “improving operational execution”, “increasing portfolio focus” and “enhancing financial flexibility”.
– DMGT shares were up 2.9 percent at 786 pence at 1516 GMT.
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(Editing by Peter Thal Larsen.)