Independent News and Media (INM) has warned shareholders that its full-year profits will be “materially below” expectations due to a continued reduction in advertising revenue and substantial legal costs.
The publisher of the Irish Independent and Sunday Independent yesterday issued a profit warning which it said was driven by the challenges it and the media industry continued to face.
These included a decline in circulation and readership, a decline in advertising revenues, ongoing uncertainty arising from Brexit and lower than expected digital revenue growth. INM said that while digital revenues were forecast to grow, they would do so at a much lower rate than anticipated. Print revenue has fallen by 12 per cent in the year to date, and total revenue by about 7 per cent. Shares closed down 14.85 per cent at €0.11.
In a statement, the publishing group said the challenges were expected to continue for the remainder of 2017.
Darren McKinley, a senior equity analyst at Merrion Capital, said that INM was expected to record net income of €31 million this year, down from an earlier estimate of €35 million.
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Libel costs and the “unpredictability” of recent court awards “materially impacted” its performance and forced management to review its provisioning for outstanding cases, INM said.
Robert Pitt, the chief executive, said the group remained operationally robust and cash generative but warned of the risks facing the company, including readers’ “accelerated move to digital, particularly mobile” and “punitive” defamation awards.
Last year INM abandoned the proposed takeover of Newstalk radio station after Mr Pitt clashed with Leslie Buckley, the INM chairman, over its valuation. This led to an investigation by the Office of the Director of Corporate Enforcement, and INM separately commissioned an independent review, to be published in the coming days.
INM said the reviews, coupled with the cost of cyber security and data protection projects, directly impacted its profitability and prevented it from pursuing further acquisitions while they were ongoing.