Richard Desmond’s Northern & Shell fell to a £25m loss last year after embarking on costly tabloid price cuts and boosting investment in digital publishing.
Northern & Shell owns assets including the Daily Express, Sunday Express, Daily Star, Daily Star Sunday, OK! magazine and the Health Lottery, made a pre-tax loss of £24.8m in 2015.
This was down on a pre-tax profit of £333.7m in 2014, inflated by the sale of Channel 5 to MTV-owner Viacom for £463m.
The business, which will have its full financial results published at Companies House next week, said the loss is down to a number of factors.
These include an £8.5m impairment charge relating to the closure of Broughton Printers in Lancashire, slashing the price of the Star and Express titles and playing catch-up with signifcant investment in digital publishing.
Despite the costly cover price strategy – sales have been boosted but not to an extent to make up for cutting the price in half – N&S said it will continue the strategy.
“Despite tough print market conditions, the group will maintain its strategy to ensure the print brands continue to meet the needs and requirements for readers and advertisers alike,” the company said. “Including an ongoing cover price focus, one which has paid off significantly thus far in 2016, with print brands selling more copies in total week on week than last year.”
Despite the loss, the company said it was in good shape with its net assets at £400m demonstrating that the group is “well placed to take advantage of new, strategic opportunities”.
The company’s gross pension deficit fell from £52.8m to £21.6m, a positive sign if Desmond was once again looking to sell his publishing assets.
Last year, Desmond held on-off talks with Trinity Mirror, owner of the Mirror titles and Sunday People, about a potential sale of “certain assets” including the Express stable.
However, talks broke down over factors including the high price Desmond was seeking, as well as concerns over future potential pension issues.
Earlier this month, Desmond sold his adult TV operation, including Television X and Red Hot channels, to its management.
“Following the sale of Channel 5, Northern & Shell has pursued its strategic aim to rationalise its operations down to its core activities of publishing, printing, lotteries and property,” the company said. “Significant investments have been made in the group’s digital assets with the intention to grow digital revenues and offset declining print advertising revenues.”
Northern & Shell, which will report total group revenues of £241.1m, also said it has just received planning permission to develop the 15.5 acre site of its former West Ferry Printworks to build 772 residential units, a public open space and a 1,200 pupil sixth form entry secondary school.
The company calls the proposed development, which has just received planning permission from the Greater London Authority, a “vibrant new mixed-use neighbourhood”.
The company also clarified a management restructure following the announcement that Desmond’s right hand man of 21 years, Stan Myerson, is to leave in July.
Group finance director Rob Sanderson has been promoted to group joint managing director.
And Richard Martin, currently commercial director, will join the N&S board, as will Digby Rancombe who has been promoted to finance director.
“In these first full accounts since the sale of Channel 5, we see the results of the board’s decision to focus our operations to core business and to invest heavily in digital,” said Sanderson. “Through this we will future-proof our business and with significant liquid assets we are ready to act should the right strategic business opportunity present itself.”
