Decline in advertising revenues takes toll on semi-annual results of TMG
TMG continues 24/7 strategy by strengthening results and lowering fixed costs
- Focus on 24/7 strategy and new partnerships lead to stronger brands and better reach;
- Growth in digital subscriptions of De Telegraaf (16% increase compared to the end of 2015);
- Decline in revenues (normalised for portfolio rationalisations) equal to the same period last year: -4%;
- Decline in circulation revenues from print stabilises: -0.6% (first half of 2015: -2.8%);
- Advertising revenues from print show strong decline: -21.8% (first half of 2015: -15.9%);
- Sky Radio Group activities classified as discontinued in connection with the announced strategic collaboration with Talpa;
- In line with 24/7 strategy, TMG is further adjusting its organisational model and structure.
On track with 24/7 strategy
In the first half of 2016, TMG continued to pursue the direction of its 24/7 strategy with an ever sharper focus. TMG focuses on creating relevant content that is available to consumers anywhere and anytime, and on further strengthening the reach of its main brands. This reach is enhanced, for example, by developing apps (together with Apple and IBM) and by improving or launching websites. TMG has also managed to expand its reach by strategic collaborations with companies such as Talpa. In addition, the introduction of new marketing models that replace traditional advertising rates ensure that TMG is able to develop increasingly personal and cross-media offers to advertisers, and that it can make optimum use of all existing and new touch points. Finally, TMG continues to invest in the development of existing and new distribution possibilities and related technologies to make content available to consumers anywhere and anytime.
The result of the direction taken is reflected in the growing digital reach of TMG, the fact that De Telegraaf, Metro, VROUW and Dumpert are leaders in brand reach in their market segments, and the fact that TMG’s regional brands are also seeing their reach grow further. The number of digital subscribers of De Telegraaf (combined and digital-only) rose by 16% in the first half of 2016. In line with the direction of the 24/7 strategy, further necessary organisational changes will now follow, so that synergy and efficiency benefits can be realised.
The steps taken by TMG contributed to the stabilisation of the decline in revenues (normalised for portfolio rationalisations), which was equal to the decline in the first half of 2015 (-4%). The effect of the positive development of the brands was also visible in circulation revenues, which stabilised in a market in which shrinking circulation revenues are the norm. Advertising revenues from print, on the other hand, dropped sharply (-21.8%), a trend that is also visible in the rest of the Dutch market. TMG’s fixed costs have not yet been lowered sufficiently to offset the declining advertising revenues, as a result of which the EBITDA result decreased to € 8.1 million (compared to € 16.2 million in the same period last year).
To ensure that TMG maintains a future-proof position in the Dutch market, in the second half of 2016, the following organisational changes will be implemented in order to structurally lower costs:
- The centralisation of essential TMG activities in Amsterdam will be maximised in order to reduce the number of locations;
- The activities of Holland Media Combinatie (HMC) and Telegraaf Landelijke Media (TLM) will be combined in Amsterdam: the HMC head office will move from Alkmaar to Amsterdam, and the office in Alkmaar will be closed;
- The weekly portfolio will be reconsidered;
- Sourcing and outsourcing of non-core actitivities (including support activities) will be researched and options considered;
- New competencies will be acquired and developed to speed up the transition to new business models.
The lower advertising revenues are taking their toll on the semi-annual results. Following on to previous reorganisations, TMG will further adjust the organisation in order to structurally lower fixed costs. The organisational changes will affect the total number of jobs at TMG. The sales organisation will be aligned with the needs of the market, and the fixed costs within this department will be lowered and brought in line with advertising revenues. The reorganisation of the sales organisation is expected to result in the loss of approximately 75 jobs.
With the organisational changes now announced, TMG is taking a first step, with the ultimate aim of reducing the cost base by at least 20% in 2018 (compared to 2015). The works councils involved will be asked today to prepare their advice on the proposed restructuring and its consequences for employees. In the coming weeks, the measures announced will be worked out in more detail. During the next Investor Relations Day at the end of September, among other things, these proposed organisational changes will be elaborated on further.
CEO Telegraaf Media Groep, Geert-Jan van der Snoek:
“Since the end of 2015, we have seen that pursuing the direction of our 24/7 strategy is beginning to pay off. The reach of our digital activities is growing, and we have expanded our reach even further by entering into strategic collaborations with companies such as Talpa. However, the figures show that we are not there yet, and that the positive effects are too much overshadowed by the high fixed costs of the organisation. We will continue our sharp focus on our core activities, while also implementing changes that will lead to synergy and efficiency benefits that will structurally lower our fixed costs. It is inevitable that jobs will be lost, but these steps are a prerequisite to assuring a future-proof position for TMG in the Dutch market, which is still changing continuously.”
About Telegraaf Media Groep
Telegraaf Media Groep N.V. (TMG) is the largest Dutch media company in the Netherlands, with strong brands such as De Telegraaf, DFT, Telesport, Metro, Autovisie, Privé and VROUW; regional dailies such as Noordhollands Dagblad and de Gooi- en Eemlander; digital brands such as GeenStijl, Dumpert and Gaspedaal; Classic FM and – through a strategic collaboration – national radio stations Sky Radio, Radio Veronica, Radio 538 and Radio 10. We also have dozens of other brands and titles that focus on providing local news, entertainment or e-commerce (e.g., GroupDeal). Through Keesing Media Group, we are market leader in Europe in the field of puzzle magazines and digital puzzles. It is TMG’s mission to provide consumers with high-quality, personalised and relevant news, sport and entertainment 24 hours a day, 7 days a week, via any available form of distribution. For more information about TMG, go to www.tmg.nl.
This press release is a translation of the original text in Dutch. In the event of a discrepancy between the two versions, the one in the Dutch language prevails.