Profits at the Telegraph group fell 11% last year despite increased sales, as the newspaper group spent more on marketing to compete against the Times. In accounts filed at Companies House which are not yet available, the group reveals it made an operating profit of £31.5m on sales of £313m. This compares with the previous year's profit of £35.7m on sales of £305m.
The company, which was bought half way through the year by Sir David and Sir Frederick Barclay, spent much more on marketing and promotion last year to combat the increased sales enjoyed by the Times, which changed to a tabloid format in November 2003. It also made provisions against some contracts made by the previous management. The group spent £4m after cancelling a special contract with Formula One, for example. The deal, which led to special supplements on the sport, was considered unprofitable by the new management team brought in by the Barclays after they bought the group from Conrad Black for £665m in July.
Without such write-offs, profits at the group would have been higher. At £31.5m with a 10% operating margin, the titles are still considered the most profitable quality newspapers on Fleet Street. The increased sales came on the back of a 20% price rise for the Daily Telegraph's best-selling Saturday newspaper in August. It bucked flat advertising sales for the industry in the year as a whole. They also came as the Times enjoyed an increase in circulation with the tabloid switch.
In spite of the circulation gains, losses at the Rupert Murdoch-owned Times and Sunday Times deepened by £11.4m to £40.1m in the year to June 2004. The increase in losses - up from £28.6m the year before - reflected the extent of the marketing exercise designed to put the Times ahead of the Daily Telegraph as Britain's biggest-selling quality daily.
The advertising market this year has been particularly difficult for the newspaper industry and the Daily Telegraph last week announced a 5p cover price rise Monday to Friday. The Times increased its cover price by 20% this year with two 5p additions while the Sunday Times increased its price in September.
