Reach, which owns the Daily Mirror and the Daily Express newspapers, is planning to cut about 550 jobs – 12% of its workforce – because of declining revenues and adspend during the coronavirus outbreak.
The group, which also owns regional titles such as the Manchester Evening News, said the redundancies will help the company make £35m in annualised savings, with a one-off cost of £20m. It said that a 45-day consultation will begin shortly. The company has more than 4,500 employees.
In a trading update released this morning (Tuesday), the publisher said the move will "reshape the Reach business into a streamlined, efficient organisation" with a focus on editorial, advertising and central operations.
The editorial teams will move to a centralised structure that brings the national and regional teams together to work on print and digital. This will "significantly increase efficiency and remove duplication while maintaining the strong editorial identity", Reach explained.
It added: "In local commercial as well as in finance, Reach will move to fewer locations and a simpler management structure, with costs geared to current market conditions."
The changes mean that the 20% pay cuts for senior editorial and management team announced in April will come to an end. However, board members will continue to take a 20% reduction and all annual bonus schemes for 2020 are suspended.
Group revenue down 27.5%
The trading update revealed that group revenue for the second quarter of the year dropped 27.5% year on year because of a fall in circulation and advertising. Print revenue was down 29.5% and digital revenue by 14.8%.
Reach said: "Circulation remains significantly below pre-Covid-19 levels, with local advertising continuing to be challenging."
It added that revenue for the year to 28 June fell 17.5%, "benefiting from the good start to the year before Covid-19 began impacting the business in mid-March".
Things slightly improved in June as revenue dropped 23.9% year on year, compared with 30.5% in April. Reach said that the eases in lockdown has helped with improving circulations and national digital revenue.
In June, digital revenue dropped 4.9% compared with 22.5% in April. Print fell 26.7% in June and by 31.8% in April.
Jim Mullen, chief executive of Reach, said: "Structural change in the media sector has accelerated during the pandemic and this has resulted in increased adoption of our digital products. However, due to reduced advertising demand, we have not seen commensurate increases in digital revenue.
"To meet these challenges and to accelerate our customer value strategy, we have completed plans to transform the business and are ready to begin the process of implementation.
"Regrettably, these plans involve a reduction in our workforce and we will ensure all impacted colleagues are treated with fairness and respect throughout the forthcoming consultation process.
"The plans will provide a stable platform for us to accelerate our strategy, based on stronger and deeper customer relationships, increasing our appeal to advertisers."