Reach (RCH.L), the publishing company behind the Daily Mirror and Express newspapers, has announced plans to cut 550 jobs as part of a restructuring, blaming a COVID-19-driven downturn in the advertising market.
Reach said on Tuesday it would start a 45-day consultation on cutting 12% of its workforce, part of plans to save £35m ($43.7m) in annual costs.
“Structural change in the media sector has accelerated during the pandemic and this has resulted in increased adoption of our digital products,” Reach chief executive Jim Mullen said. “However, due to reduced advertising demand, we have not seen commensurate increases in digital revenue.”
Second quarter revenue collapsed by 27.5%, Reach said, and was still down 23.9% in June. Circulation remains “significantly below” pre-COVID-19 levels and the ad market “continues to be challenging,” the company said.
“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,” Mullen said. “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.”
Reach did not specify where job cuts would fall but the statement suggested journalists and ad sales staff would be affected.
As well as national newspapers like the Mirror, Express, and Daily Star, Reach operates a large network of regional newspapers and publications, including the Liverpool Echo and the Manchester Evening News.
Reach said it would “move to a more centralised structure bringing together national and regional teams across print and digital to significantly increase efficiency”.
“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,” Mullen said. “This will ensure the sustainability and profitability of the Reach business, enabling it to deliver to stakeholders over the long-term.”
Reach said temporary pay cuts for staff would be reversed after the restructure takes affect, although senior managers will continue to take lower salaries and waive bonuses.
“Award-winning journalism and content will always be at the core of our purpose,” Mullen said. “Through the transformation, Reach will realise the full potential of its business model, enabling our news brands to continue to shape the daily conversations of millions of people for years to come.”
Shares in Reach fell 12.1%.