UK publisher The Telegraph Group today reaffirmed its commitment to its subscription-first strategy as it reported disappointing financial results in which profits before tax fell by 88 percent to £1.6 million for 2018. For the Telegraph’s media business specifically (ignoring other revenue streams like events), profits were down 93 percent to £900,000.
Overall revenues saw a more gentle decline of 2.6 percent year-on-year to £278.1 million, down from £285.7 million. The publisher attributed the difficulties to “structural declines” across the industry, particularly in print advertising and circulation.
But as traditional revenues streams falter, the company is doubling down on its subscription-first strategy to deliver a turn around, rather than looking to increase its digital ad revenues. The Telegraph places paywalls on a lot of its content, and also encourages user registration by giving access to a limited amount of premium content per month to those who register. And chief executive Nick Hugh says this strategy is delivery, despite the disappointing overall result. “In 2018 we launched our subscription-first strategy and we are already at five million registered users and 400,000 subscribers, which gives us great optimism that the plan is working,” he said. “We are also extremely pleased to have beaten our financial targets in 2018.”
It’s notable that while The Telegraph does still run ads on its properties, even for those with paid subscriptions, Hugh paints this as a secondary revenue stream. “I have to completely transform an ad-funded business to a subscription business,” he told the Financial Times.
That’s not to say that digital advertising isn’t delivering for The Telegraph. Overall ad revenues were two percent ahead of budget and according to the group, and it remains committed a number of industry alliances designed to bolster ad revenue, include the Ozone Project.
But as other publishers continue to also rely more heavily on subscriptions, or other new revenue streams, The Telegraph’s firm commitment to a subscription-first strategy highlight how many feel digital ad revenue growth alone isn’t sufficient to overcome the difficulties facing the industry.