Sales slump slows but the axe falls

In recent weeks, newspapers have been generating bad news rather than just reporting it, as plunging ad revenues and rising print costs have synchronised with an accelerating decline in copy sales. The response has been a series of headlines about back-end costs: job cuts, outsourcing, shorter working weeks, consolidating departments - and, of course, the Independent's move to Derry Street, which has set tongues wagging about the real end-game for the two troubled titles.

But the news is not all about head count. The Evening Standard, for example, is in the process of culling more than a third of its 8,500-strong shop network, and has reduced its number of editions from three to two. This raises the question of what the final balance between free and paid-for sales is going to be for the Standard. If bulks are included, the paper recorded a 3.79% year-on-year increase according to November's ABC figures. However, the paper's fully paid UK sale, at 174,438, was 9% down year on year and represent only 58% of its topline ABC figure.

In fact, after all the recent bad news, November's figures have actually been something of a relief - although to talk of a 4.7% year-on-year drop across all national titles as good news is a sign of just how bad things have been. But it represents a major slowdown on last month's 6.2% drop and is the sector's best performance for five months. And while the Sundays (-5.3%) continue to slide more quickly than the dailies (-4.0%), they are also putting the brakes on more sharply.

The only national titles to show any growth year on year come from the quality sector - with the Guardian up 0.4%, and the Financial Times up 0.8%. The fastest falling title in the sector is the Independent - down by 14% year on year, but it has actually edged 94 copies ahead of October's sale to 201,113. The initial panic following its 25% September price rise, when the sales decline accelerated sharply, has receded a little as it stabilised in November, along with its Sunday sister. Yet both titles are still looking very vulnerable.

The Sunday qualities performed strongest of all sectors, with a 2.4% year-on-year fall. Here the Sunday Times is back in a strong position, showing year-on-year growth (+0.8%), with the Observer (-2.3%) slowing its slide. Moving over to the middle market, both the Daily Express (-1.9%) and Sunday Express (-2.4%) are showing stronger performances than for some time. Although they both lag behind the Mail duo in absolute numbers, their year-on-year performances are currently better.

In the popular sector, the Sun (-1.1%), driven by its continued cut-price promotions, is holding the sector up. The Daily Star responded in November with a 15p price-cut, dropping to just 20p. As a result, it rose by 2.5% month on month, slowing its average 8% year-on-year decline to a more modest 5% in November.

It is the popular Sunday market where there is still most pain. Two titles are showing double-digit decline: Daily Star Sunday (-18%) and the People (-13%), which slipped below 600,000 copies for the first time. Even the market-leading News of the World is sliding at a -4% rate.

In London, the four key frees all look steady at a combined distribution of 1.75m copies: 3,000 copies up month on month and 0.6% up year on year.

Behind the short-term shifts, what is coming to the fore is copy sales revenues rather than volumes, and margins rather than straight revenues. In other words, the business back-end of running a newspaper efficiently rather than the front-end "death or glory" of the monthly ABC figures.

Jim Bilton The Guardian, Monday December 8 2008