Chart: Why Classifieds Mean More Than Mail Online To DMGT

Here’s why the most valuable part of A&N Media’s digital empire has little to do with news and its display ads, and everything to do with classifieds…

Though national publisher Associated Newspapers’ digital income, mostly comprising Mail Online, is noticeably small for one of the world’s largest news sites, the bulk of A&N’s digital sales are actually recorded in the division formerly known as Associated Northcliffe Digital (AND) – home to jobs, property, travel and motors ad sites like Findaproperty, Jobsite and

Unlike Associated’s Mail Online, that division is actually profitable.

These sites depend partly on the leverage they get through Mail Online. But they are deployed more greatly through Associated’s regional stablemate Northcliffe’s news sites, which, by themselves, have not grown revenue in three to four years.

In fact, taken together, the former AND and the Northcliffe division to which it really belongs are a £106 million business – five times greater than Associated’s online sales. But that has remained about the same for the last four years now.

All of this allows us to ponder interesting scenarios for Northcliffe’s online future…

Would DMGT sell AND with Northcliffe?

  • DMGT is reported to have called in Ernst & Young to place a value on Northcliffe’s head, ahead of possible consolidation by Trinity Mirror.
  • By ringfencing the online equivalent of its traditional regional newspaper classifieds in a separate division as it has, DMGT may get to withhold the assets from any Northcliffe sale. But whether it does so may depend on whether it sells Northcliffe whole or piecemeal.

Would Trinity Mirror (LSE: TNI) want it?

  • Trinity Mirror already operates its own classified sites in each of A&N’s areas, but their popularity lags A&N’s.
  • Though A&N’s classifieds sites generate most of its digital money, some of them also operate in a challenging climate. Whilst its job and property sites are growing, its car and travel sites are taking a hit in the current economy.
  • There is certainly room for consolidation within the UK online classifieds sector, as DMGT recently suggested by merging its Digital Property Group with Zoopla to fight Rightmove.

Something has to give to make Northcliffe tick online. After consecutive flat performance, this year, DMGT is not even attempting to disclose Northcliffe’s 2011 digital earnings. It has now been overtaken by Mail Online-led Associated’s websites.