Reach has become the latest international publisher to warn that sweeping changes to how Meta presents and prioritises news on Facebook will hit revenues this year.
The publisher of titles such as the Mirror and Express on Wednesday reported an almost 6 per cent fall in revenues in the four months to April 23, dragged down by a sharp drop in digital advertising.
The publisher blamed recent changes to the way Facebook presents news content, which it said caused a reduction in referred traffic across the sector.
Facebook this year ended support for Instant Articles, a mobile-friendly format that quickly loads news articles on the Facebook app, as Meta shifted its strategy away from news and political content on feeds and towards short-form video content to compete with TikTok. This route to publishing articles also allowed news groups to keep much of the advertising revenue.
Publishers say news content is no longer prioritised on news feeds, while Meta has also reportedly cut funding for US groups to post content on its news tab.
Buzzfeed’s chief executive Jonah Peretti last month blamed himself for the decision to axe its news division as he had been “slow to accept that big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media”.
News is only a small part of Facebook’s service for the majority of people who use the platform.
When Meta announced its plans for Instant Articles in October last year, a spokesperson said that “less than 3 per cent of what people around the world see in Facebook’s Feed are posts with links to news articles . . . as a business it doesn’t make sense to over invest in areas that don’t align with user preferences.”
Reach said digital revenue had dropped 14.5 per cent, with print revenue down 3 per cent.
Johnathan Barrett, analyst at Panmure, said that when excluding Facebook, page views at Reach had been stable. “Clearly Facebook has been under significant pressure, and only time will tell as to whether this is just part of the ongoing testing designed to optimise their performance or if this is perhaps seeking to improve its bargaining position ahead of commercial discussions with publishers, which have ever-growing regulatory support,” he added.
Reach expects to launch US domain websites for The Express and Mirror over the next few months.
Analysts at Singer Capital Markets said the “shift by Facebook towards short-form video/reels and away from digital news has impacted traffic referrals to Reach”.
Singer said it expected to see “some muted structural risk to traffic from short-form content” but Meta’s “well-flagged monetisation challenges for this format mean news content traffic share will remain steady we believe”.
Circulation revenue at Reach benefited from cover price increases last year, it added, while expected profit this year remained in line with market consensus. The group is on track to force through cost-cutting of 5 to 6 per cent this year, it said, with most of these savings coming through in the second half of the year.
Reach’s chief executive Jim Mullen said that “external factors continue to impact digital revenue [but] delivery of the customer value strategy is driving a higher-quality mix, underpinned by the strength of print”.
