Finance

ALEX BRUMMER: UK media has done a remarkable job in colonising online news

Web success: Mail Online has 15.1m unique browsers each day

As a rule it is best not to write about your own employer or you risk an appearance in Private Eye. But in the broader context of digital transformation for legacy news media and the move by Silicon Valley giants into current affairs it is worth having a shot.

Let it be said immediately that I do own shares in this paper’s owner through a standard employee savings plan but have received no briefings on DMGT’s half-yearly results released on Thursday and given extensive coverage elsewhere in the media.

What struck me about the figures was not the malfunction at the events and information division, which disappointed analysts, but the improving financial performance of Mail Online.

The British media, the Guardian, the now web-only Independent, the FT and Mail Online have done a remarkable job in colonising online news.

All have had success in the US where there is still a lack of genuinely national media outlets and where local journalism has been decimated by the digital revolution.

Traditional reporting methods and celebrity journalism have been hollowed out, creating the opportunity for British titles.

The US is also home to the most permissive stock markets in the world. Snap was given a rapturous reception when it floated on the New York stock market valued at £18billion.

This was despite the fact that investors were deprived of voting rights, income projections were thinly based and competitive services such as WhatsApp, owned by Facebook, have been moving heaven and earth to dominate the space.

The puzzle is this. The website Newsworks shows that Mail Online has 15.1m unique browsers each day on computers accessing 188.5m page impressions.

Some 19.9m people access Mail Online using mobiles. Unlike many competitors, Mail Online has maintained free access to the site and sought to monetise by selling consumer advertising.

There have been considerable obstacles. Not least has been the world’s biggest advertising and marketing group WPP, which uses a disruptive platform Xaxis and algorithms to ‘connect advertisers to audiences’ using proprietary data, advertising technology and ‘unparalleled media relationships’.

Until quite recently this meant that the Silicon Valley giants, such as Facebook, with vast numbers of signed up members, have been creaming off digital spend.

Dangers for the advertisers have become increasingly obvious. Unmonitored material appearing on social media has meant anything goes, including ‘fake news’, child porn, pirated material and, as we have learnt from Manchester, do-it-yourself terrorism techniques.

Dig into the latest Mail Online figures and it becomes possible to see a greatly improved trend for a legacy media company which is making a digital transition.

As the FT reported, there was a strong performance from the newspaper and website division with revenues of £350million. So although print advertising fell, this was partly offset by a 19 per cent rise in digital advertising at Mail Online.

At present there is seemingly insatiable demand for tech shares, with the Nasdaq at a record high and the S&P 500 climbing on the tech rally. Against this febrile background, the potential value of Mail Online may yet to be fully recognised.

That is not just a DMGT problem but a broader issue for the London Stock Exchange. Even though share prices currently are at or close to record levels the ratio of share prices to earnings often lags that on Wall Street and too often British innovation goes unrecognised in the City.

Artificial intelligence pioneer Improbable needed finance from Japan’s Softbank. In the consumer sector, Pret a Manger is leaning towards New York for its float. The City works too well for the investment banks but less well for most home grown game changers.

Alfa risks

Innovation is being rewarded in financial technology. There may be those who dispute whether Alfa deserves a high-grade name, but the provider of software to the car leasing and credit industries was given a dazzling reception on the LSE.

The shares soared more than 30pc above the offer price giving the company a market value of £1.2billion and making main investor Andrew Page and chief executive Andrew Denton very rich.

It joins Worldpay, valued at £6.3billion, and AIM quoted FreeAgent in the growing FinTech sector.

Investors in Alfa look immune to evidence that the private contract purchase deals are out of hand. But if PCPs go up in smoke so might the demand for software.

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