Trinity Mirror, Daily Mail surge on Screws’ demise

Shares in newspaper groups Trinity Mirror (TNI.L) and Daily Mail & General Trust (DMGOa.L) have jumped in response to News International's closure of the News of the World.

Trinity Mirror shot up 3.5p, or 7.3%, to 52p, and Daily Mail & General Trust added 6p to 479p. The gains came, however, after steep falls in both stocks’ share prices both recently and over the course of the last decade.

News International, the UK newspaper arm of Rupert Murdoch’s News Corp, shut the Sunday tabloid, also known as ‘the Screws’, in an effort to shore up the group's controversial takeover bid for British Sky Broadcasting (BSY.L), in which it has a 39% stake.

Analysts said the move was likely to send readers and advertisers to rivals of the News of the World, the most widely read Sunday paper in Britain with a circulation of about 2.6 million.

‘The opportunity for TNI here is much improved market share of circulation and advertising,’ said Alex DeGroote, analyst at Panmure Gordon. ‘In terms of demographic, the Mirror titles are arguably closest to the NoW.’

But he added that after a while, News International would likely turn the Sun into a seven-day operation. 

Analysts at Numis pointed out that the Mail on Sunday, which has the largest market share of Sunday advertising by volume (31.5%), was ‘well placed’ to exploit its existing strong position to win readers and advertisers.

‘We like DMGT predominantly on the strength of its B2B [business to business] businesses,’ they wrote in a research note, ‘however, we believe this could boost sentiment towards its business-to-consumer division and provide a much needed rerating.’

Numis also upgraded Trinity Mirror to ‘buy’ from ‘hold’, hiking its target price to 60p from 50p.

Trinity Mirror – whose share price has given up 31% in the past year – is a small holding in Citywire-AA rated managers Kevin Murphy and Nick Kirrage’s Schroder Income fund, according to Reuters data from the end of April.

Meanwhile, Altium Securities warned that the demise of the News of the World would adversely impact newspaper and magazine distributor Smiths News (SNWS.L) in the short term.

The broker noted, however, that the distributor was likely to be compensated in time by substitution to other papers and a possible launch of a replacement paper. Smiths News were flat in late morning trading at 89p.