Mirror publisher suffers hit as Facebook downgrades news articles

The publisher of the Mirror and Express newspapers has posted a drop in revenues after a change in Facebook’s algorithm downgraded the importance of news.

Reach reported an 8.5pc fall in digital revenues in the first three months of the year as boss Jim Mullen suffered a shareholder backlash over his pay.

Unlike publications with a subscription-based business model such as The Telegraph, Reach relies on advertising income, meaning changes in traffic from social media can greatly affect its revenues.

Facebook, which is owned by Meta, has begun downgrading news articles on its platform, while it is winding down deals to pay publishers and has shut down its news tab entirely.

X, formerly Twitter, has also taken steps to deprioritise news, including removing headlines from articles, as boss Elon Musk tries to keep users on the website.

Reach, which relies heavily on social media for referrals, said the changes meant its page views had slumped by a third year-on-year. The publisher has previously branded Facebook a “potent threat to civil society”.

The publisher, which also owns regional titles including the Liverpool Echo and Manchester Evening News, is battling to turn around its fortunes as it struggles to adapt to the digital era.

Reach slashed around 800 roles last year, including many in its editorial department, in a bid to shore up its finances.

It came as the company was hit by a shareholder revolt over pay packets for top executives at its annual general meeting on Thursday.

More than 10pc of votes were cast against Reach’s remuneration policy for the next three years, while 8pc voted against last year’s pay.

Mr Mullen, the chief executive, was paid £564,000 last year after forgoing his bonus and agreeing to a freeze in his salary.

The newspaper boss has previously come under fire for his eye-watering pay packets after taking home more than £4m in 2021.

Reach is also trying to gather more data on its readers in an effort to improve its offering to advertisers, as well as for e-commerce and affiliate marketing.

It said data-driven revenue made up 45pc of its digital revenues in the first quarter, up from 39pc in the same period last year.

Bosses also said print newspapers remained a “predictable and reliable” revenue stream, though Mr Mullen has previously said they could become loss-making in as little as five years.

Print advertising revenues slumped 11pc in the first quarter, while circulation was down around 3pc. Overall revenues fell 6.7pc.

Shares rose 9pc following the trading update.

Reach said it was on track to make cost savings of between 5pc and 6pc and said it was expecting a boost to traffic from upcoming events including the Euros, the Olympic Games and elections in Britain and the United States.

Mr Mullen said: “We have set the business up to succeed – the decision to take cost action early, alongside the continued implementation of the customer value strategy, is delivering a growing yield performance and driving results.

“This gives me confidence that we can continue to navigate current market conditions.”