Trinity pays the price of a lost battle

THE decision by Trinity Mirror to slash the price of its flagship Daily Mirror and take on its leading tabloid rival, the Sun, is likely to prove expensive.

A drop in profits is expected this week when the newspaper group unveils its half-year results.

The Mirror, edited by Piers Morgan, cut its cover price from 32p to 20p in May, costing it more than £1 million a week in lost revenue.

The Sun quickly retaliated, also cutting its price to 20p. But it stayed at 20p when the Mirror last month went back up again to 32p in areas outside southern England.

Now Trinity's wobbly price-cutting strategy is expected to have contributed to a 4% fall in group profits to less than £78m compared with the same period last year.

And advertising revenue at its three national newspapers - the group also owns the Sunday Mirror and Sunday People - is also expected to be down by more than 10%.

The price cuts also failed completely in their aim of boosting Daily Mirror sales. In fact, its circulation for the first half of the year shows a fall of 3.5% compared with the same period last year.

The total effect on full-year profits of the price cuts, the circulation decline and the slowdown in advertising revenue is likely to be considerable.

Investment bank Merrill Lynch estimates that the national titles' earnings before interest, tax and debt payments for the full year are likely to be down by 15% - £10 million.

Meanwhile, Pearson, publisher of the Financial Times, is expected tomorrow to reveal a big fall in first-half revenues at the FT, mainly because of a fall in its advertising revenues.