Mirror owner Reach cuts expected phone hacking payout bill

Reach expects to pay around £20m less than previously expected to settle claims of phone hacking and illegal data collection.

Britain’s biggest business news publisher said it had set aside £18.2 million relating to “landmark legal issues” following a High Court ruling on the matter in December.

The owner of the Daily Express and Mirror has been ordered by the court to pay £140,000 in compensation to Prince Harry after a judge found evidence of “extensive” phone hacking by Mirror Group Newspapers.

But the judge also declared a time limit on phone hacking complaints, meaning most cases are likely to be dismissed unless exceptional circumstances arise.

As a result, Reach told investors it would release an additional £20.2m provision and anticipates most, if not all, claims will be finalized by the end of next year.

It said: ‘The ruling we received in December established very clear parameters on the time limitation, allowing us to draw a line on these issues.

“Simply put, this means that we now have a much clearer view on the estimated cost of resolving these long-standing issues and, importantly, these costs are expected to be materially lower than our previous estimates.”

The London-listed company further revealed that it took “decisive action” regarding its pension plans, “which has also given us a firm end in sight to an obligation that has hampered this organization for several decades.”

He said “an agreed path to fully funding the plans” had been set, meaning pension commitments for 2028 are expected to be around £40m less.

Scope of actions rose 11.4 per cent to 67.25p on Tuesday afternoon following this announcement, making them one of the biggest risers on the FTSE All-Share index.

The group’s shares rose on the back of greater clarity on costs for investors after a prolonged period of uncertainty.

It helped eclipse a 35.3 per cent drop in operating profits to £46.1m last year, due in part to restructuring costs and the subletting of a former printing plant.

Total turnover fell 5.4 per cent to £568.6 million due to lower advertising revenue across print and digital formats.

Reach attributed the 15 percent drop in comparable online revenue to macroeconomic uncertainty and a decline in referral traffic from technology platforms, such as Google and Facebook.

He noted that Google had made multiple updates to its core algorithm, while Facebook had begun deprioritizing news content.

Adam Vettese, analyst at investment platform eToro, said: “Given that most of us receive our news through a screen today, digital transformation has been the key for publishers to evolve and adapt.”

He added that despite Reach’s declining profits, “resolving well-publicized litigation against the company will allow for more effective planning in the future as uncertainty decreases.”