Mirror publisher Reach cuts amount set aside for phone hacking spending

Reach, publisher of the Mirror and Express, has cut the cost of dealing with legal claims relating to phone hacking and illegal information collection by £20m in a bid to distance itself from the scandal.

The company, which owns dozens of newspapers and websites in the UK including the Express, Daily Chronicle, Manchester Evening News and Liverpool Echo, said it had set aside £18.2 million to deal with such allegations. And said that this is its best result. Estimate the amount needed to resolve a long-standing legal dispute.

Announcing its annual results on Tuesday, Reach said it would hand out a further £20.2m in grants after a High Court ruling last year set clear parameters for the time frame for new cases.

In December last year, the High Court found that Prince Harry was the victim of illegal information gathering by the Mirror Group newspapers, after which Reach’s Mirror newspaper was ordered to pay Prince Harry 140,000 pounds. The ruling also means that all cases issued after October 31, 2020, may be dismissed unless there are exceptional circumstances.

Reach expects to resolve the majority of outstanding claims this year and 2025, effectively resolving the dispute, which has cost the group a total of around £110m. “I’ve written a lot of checks that will effectively solve this problem,” CEO Jim Mullen said.

Mullen added that Reach had resolved long-term issues involving its pension funds. Its agreement with trustees clarifies the size of its future pension commitments – which will be significantly reduced from the current £60m from 2028.

Reach shares rose 14% on Tuesday. The company reported adjusted operating profit of 96.5 million pounds in the 53 weeks to December 31, slightly above analysts’ expectations of 95 million pounds.

Statutory pre-tax profits fell 45% to £36.7m in 2023 from £66.2m in 2022, following changes by Facebook, one of its largest traffic referrers. Reach has seen fewer ads and a sharp drop in web traffic, which has de-prioritized news content on its feed. Reach has also been affected by updates to Google’s core algorithm, forcing it to change the way it delivers content to readers.

Reach said its headcount fell by 14% last year. In November, the company announced it would cut 450 jobs, one of the largest annual layoffs in the British newspaper industry in decades. In January, Reach confirmed the departure of long-term Daily Mirror employee Alison Phillips, the first female editor since the magazine was founded in 1903, by mutual consent.