UK newspaper publishers fall, UBS wary on sector

LONDON, Sept 25 (Reuters) - UK media stocks ended lower on Tuesday with newspaper publishers Trinity Mirror (TNI.L) and Johnston Press (JPR.L) knocked by negative broker comment.

UBS said in a note on UK newspaper publishers that it was keeping its "sell" ratings on both shares.

Although Trinity Mirror and Johnston Press trade at a discount to Daily Mail & General Trust (DMGOa.L) (DMGT), UBS said it was concerned about structural risks facing the UK regional newspaper industry.

For Trinity Mirror, owner of the Daily and Sunday Mirror tabloids, it said the strength of competition at the tabloid end of the national newspaper market was a particular concern.

UBS began coverage on DMGT on Tuesday with a "neutral" rating and 750 pence price target, adding that it had an attractive portfolio of assets offering investors a relatively safer and more reliable way to play the UK advertising sector than peers such as Trinity Mirror and Johnston Press.

"However, the stock is not particularly compelling on valuation terms and we are concerned about certain aspects of their strategic focus," the broker said.

It added: "There are signs the Evening Standard circulation numbers are now stabilising and Eastern Europe offers a new route to growth. However, we have doubts over whether DMGT is choosing quantity over quality for its online sites and are structurally negative on the regional newspaper industry generally."

DMGT fell 3.3 percent to 651 pence.

Shares in Trinity Mirror ended 5.9 percent lower at 413-1/4 pence, setting a new 52-week low. Johnston Press fell 7 percent to 312p.

Trinity Mirror's fall come ahead of an update expected by Friday on the sale of its Racing Post and newspaper titles in Birmingham.

Recent newspaper reports say Trinity Mirror will sell the Post but pull the sale of its regional titles.

The company has declined to comment.

Analysts have said a disappointing outcome will make for poor asset valuations across the UK print media sector.

UBS said its top pick in UK consumer publishing was media group Emap EMA.L, which has diversified away from exposure to UK advertising and offers a potential bid angle given its strategic review.

The magazines, trade shows and radio station group is scheduled to give a trading update on Thursday and analysts are looking for news on the level of approaches it has received since announcing that it was considering a break-up or demerger of the business.

Shares in the company ended 1.9 percent lower at 862-1/2 pence.

((Reporting by Gavin Haycock; editing by Paul Bolding; gavin.haycock@reuters.com; Reuters Messaging: gavin.haycock.reuters.com@reuters.net; +44 0207 5427954)) Keywords: BRITAIN MEDIA/SHARES

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