By Georgina Prodhan
LONDON (Reuters) - UK newspaper group Daily Mail & General Trust has not published any stories based on hacked messages, its chief executive said, as rival News Corp battles a phone-hacking crisis at its now defunct News of the World tabloid.
Martin Morgan said DMGT was considering launching its own mass-market Sunday tabloid to fill the gap in the market left by the News of the World, and had seen an improvement in circulation of its mid-market newspaper the Mail on Sunday.
"We're considering whether there's a gap in the market for a new Sunday title," Morgan told journalists on a conference call after the group reported a 2 percent increase in underlying revenue for the quarter to end-June on Tuesday.
"Our titles have not published stories based on hacked messages," he said, adding that the company saw no need for an internal investigation into its newsgathering practices.
Finance Director Stephen Daintith, a former CFO of News Corp's British newspaper operations, said the Mail on Sunday had picked up about 500,000 in circulation since the News of the World's closure, helped by a cover price cut.
Its circulation rose to about 2.4 million from 1.9 million, compared with the 2.7 million the News of the World typically sold before it was shut down two weeks ago.
The News of the World has admitted hacking into the voicemails of celebrities to rake up stories, but a revelation earlier this month that a murdered schoolgirl had had her phone hacked turned the affair into a matter of national outrage.
Advertisers pulled their ads from the newspaper, estimated to be worth 40 million pounds ($65 million) annually, and News Corp swiftly took a shock decision to shut down the 168-year-old title.
Daily Mail said on Tuesday that declines in its own advertising slowed in July but the market remained weak, reflecting the fragile UK economy.
National advertising revenues fell 3 percent in the first three weeks of July, compared with a 9 percent drop in June, while regional ad revenues fell 8 percent in the last 4 weeks, compared with a 10 percent fall in the quarter to end-June.
Morgan said the company's business-to-business operations, which include professional information and events, would help it lift earnings for the financial year to end-September.
"We still expect to achieve some growth in earnings per share for the full financial year ... despite the volatile and uncertain market conditions faced by the UK consumer businesses," he said.
Revenue from B2B operations rose 8 percent on an underlying basis to 229 million pounds in the quarter to end-June, DMGT said. Total revenue rose 2 percent 495 million pounds.
DMGT shares inched up 0.3 percent to 427 pence by 0730 GMT, broadly in line with the wider market. The share price rose sharply in the days following the announcement of the News of the World's closure but is down 26 percent this year so far.
London brokerage Numis said the results were in line with its e ($1=0.614 pounds) ($1 = 0.614 British Pounds)
(Reporting by Georgina Prodhan; Editing by Greg Mahlich)