The Daily Sport paid a high price yesterday for its plans to move upmarket when a warning of weakening advertising prompted shares in Sport Media Group, the newspaper's parent company, to plunge by more than a quarter.

The gloomy forecast provided a bleak backdrop to the much-delayed relaunch of the adult-orientated daily, which yesterday led on a spoofed John Prescott memoir under the headline: “Spew Jags! Exclusive: The Prezza Pie Diaries.”

The Daily Sport, which sold 97,199 copies a day in March, is trying to reposition itself as a slightly more upmarket title, with less explicit photographs of off-guard and underdressed celebrities.

It hopes to attract mainstream advertisers aiming for its male audience and to persuade more high street retailers to stock it.

Its prospects, however, drew a loud raspberry from the stock market after Andrew Fickling, the chief executive, blamed the “deteoriating macro-economic climate” as he unveiled maiden interim results that in turn prompted executives to adopt “a more cautious approach to the full-year forecasts” - although plans were also hampered by the repeatedly delayed relaunch.

Turnover at the company as a whole is expected to be 10 per cent lower at £32.1 million, with progress also hindered by worries about faltering growth at the company's separate phone line businesses.

The shares tumbled 11p to 30p, or 27 per cent, reflecting the anticipated decline in earnings to 6.44p a share this year.

Daniel Stewart, the house broker, slashed Sport Media Group's 2008 earnings forecast by 24 per cent, amid worries that a softening of the economy would adversely affect both ad revenues and the number of people willing to pay 50p for a paper that sells at a premium to its rivals The Sun, the Daily Mirror and the Daily Star.

The Daily Sport was owned by David Sullivan and the Gold brothers, but the three men sold the title in the summer to the publicly traded Sport Media Group.

Traditionally, the paper generated its profits from the advertisers of explicit adult chat lines. Under new ownership, the plan is to try to bring retailers and other high street advertisers into the early pages of the newspaper, but it is not clear if it will pay off.

Moreover, a long-planned relaunch was delayed as the publisher wanted to wait for the end of the school holiday period, as it believes that most readers pick up the newspaper after dropping off their children in the morning. Display advertisers held off until they saw how the new product settled down.

There is no sign of economic problems affecting what the company calls its “classfied advertising” business - chat lines and other soft pornographic advertising. The publisher said that classified spending was “running at its strongest rate” since the acquisition of the Sport.

Pre-tax profits were up by 10 per cent to £2.3 million in the half ending January 31, after a 181 per cent improvement in turnover to £14.4 million. Growth was accounted for by the inclusion of the Daily Sport in the overall figures for the first time, with the title contributing for five months of the period.

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