Johnston Press boss Ashley Highfield has again flagged up the possible sale of some of the group’s regional titles as shareholders backed the purchase of cut-price national daily the i.
At a general meeting held yesterday, 99.85pc of JP shareholders voted in favour of the deal with just 0.15pc against.
It means the £24m acquisition, originally announced on 12 February, has now passed its final hurdle, with the sale due to complete on 10 April.
But as the company unveiled its annual results today, it also delivered a fresh signal about forthcoming “asset sales” as it seeks to “rebalance” its portfolio.
Said Ashley: “The acquisition of the i newspaper is also incredibly exciting for us. It gives us scale, with a combined JP plus i daily print circulation of over 600,000 papers making us the UK’s 4th largest news publisher, and thus numerous revenue and cost synergy opportunities.
“Further, not only will the i contribute positively to earnings but it will allow us to accelerate growth in digital, and help stabilise our circulation revenues. In conjunction with the planned asset disposals this will enable us to continue to reduce debt levels and cut financing costs further.”
In a trading update on 19 January, the group said it had identified a number of brands that were not part of its long-term future, which would be offered for sale to “interested parties.”
It later published a list of 59 titles which it described as “sub-core,” although it denied that these were the titles being put up for sale.
A presentation to shareholders issued alongside today’s results makes clear that some titles such as The Scotsman, Edinburgh Evening News, Yorkshire Post and The News, Portsmouth remain key to the business.
It describes Edinburgh, Leeds and Portsmouth as “primary markets” and promises “increased focus of company resources” in these areas.
However the presentation also makes clear the company’s strategic aim of “rebalancing (its) portfolio through divestments.”
While no further clues are given as to which titles it may sell, it makes clear that those with “low growth geographies, low digital opportunity and low fit with portfolio” are most at risk.
Ashley said in his chief executive’s report: “We have identified a number of newsbrands that are now considered non-core and such will be either divested or run with less costs, reflecting the medium-term outlook for the identified assets that fall into this category.
“The company will run a formal process, with advisers, to market defined asset groups for sale during 2016. Interest by third parties, enquiring about assets, has been encouraging so far.”
He said the group would be focusing on what he termed “attractive geographies, serving more defined audience groups that represent the best opportunities for growth, both digitally and in print, and target higher value display advertising customers.”
“We intend to continue to invest in both digital and print products, though we will focus resources on brands and markets where we believe the best returns will be derived,” he added.
Today’s results showed overall revenues at JP down 6.8pc from £260m in 2014 to £242.3m last year, although digital revenues grew by 12.4pc to stand at £30.6m.
Operating profit fell from £54.7m to £50.6m – a drop of 7.5pc – although pre-tax profits rose by 22pc from £25.7m to £31.5m.
Overall operating costs fell by £19.6m to £191.7m while net debt was reduced by £14.8m to stand at £179.4m.
The company also reduced its pension deficit by £63m to £27m as a result of changes in the rules of its pension scheme.
Added Ashley: “The challenging trading conditions experienced in the second half of 2015 have continued into Q1 2016. We have reduced costs to maintain profitability, reset our portfolio and refocused on priority markets with attractive audiences that offer the best opportunity for growth.
“Success in driving our national display advertising business in 2015 and the rollout of our local display advertising Sales Force initiative gives me confidence for the future despite the fact that the market remains difficult.”
Yesterday’s meeting saw 62,233,091 shares cast in favour of the resolution to acquire the i, with 93,468 against and 6,297 withheld.
The newspaper is currently recruiting for additional staff with the Business Editor role available here.
- The National Union of Journalists has criticised the company’s strategy and accused JP of “writing off” large sections of its workforce.
National organiser Laura Davison said: “Members at Johnston Press are deeply sceptical about the company’s strategy. For too long they have been asked to bear the pain today for the benefit of future success which doesn’t arrive.
“Members were shocked when the purchase of the i was announced; money they didn’t know the company had was diverted to a major acquisition, rather than invested internally.
“Branding certain titles as ‘sub core’ and announcing a focus on ‘higher yield advertisers, flourishing families, and growth towns’ feels like the company is busy writing off big sections of its workforce and its readership.
“Now we learn that profit margins of over 20 per cent are being sustained by further cuts at grassroots level.
“All this means that Johnston Press is failing to take staff with them in their grand project. Action is needed to address the very real concerns members are highlighting.”
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So why are the shares sticking around the low 40s and, apart from a small blip over Christmas, have been below 50p for four months?
The current value is well under a third of what it was a year ago and despite AH sacrificing other people’s jobs, buying national daily newspapers like they were going out of business and announcing yet more ways to bombard web users with ‘lifestyle’ advertising, they just won’t budge.
Let’s see what this week brings?
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I am as confused as Confused. What on earth is JP doing buying this title when it is drowning in an ocean of bad money? Weren’t employees even told to stop ordering stationery late last year? No A4 envelopes, Roger, but get me a national newspaper. Incredible.
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I visited my for JP newspaper last week and it was like entering a morgue. Bless my former colleagues. They all anticipate that the grim reaper is knocking at the door of their once beloved newspaper that had an office in the centre of town and a circulating three times its present one. So sad.
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Remember JP were going along quite nicely years ago until the purchase of the Scotsman came along and put a millstone around everyone’s over-stretched neck.
Now they are buying another paper when they are not doing so well. Good luck to the poor souls who can’t get out.
I really hope this all works out, but past experience of JP quality control worries me.
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JP has to do something differently; look where the current strategy has got them. If current profit levels remain, the i should have paid for itself in five years. Having it in the portfolio should add prestige and could make financial sense for JP if it feeds off the regionals too.
But we all know JP has a habit of ‘cost saving’ that ends up destroying rather than nurturing products. Only time will tell.
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Are shareholders actually investing in this shambles? Fools and their money…
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The JP paper “serving” my town is also ran and staffed from a larger town up the road which comes under a different council.
Town council is ‘covered’ by the mayor who writes a monthly column.
The parish council in my village is grappling with several large housing developments, not that my JP paper would know of the latest ins-and-outs. But they did follow-up the prompts I sent them several months ago with a tale a couple of weeks later.
The paper no longer sends anyone into the main town once a week but a neighbouring town is perhaps lucky one of its reporters lives there for the coverage it gets.
During the recent floods, the best coverage was supplied by Sky News, with the JP weekly taking a rehash of content from JPs city-based daily nearby.
The lack of news from the town is almost enough the masthead fall foul of the Trades Description Act as the bulk of content is supplied from the larger town based in another district, as mentioned.
No wonder sales fell a third in three years when JP actually allowed them to be published.
I find this to be very sad as JP still has some excellent weeklies, having worked in a couple myself, despite the disastrous Newsroom of the Future.
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Flossie the Sheep. This is a sadly familiar tale under JP with its closure of local offices that once housed superb local papers.
I have stopped reading my old JP weekly because it is no longer truly local and is so badly edited ( grammar and layout mistakes to name a few every week). The company seems to lack really good editing staff. In short it is unprofessional. The newsroom of the future is an apt title. I smell doom.
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Re: old pro – newsroom of the future. What future? What newsroom?
Sad times ahead
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It’s all smoke and mirrors. I should know!
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It would be churlish of me not to now report that JP shares have jumped to just over 47p on early trading (Tuesday) which is obviously heading in the right direction for shareholders (and that must include some HTFP readers). And, notwithstanding the means used, getting net debt down to £179 million is frankly remarkable.
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What’s £179 million between friends, Confused? Let’s hope the share price continues its steep upward curve for the rest of the year, JP starts rehiring some of the talent it’s shed in recent years, and the papers and websites reflect the best of British journalism. And in more news from Wonderland…
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I assume the Highfield promise – “increased focus of company resources” – in Leeds, Edinburgh and Portsmouth is code for still further job cuts.
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The share price would have to rise by several hundred per cent for most shareholders to get back to evens, so a few pence makes absolutely no difference. This idea that shareholders (I have some from my days with JP) might be pleased by the upward movement is a non-starter. It went past all that many moons ago. These improved margins come on the back of reduced profit and further savage cuts so I do think the city will be placated. I would love to be proved wrong.
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I sadly have to agree with old pro. I was sitting in a coffee bar with two friends and to my shame they were laughing at the mistakes and production in errors in my old paper, not to mention the news from way behind the paper’s patch (just to fill I assume). I would not say we ever got a paper 100 per cent right a few years back, but we did try to be professional. I do agree that some of the editing (if any is done) is plain sloppy. Never mind a slight creep up in share price AH, get the product right and find some good (content?) editors.
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We have to hold up our hands as journalists and say, ok, some newspapers have dropped to such low circulations that it’s time to cease the print products. Many more people are reading papers on their phones and tablets and that’s not actually a bad thing. It means there is still a market for journalism; still a requirement for well-written and researched stories.
So publishers need to reflect this by axing the lower performing papers and using the money saved to invest in the reporters who produce the copy. They must go all-out with a solid, non-clickbaity digital platform.
Some of the worst performing dailies should then become bi-weekly or weekly and be supplemented by a strong daily web/app offering. Again, this would cut costs that should – in an ideal world – be used to invest in journalism to drive people to these sites.
Let’s face facts. The internet is not going away and it’s the first port of call for the majority of readers. You only have to look at the news coming from Brussels today: hands up those who went online this morning to read the latest news and hands up if you’re going to wait until the morning (or this evening in some cases) to get the low-down. I think we’ll see a greater showing for the former.
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Print revenues down 9.7% or £21 Million
Digital revenues up 12.4% or £3.4 Million
At these rates……..?
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“….identified a number of brands that were not part of its long-term future, which would be offered for sale …”
As unpalatable as it may seem, off loading unprofitable titles makes sense,propping up dead weight publications is a large financial drain on the company, so despite all the reasons why JP/AH have been criticised in the past ,and rightly so,it makes no sense to continue with unprofitable parts of the business and is a lead other RP groups would do well to follow, carrying N propping up it running into the ground through lack of real investment makes no sense.
If these unwanted titles are deemed viable by others it t will give an opportunity for those who are brave enough, the chance to take them on and develop them, although why anyone would want to invest in what to all intents and purposes is a dying medium is beyond me.
No other business would think of throwing good money after bad and this policy of doing so has helped drag the regional press to the sorry place it finds itself in today.
Unpopular but unfortunately necessary
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Why did this huckster of a firm buy all these papers in the first place? They’ve ruined hundreds of decent product, thrown good people on the scrapheap and robbed communities of their local newspapers. But these greedy sods don’t know nor care. I dread to think what they’ll do to the i paper. No doubt it’ll go digital and bite the dust like so many others.
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What is the i’s loss could be the “unprofitable local papers'” gain. Clearly JP’s management is a total shambles. They have failed to get a grip on a changing market and, now finding themselves in a financial quagmire, have resorted to the time-honoured policy of slash and burn.
So, is this the end of local newspapers? Not necessarily. A new owner prepared to take a not inconsiderable drop in profit margins may make it work. The USP of any local newspaper – and its attendant website – is local news. Not clickbait or three days old national newspaper stories or cat videos.
Newspapers must make a profit, they are not charities. All staff will have to accept that they will have to change the way they work. They will have to know that simply rewriting police press releases (easily obtainable without the annoying ads on constabulary websites) is not going to cut it.
But a future is possible.
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Many of the so-called Sub Core papers are unprofitable BECAUSE JP neglected them, cut staff and pages, closed town centre offices, filled them with rubbishy press releases, introduced unattractive and tacky page templates, asked readers to take their own photos and to add insult to injury, put up cover prices. They made pigs ears out of silk purses and now have the cheek to disrespect their own products. What company in the world ever survived by drastically lowering the quality of their product and putting up the price?!
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