In a trading update yesterday, JP revealed it was exploring possible asset sales to help fund investment and pay down net debt.
According to the update, titles which could be sold off include those that are outside of selected markets, do not match its “audience focus” or do not offer the desired levels of digital growth.
It has now emerged that the group has categorised its 200-plus newspaper titles into four groups – uber, primary, core and sub-core.
The lists came to light in an email to staff yesterday which JP has since forwarded to HTFP.
Ths ‘uber’ group of flagship newspaper brands includes a group of eight daily titles.
The email says that this group of titles, which also includes 70 weeklies, make “a significant contribution and are important brands which sit right at the heart of Johnston Press.”
By contrast the sub-core group are said to deliver “very low levels of contribution,” with some not breaking-even.
The email says: “We intend to review these first and will look to establish new innovative models to enable us to improve the levels of return from this group. It is critical that our resources are used to the maximum effect and we will be working speedily to establish an effective publishing model for these brands.”
Also listed are 23 ‘primary’ titles, all weeklies, which the email says “will benefit from having ammore consistently executed audience and commercial strategy.”
The email adds: “Each grouping makes a different, but equally important, contribution to Johnston Press, and we believe that different strategies are needed for each group in order to set that group of brands up to be successful and improve their contribution.
“To be crystal clear: if we do decide to undertake a small number of asset sales, the four groupings of Uber, Primary, Core and Sub-Core have no bearing on those decisions.
“We would not, for example, ever look to sell a whole category.”
Below is the email, sent yesterday from the company’s international communications team, in full. The lists of titles in the four categories can be seen here.
We issued a trading update today confirming that we’re on track to hit trading expectations for 2015. The note highlights that we have continued to carefully manage costs, paid off more of our debt and invested in our key markets.
It was another challenging trading period, and underlying total revenues fell 7% year on year. Circulation revenues were down 7% year on year, while contract printing revenues were consistent, boosted by some impressive contract wins including the Daily and Sunday Express and Star. Underlying digital revenues grew 12%, and growth stories included our internet advertising platform 1XL, which saw a 99% revenue increase, larger SME customer spend, up 17% year on year, and Media Sales Centre revenues – also up on 2014.
You have probably seen headlines referencing a possible sale of assets which was mentioned in our Trading Update. The media reaction has greatly exaggerated our intentions around this, so we wanted to take a moment to outline what was discussed at a Senior Leadership Team event last week around how we are segmenting and managing our portfolio this year and what that means in practice. This includes how we could, theoretically, arrive at a small number of sale decisions in order to re-invest the proceeds in our primary markets, or to further pay down our debt.
The update was viewed positively by the City this morning and on the back of the trading update Liberum, our joint corporate advisers, issued a ‘Buy’ note. Please do take the time to read this, it is an excellent and succinct summary of our performance and strategy. It includes a map of contribution by brand, which has been just one of the factors that has helped form our strategy this year.
The strategy is based on the three key factors that we believe will set Johnston Press up for growth overall. Those factors are:
1. Advertisers & Products: focusing our commercial offer around fewer, better, commercial products which are most attractive to our customers, and serving our higher-yielding customers ever better to ensure we get our LDFE business back to growth, mirroring our national advertising success.
2. Geographies: focusing our investments on our primary brands which are in markets where the economics show there is most potential for growth, or where their financial contribution is strong.
3. Audiences: focusing our efforts to attract more commercially valuable, multi-platform audience groups, which we’ve described as “Flourishing Families” and “Mid-lifers”. These are the groups with the disposable income, who value what we do, value our brands and are attractive for our advertisers to reach.
We have assessed all our brands against these factors, and created four strategic groupings which we have called Uber, Primary, Core and Sub-Core. These replace both the old PU-groupings and the priority brand framework which were the main operating principles to date.
Each grouping makes a different, but equally important, contribution to Johnston Press, and we believe that different strategies are needed for each group in order to set that group of brands up to be successful and improve their contribution. To be crystal clear: if we do decide to undertake a small number of asset sales, the four groupings of Uber, Primary, Core and Sub-Core have no bearing on those decisions. We would not, for example, ever look to sell a whole category.
The Uber group comprises eight brands including the Yorkshire Post, The Scotsman, Yorkshire Evening Post, Edinburgh Evening News, Portsmouth News, Lancashire Evening Post, The Star (Sheffield) and the News Letter.
The Primary group includes 23 weekly titles. The brands in this group will benefit from having a more consistently executed audience and commercial strategy.
The Core group includes 70 titles. These brands make a significant contribution and are important brands which sit right at the heart of Johnston Press. We will manage this group to achieve a high degree of best practice driven by a balanced and consistent approach. Specifically we will look to organise our newsrooms to deliver the appropriate mix of content across these ‘core’ titles.
We have a number of smaller brands which need simple solutions to ensure they serve their communities effectively and profitably. Internally, we are calling this group ‘Sub-Core’. This group makes up a third of our news brands and delivers very low levels of contribution, some brands in this group do not break even. We intend to review these first and will look to establish new innovative models to enable us to improve the levels of return from this group. It is critical that our resources are used to the maximum effect and we will be working speedily to establish an effective publishing model for these brands.
Finally, we have regularly signalled our intention to continue to take further costs out of the business and our new initiatives should allow us to continue to be more efficient in the way we operate. Identifying cost saving opportunities along with ways to generate more revenue is, and will remain, a normal and ongoing process, just as it is for every successful business.
Together we must remain absolutely focused on delivering our 2016 priorities, driven by a simpler organisation design, cost focus and a clear portfolio strategy.