Regional publisher Johnston Press has recorded a 16.2m operating profit for the first half of 2017 despite a 3.6pc drop in revenues.
In its latest financial results published today, the group singled out its ‘big city titles’ such as the Sheffield Star and Portsmouth News for their strong contribution to overall profitability.
The group’s performance was also bolstered by the i newspaper, which delivered a 28.6pc increase in revenues.
The 3.6pc overall revenue fall compares with the 14pc drop reported by fellow publisher Trinity Mirror earlier this week.
In today’s report, JP said that if classifieds are excluded from the figures, revenues actually grew by 4.6pc during the first half of the year.
It said that strong growth in digital revenues – up 14.8pc excluding classifieds – helped offset the decline in print revenues.
Circulation revenues, including those from the i, rose by 7.9pc during the period to stand at £39.5m.
However advertising revenues, including both print and digital, were down 11.8pc at £52.5m while classfied revenues fell by 28.9pc.
The group, which owns scores of small weeklies as well as some of the biggest dailies, said its focus on its larger titles was bearing fruit in terms of profits.
“Our focus on the larger titles that have significant print and digital reach in their geographies and communities has resulted in strong profit contributions led by the ‘Nationals’, i.e. The Scotsman, The Newsletter (Northern Ireland) and The Yorkshire Post, and by the ‘big city dailies’ such as The Sheffield Star and the Portsmouth News,” said the report.
Chief executive Ashley Highfield said: In the context of the broader industry trading environment where print classifieds in particular are in continued significant structural decline, we are focused on creating a business for the future.
“This is a business which we have long believed needed to transform, but once done, could return to growth. Thus, since 2012 we have been making the necessary and at times painful changes to transform Johnston Press into a truly cross-platform business.
“Whilst trading remains challenging, the business has responded and, as a result of our substantial efforts and clear strategic focus, I am very pleased to announce that we have posted revenue growth in the business (excluding classifieds) of 4.6pc during the half.
“Digital revenues (excluding classifieds) have outweighed the declines of print advertising revenues, helped by an editorial focus that has resulted in digital audiences at a record high, and by a fantastic performance from the i newspaper which has achieved significantly enhanced performance during the sixteen months since acquisition.”
The Johnston Press group chapel of the National Union of Journalists has issued a statement in response to the figures.
It said: “Today’s results show Johnston Press has withstood significant challenges to remain profitable after reducing costs and increasing revenues in parts of the business. We hope the company recognises the need to focus on the morale and wellbeing of its workforce if this is to be maintained.
“Our members are facing a pay freeze between now and the end of the year, piling further pressure on their finances as wages fall behind the cost of living. We are also witnessing high levels of stress and workloads, because of understaffing. We look forward to continuing our dialogue with management on how these issues will be addressed.”
Laura Davison, NUJ national organiser, added: “We will be asking management to look again at the pay freeze our members are facing, particularly in light of RPI inflation running at 3.5 per cent and recent fuel price increases. Matching the positive slant on these results with concrete action over the issues our members are facing would be a good step forward.”
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The big daily papers are performing well….that’s because they are the best resourced titles in the company. The weeklies have been left to wither and die. If JP had put resources into weeklies then maybe they would still be quality products and maybe print ad revenues would be up. I say it again…print is not dying…it is being MURDERED..
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Hip hip hooray! The “i” is doing really well. Of course it is because resources are being put into it. This isn’t good news for the journalists and sales staff facing the next set of redundancies, weekly newspapers that are seeing less and less local advertising and websites that are quite frankly, a joke. Morale is at an all time low at JP (if that were possible). Sinking ship.
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If the future is digital then JP needs to improve its websites. It is hard to believe that CEO Ashley Highfield, who has a digital background, can tolerate such poor sites. Even NQ’s – and I have no loyalty to my former employer – are better.
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Digital Dead Horse, instead of citing your usual rant please read the report and review your comment.
Print advertising – down
Digital advertising – up
Combined print and digital advertising – stagnant
Notice anything there?
The i had a cover price increase of 20 per cent last September and only increased circulation revenues by 7.9 per cent. That’s an unsustainable drop in circulation in the long-term. The results are a high-five for the ad reps and spell misery for editorial.
Advertising resources are being placed where they are most effective for the TM shareholders. Simple as that! They won’t make them a 25 per cent plus profit at a local level.
Offload the regionals to private investors who would be happy with a five to ten per cent profit, let them invest in digital locally and I guarantee you they’ll make more than print within five years!
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@Oliver. My local weekly JP titles have virtually NO local ads in them. The news stories are far from local, news from many miles away about totally different towns. An increase in digi ad revenue is a red herring. Starting from a low base a small increase is nothing to shout about. But AH will hype up any small increase to something it really isn’t. It’s like the captain of the Titanic saying ‘at least the violin quartet are in tune’. I DO agree that local JP weeklies should be sold off asap to investors. In fact they should actually GIVE some away for £1 each. Local communities and advertisers need good local papers, JP see them as an inconvienience. As far as local weeklies are concerned digital is useless..
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Again, let’s see the cash figures. Digital income v newspaper income. Id guess 20 per cent digital, 80 per cent paper, but I stand to be corrected.
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I’m with paperboy, completely meaningless reporting digital increases if revenues aren’t included.
The fact the revenue isn’t shown tells us all we need to know as trust me if they were good the crowing would be even louder than it is already,
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DDH and paperboy, when it comes to the digital income, just read the report!
Print advertising revenue – £25.2m (down 4.9 per cent YoY)
Digital advertising revenue – £10m (up 14.8 per cent YoY)
If that trend continues (and, yes, that’s a big if given the overall current state of advertising industry) digital revenue will overtake print revenue by 2022. In my opinion, it’s likely to happen earlier than that.
The only thing shoring up print is the circulation revenue (£39.5m) but we’re bound a reach a tipping point on that soon. You can only increase cover prices so far to offset the relentless decline in sales.
When that point is reached, expect to see a whole bunch of print closures and sell-offs to reduce operating costs quickly. Print revenue will naturally then get dragged down further too and digital will become the bread-winner and probably, like I said, in less than five years!
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So Oliver, the figures you quote indicate that at the mo print rev amounts to around 65 mill, and digi rev 10 mill. When Utopia for you is reached and digi blasts print out of the water, maybe we will see print rev limping in at say 30 mill and digi bounding on at 30+ mill by 2022 (the time scale you smugly predict for digi supremacy). You will then perhaps be able to smugly tell the shareholders how lucky they are, with revs down by 15 mill compared with 5 years before, though reduced employee and related costs will no doubt lessen if not alleviate the pain. Your Utopia, but glad not to share it.
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Oliver….are you Ashley Highfield in disguise? Digital will never work for local weeklies. The figures you are quoting are dodgy and mostly daily titles. I heard of ad staff selling digi ads for say £110 for print /digi deal on a regular £100 print ad order and the invoice arriving for £80 print and £30 digi. Do can we beliebe the figures.
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‘significant structural decline, we are focused on creating a business for the future’
The way the cuts have happened and the calibre of people no longer there and the state the papers and websites are in he honestly sees a future ?
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‘Excluding classifieds’. If only you could!
That’s like a sandwich ‘excluding bread’.
Any results look good (well, better at least) when you exclude the bad bits.
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Digital revenues are quite meaningless really. Most of the digital revenue is “packaged” in with a print advert in order to give customers a presence online, which normally gives a very poor click through rate. In order to get a good response online high volumes of impressions need to be taken. Ad rep’s targets are made up of an overall monthly figure, with a certain percentage made up of digital. It is almost rammed down their throat that they must hit their digital targets, even if it is not in the interests of the customer. Increases in any digital revenue figures merely show that the percentage of digital revenue on packaged ads has increased. Ad reps are encouraged to sell “just digital”, when doing so means less ads are going in the papers – some local papers are drastically low on local advertising – and advertisers are finding more less costly ways of promoting themselves – Facebook, Twitter etc.
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Exactly despairingly
‘Packaging up’ happens where I am and has done for years due to middle managers fearing missing digital targets ( they do anyway )and getting grief off their big chiefs so they push getting web figures ‘on the board’ Irrespective of whether it benefits the advertiser or not.its all about self preservation these days not customer focused results delivery as it used to be.
The movement of a customers budget spend from print to web to again be seen to be ‘selling digital’ is common yet doesn’t give new revenue,it simply robs Peter to pay Paul , it simply moves money around and it’s partly this tactic which has given a false impression of how ‘popular’ digital is with advertisers and led the top floor johnnies to believe their web offering was a popular one, this also seriously erodes print revenues.
Having spoken to many many local business people the conclusion is always the same,digital advertising doesn’t bring tangible results on local press websites and from first hand experience of talking to sales reps themselves they too don’t believe in it
Digital is a flawed medium best left to those who understand it and who have a truly strong and well developed digital platform to offer and like it or not that’s not a local publishers website
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Ex Ed, I’m stating facts and giving opinion. You may disagree and explain why, that’s fine. Simply calling me smug is a bit… well… childish.
Anyway, to address your point about revenue. Shareholders are simply milking every last drop out of this industry by way of dividends, not by share price. If revenue drops by £15m over the next five years, you can be sure that operating costs will drop by more, keeping the profits up and the dividend payouts high.
You can’t argue that digital costs are a fraction of print so when you haven’t got print and distribution costs – and don’t forget the obvious one of fewer staff – there’s your £15m+ saving.
Despairingly and Juan, the local ‘packaging’ you refer to was always a terrible idea but that’s not the business model for Johnston and TM. They would much rather sell adverts across the entire network of users at tens of thousands of pounds a time to the likes of Ryanair, McDonalds, Tesco etc. This is why they created 1XL. It was the only way to compete with the likes of Facebook and Google.
In my opinion, this national/regional digital model is killing the local one as a result. The vast majority of the audience isn’t local, relevant or targeted so the results for local advertisers are poor.
It’s just that a handful of ad reps selling national ads at £50k a pop instead of lots of local ad reps selling ads at £500 a pop is always going to be way more attractive to shareholders.
Selling off poor-performing print titles along with strong websites is not an option as it impacts upon this model based upon digital reach. They will cut print costs before anything else.
It’s a shame because I do believe that independent publishers could quite easily make a good little profit out of local digital advertising through smaller, niche publications – and there may even be some potential to sustain print for longer too.
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Oliver. lets see a breakdown showing the weeklies. There is a bit smoke and mirrors going on here.
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Paperboy, it doesn’t matter. It’ll be terrible by comparison because the current overarching business model is wrong.
What we need are local independents who can find their own models based upon local audiences. In some areas that might be a solely digital option, in others it might be digital complemented by print.
Personally, I see no long-term future for any format which is just print but I would genuinely love to be wrong about that!
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So many high street shops are a shadow of their former selves, if they are even still open. So much shopping is now done on the internet. Where are your traditional small town weeklies going to get their ad revenues from, digital or otherwise?
Local printers are churning out pocket-sized monthly ad magazines but these people are never going to employ high-salaried journalists.
In the heyday of weeklies, the 50s and 60s, journalists were employed straight from school. The NUJ insisted on graduate entry for trainees solely to push up wages, which made costs too high.
Investors are not going to put their money where there’s only a half decent return when they have market alternatives.
Weeklies with genuine news will go like the dodo, never to return.
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Oliver
You’re missing the point
I’m not taking about packaging, that’s just a choice or in some cases a mandatory print web offering, I’m talking about wholesale revenue apportioning and moving money around which gives a false impression.
Eg.; a customer used to book £1,000 of ads and got £1,000 of print ads
Now because there’s pressure to sell digital he books £1,000 of ad and the rep gives him £750 print and £250 web
The resultant figure ms then show print to be 25% down y/y but good news digital is 25% up
It happens
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@Juan.. that’s what I was trying to say. There ate lies, dammned lies and statistics!
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Juan, no I’m not. I’m agreeing with you, although what you’re saying happens is about two years behind. This sort of print/digital packaging was a bad tactic from the outset as it just devalues both elements of the business.
What we’re now starting to see is less of that with digital only ad options available. Unfortunately, it’s at a time when all advertising spend with local papers, in print and digital, is in decline.
Which one is your money on recovering more quickly?
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Oliver
Wrong again
The movement of revenue is happening now, not two years ago, today.
At least it is where I am and I’m told it’s still common practice elsewhere, going unnoticed or simply ignored,so just imagine the true state of digital revenues if only genuine sales were recorded.
And forget print / digital packaging this is a practice that serves the sales person alone, not the advertiser, given a choice many if not all businesses aren’t opting for digital advertising on regional press websites, they target specific audiences and demographics either on recognised on line sites or into localised targeted lifestyle magazines and spend there instead.
One of the many reasons ad spends haven’t taken off on line and are in steep decline is down to this practice, an advertiser is put online,is lucky if he gets all the inventory he’s paid for ,gets no response and is turned off using digital again in a more considered and planned way as ‘it doesn’t work’ they are spending the same but have a lesser presence in print so again get less response, it’s a vicious circle bringing short term spikes for longer term losses just to satisfy a short term goal or target.
Which will recover first?
Neither, in a modern fast moving media environment both newspapers and their associated digital sites are out dated and flawed business models which aren’t as responsive or high profile enough as the many alternate sources to advertise on/ in,and expecting traditional print sales people to buy into an online medium simply doesn’t work, they don’t like it and don’t believe in it.
You have to know your product and believe in its effectiveness to be able to sell it and therein lies the answer and no amount of shouting about how many people are visiting and seeing your product will be if any real benefit if those responsible for monetising it aren’t doing so
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Juan, please read my comments if you insist on commenting in such a self-righteous way.
I’m with you on the niche markets; I’m with you on the packaging of print and digital ads being partly responsible for the current issues; and I’m with you on the flawed business models of the regional publishers.
I disagree that the current pricing of print/digital packages is the same as it was two years ago. I sat in many a meeting at Northcliffe HQ five years ago where it was drummed into us just how problematic this was in terms of both revenue and value of each product.
Digital advertising is much, much smarter than that now. The issue is that it’s only being really invested in at the national level because that’s where the cash is in terms of greater profits. I’m sure it can work at a local level but with much less reward. It could be useful for small independents but not the like of Johnston and TM.
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