Johnston Press chief executive Ashley Highfield has told staff his number one priority is to “get the banks off our backs” by paying down the company’s debts.
In an internal memo, which has been seen by HTFP, the regional publishing boss says the company’s “not inconsiderable” profits are all being absorbed in debt repayments.
The company has so far reduced its debt from £351m to £336m this year and Ashley said he aimed to get it down to £250m by the end of 2014.
In the memo, in which he also thanked staff for their “amazing tenacity and dedication,” he said the company’s strategy was starting to work and that its newspaper titles were in “excellent shape.”
Said Ashley: “Our mission is straightforward: by 2015 we need to have paid down our debt sufficiently so that we can get the banks off our backs – they are currently rapaciously sucking up all our (not inconsiderable) profits – so that we can build and invest for the future.
“In spite of the considerable fees the banks charged us for the privilege of borrowing their money, and some additional costs of restructuring, we’ve paid down our debt so far this year from £351.7m to £336m. We need to get it down to something like £250m by the end of 2014 to allow us to find alternative (and way cheaper) sources of funding. We can do this.”
He again defended the strategy of increasing cover prices, saying this had helped offset declining circulation revenue overall.
“We historically gave our papers away way too cheaply – they were essentially subsidised by classified advertising revenues – and now we need to charge a fair price for an excellent product. It’s fair to say there are some readers who will lodge a protest vote against price rises in tough economic times, but we can, and must, win them back one by one,” he said.
In an interim management statement last week, the company said that while overall revenues were down 11.4pc in the 18 weeks to 3 November, the relaunches of 54 paid-for titles this year has helped to slow down the decline in circulation revenues, which stood at 0.5pc for the period.
It said circulation revenues at the 31 newspapers relaunched in the second half of the year were up 13.8pc year-on-year immediately after relaunch.
Added Ashley: “Despite a year of enormous change, and considerable upheaval for many, I think our titles are in excellent shape.
“2012 has been a critical year on this journey and we’ll start to see the fruits of all your hard work during 2013 – and then aim to get the banks off our backs in 2014.”
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Would be nice if the shareholders took some responsibility for the debt reduction, rather than simply cost cutting and job losses.
Makes sense in the longer-term.
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At least he is telling it how it is – fair play to him.
He cannot be help responsible for the sins of his predecessors, but he can try and manage a way out of their mess.
Sound familiar Gordon Ed et al ?
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Rob
I think you will find that most share holders have lost the majority of their investment. There was a rights issue in 2012 that reduced debt, I doubt the share holders will see any of that back.
The world has changed for local newspapers and will never be the same again. I think the Weekly paid strategy is right, but I doubt the ability of companies like JP to be able to replace lost revenues with on line activity to sufficient levels.
Get the debt managed down, that’s what TM are are doing, then what’s left can be broken up into the two super regional companies with near local monopolies ( in print ) that will be the local industry in 3-5 years time. The Shareholders can stick with it and see if their slice of what ever is meaningful or get out now.
As for the Banks, JP are tied into interest rates that would make your eyes water if it was your mortgage. They are happy to go on taking as much as the can they can get and don’t the fees that they earned out of JP’s M&A activity – FHFW
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These are the same banks that, 6 or 7 years ago, were moaning that JP wasn’t being more acquisitive. They were literally throwing money at the company back then.
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They crunch question is can JP and other firms increase web income enough to cover losses on papers, especially after the circulation drops of about 1,000 on many papers after second wave of JP relaunches. Despite percentage increases no signs of really meaningful income on that front yet but we live in hope.
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Let’s get staff off our backs, Highfield tells banks
Just kidding
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As a former JP employee and shareholder, who saw share prices fall from £4.50 to 5p I feel shareholders have suffered, along with everyone else, at the hands of mismanagement of the company.
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Sorry Bernard but shareholders suffer as it’s a gambler’s risk they take – remember your investment can go down as well as up.
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I’m well aware of that Snaphappy. I just wonder at 5p per share how much of the responsibility the shareholders can take as suggested earlier by Rob.
I’m not trying to defend JP I was made redundant by them myself.
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