Regional publisher Johnston Press today revealed a 50pc increase in profits for the first half of 2018 while admitting that the market remained “extremely difficult” for its 200-plus regional titles.
Buoyed by a strong performance from cut-price national daily the i, the group posted a statutory operating profit of £7.4m in the period January to June compared to £4.9m in the same period last year.
However its chief executive David King highlighted a 15pc drop in advertising revenues as evidence of the “extremely difficult” market backdrop for regional and local newspapers, citing recent changes to the Facebook news feed algorithm as a contributory factor.
And Mr King, pictured, also revealed there have still been no agreement reached on the refinancing of the £220m worth of bonds which become repayable next June.
Commenting on the result, he said “There are two sets of issues affecting Johnston Press. The first is the group’s historical debts, including its pension obligations, which continue to weigh on our Balance Sheet. The second is the tough market conditions affecting the performance of our newspapers and websites. However, our resilient performance allowed us to generate an operating profit of £7.4m in the period, up from £4.9m in H1 2017.
“The strong performance of the i demonstrates that it is possible to grow a newspaper brand, despite the prevailing headwinds. The i grew its circulation revenues by 17% and its advertising revenues by 20% compared to H1 2017. The digital audience for inews.com grew to 4.2m in June, up from 1.3m in December last year.
“The market backdrop for regional/local newspapers is extremely difficult, as evidenced by the 15% drop in our adjusted advertising revenues from H1 2017. We have continued to make progress growing digital audiences to a record 27.3m average unique users per month.
“However, the continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes, has contributed to total digital revenue decline, while Balance Sheet constraints has restricted the Group’s ability to invest, and counter these effects.
Mr King added that the group was continuing to explore its options for the refinancing or restructuring of its debt but, as yet, no decisions have been made nor agreements reached.
HTFP reported in June that one of the options being looked at by the group includes offloading its pension scheme to the Pensions Protection Fund, allowing a new owner to take control free of pension liabilities.
Today’s results follow recent claims by Norwegian investor Christen Ager-Hanssen that the company’s Board was planning to put it into adminstration in order to facilitate a “pre-packaged sale.”
In response, JP has challenged Mr Ager-Hanssen, who owns 20pc of the business, to come up with his own rescue plan for the group.
Today’s figures show overall revenues at the group were down 10pc in the first half of the year from £103.3m in 2017 to £93m this year.
Print advertising revenue was down 15.4pc but with cover-price rises largely off-setting the impact of circulation declines, circulation revenue fell by just 1.9pc.
According to the trading update, digital audiences across the group continued to grow, reaching a record 27.3m average unique users per month.
However it said the effects of algorithm and news feed changes by Google and Facebook contributed to total digital advertising revenues declining by 7.4pc to £12.2m.
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It is all eyes on the i for JP by the looks. Not great news on digital advertising revenues falling after the destruction heaped on its local papers in recent years.
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“We have continued to make progress growing digital audiences to a record 27.3m average unique users per month.”
Hallelujah…..we’re saved then! ! How many bucks do they bring in?
Vacant pause as tumbleweeds to blow past…………………..
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I’m not trying to be a smartar5e Toggy, but the answer to your question is in the final paragraph.
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What a load of waffle! Local weekly newspapers are being destroyed by JP with massive redundancies leading to chronic understaffing and the use of way too many ‘company wide generic pages’ {non local rubbish}. Readers are walking away in droves because their once good quality, local news packed paper is now just an overpriced rag. The readers aren’t stupid and are voting with their feet. Also the JP websites are dismal. However they are also serving to lower circulation as you can read the news from last week’s paper for free on the site. JP are creating competition for their own papers by giving the news away free. That is madness. Add to that the fact that small local business’ will not advertise on their sites and the picture is complete. The fools who run JP are driving local weeklies into the ground. Websites should be there ONLY to promote the paper and have some limited breaking news. Since AH left things haven’t changed and the ‘management speak’ goes on… ‘Facebook algorithms’??? Try incompetence and a total lack of knowledge about newspapers!!
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@Oliver LOL you smartiebottom you! This grumpy old ‘tog lost the will to live to get all the way to the bottom (so to speak) through all the Gus Hedges-speak!
But using basic O-level maths skills I can deduce that they now have more unique digital users providing a smaller digital advertising income?
That’s not good, is it? 😉
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Market conditions” extremely difficult” is management speak for: Let’s keep wages down and get rid of a few more good people then we can “save” money. The market may be “challenging ” ( a much better word than negative “difficult” but that is the time to be innovative rather than pull the drawbridge up.
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We really need to start taking the i’s contribution out of the figures to get a glimpse of the ‘real; Johnston Press. It definitely ain’t pretty.
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Wordsmith… That’s all these fools are capable of, pulling up the drawbridge because they know nothing about the world of newspapers. Calling them fools doesn’t come close. Murderers of quality local news.
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Dead Digital Horse . I am inclined to agree with you. JP took the local out of local papers. Mine is full of stuff from beyond the circulation area and generic rubbish produced and written by an obviously overworked team miles from the patch. Ditto for its dreadful and user-irritating website that a bunch of sixth formers could probably improve.
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I certainly agree. My “local” paper does not have a reporter in town and most of it is filled with reports of a town which may be only a few miles away but cld be on the other side of the moon as far as local news is concerned.
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Let’s never forget! Local newspapers cannot survive without advertising and the basic problem with JP is that they have tried to survive without the sales people to sell the advertising! Further, they didn’t realise that by persuading their readers to go on line, those readers would stop buying the paper. It really is that simple. Oh, and by the way, if local advertisers bought from call centres it would have been done 35 years ago!
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Sorry but newspaper sales were in freefall way before local newspaper websites and print would still be on it’s backside regardless of how the website were handled.
Doing nothing was never an option but regional publishers have simply been too slow to react to the changing consumer landscape.
Too many low-risk business plans which protect shareholders’ dividends have caused irreparable damage to both their print and digital offering.
Rather than taking early risks by investing properly in digital, lazy staff restructures have meant, for the most part, that existing resources have been used to do a half-ar5ed job of both.
I don’t think any journalist really cares about the medium by which their stories are delivered but this, pretty much, univariate approach of ‘clicks means money’ has diluted everything that local journalism has ever stood for.
The business model is wrong and will continue to be wrong while a ’50 per cent increase in profits’ is all that matters. I wonder how much of that £7.4m operating profit will be invested back into the business and how much of next year’s profits will come from further ‘cost synergies’?
I don’t agree with other commenters on how printed newspapers could have been today but an intelligent, long-term business plan has been seriously lacking. Unfortunately, it’s all about the now!
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@Oliver precisely
JP investment in Digital is non-existent now, where in the least at least some effort was made.
No innovation is encouraged, nor could it be delivered. Just serve more clickbait for less return, that’s the only strategy
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