Johnston Press reports £300m loss as cost-cutting measures fail to offset declines in ad revenues
Johnston Press has reported a £300m pre-tax loss in 2016, knocked by a 17.7% decline in statutory total advertising revenues across the group and a write-down in the value of its newspaper titles.
Johnston Press reports £300m loss as cost-cutting measures fail to offset declines in ad revenues
The regional publisher, which owns 200 local UK papers, including the Scotsman and the Yorkshire Post, wrote down the value of its publishing and print assets by £344m.
As such, it turned a £2.2m pre-tax profit in 2015 into a £300m loss last year.
Revenue slid by 8% to £222.7m for the 12 months to the end of December 2016. Total ad revenues fell 17.7% according to its statutory accounts, with print ads dropping by 9.2% and digital advertising falling 0.2%, excluding classifieds.
The publisher is under mounting pressure from activity investor Crystal Amber, which in January built a 20% stake in the business to become the largest stakeholder.
At the time the investor was expected to hold talks with interim chairman Camilla Rhodes to demand an overhaul of the company’s management, that could put chief executive Ashley Highfield’s job at risk. It is not yet known how secure Highfield’s status in the publisher is, but it is said there are shareholder concerns over his leadership.
Shareholders have questioned his strategy to reduce costs at the publisher, which included a “disinvestment strategy” that saw 13 “non-core” titles sold.
At the same time the chief executive oversaw the £24.4m acquisition of the i newspaper last year to give the publisher a national sell. It means that the £26m of cost savings Highfield delivered in 2016 has been markedly undermined by the cost of the national paper.
That said, Highfield is optimistic that the actions taken to steer the business through this “rapidly-changing market” and help the business return to growth “are starting to bear fruit”.
“Circulation figures of key titles are improving, the i has bucked the trend of declining national newspaper sales and our progressive editorial and sales models are starting to transform our regional businesses.
“While we can expect to see continued pressure on traditional print revenue streams, we have seen digital return to growth in Q1 2017, with better margin products, and will see growth from our investment in the i from both the newspaper and website. Further, we will start to see the benefits of our restructured sales teams and product roll out,” he said.
The i newspaper increased sales by 2.8% since the start of 2017, while sales of the Scotsman were up 4.7%, boosted by marketing activity around the paper’s 200th anniversary this year. The Northern Ireland News Letter suffered a 6.8% drop in sales in Q1 2017, and the Yorkshire Post slid by 8.5%.