Johnston Press suffers post-Brexit hit but revenue buoyed by i newspaper
Johnston Press’ acquisition of the i newspaper - its only national paper - boosted the publisher’s revenue by 8% in 2016, sparing the publisher from a -14% decline in revenue and -9% decline in circulation.
Johnston Press title The Scotsman
Instead total revenue was down -6% in the 52 weeks to 31 December 2016, after the publisher suffered a heavy hit in Q3 2016 prompted by a Brexit fallout, leading to a weaker sterling and higher costs of imported paper and ink. Total revenue was down -5% in Q3, aided by the i newspaper which boosted revenue by 11% in the same period.
The decline in circulation revenue across Johnston Press’ regional portfolio was offset by strong circulation from the i newspaper since its acquisition in April 2016, boosting circulation revenue to 11% for the year, 24% in Q4.
Digital advertising revenue, up 1% for the year, failed to offset declines in print advertising, pushing total ad revenue down to -7% in 2016.
The i has increased its newspaper volume sales by 5% (ABC excluding bulks) year-on-year, aided by a reintroduction of the newspaper in Northern Ireland. The Saturday edition of the i has seen circulation volume up 13% year on year, a sign that the publisher will be following through will plans to build the brand in the weekend space. The i’s website, launched in April, reached 1.4 million unique users a month in Q4.
The publisher’s digital business, telesales and contract printing, and the i newspaper, make up over 50% of its total revenue.
The publisher’s “relentless” cost-cutting programme, which included the sale of its Isle of Man business and at least 13 other regional titles, while restructuring its sales team away from a regional approach to a cross-title, cross-platform one, helped the publisher save over £25m in 2016. In January 2017 it sold its East Anglia portfolio for £17m.
Such cost-cutting measures form part of the publisher’s efforts to reduce its debt and cancel its revolving credit facility to appeal to shareholder woes, after activist investor Crystal Amber built it stake in the company in January and has been agitating for change since, including a potential overhaul of the company’s management.
The value of Johnston Press is £220m but 90% of this is debt, not shares.
Ashley Highfield, chief executive of Johnston Press, commented: "Despite the challenging print market, including a very difficult summer prompted by Brexit-related uncertainties, we have seen some improvement in our markets during the fourth quarter.
"Whilst we expect the overall market environment to remain challenging for both the Group and the industry as a whole, we remain focused on delivering on our strategic priorities of growing our overall audience, driving the further success of the i newspaper, delivering a more efficient editorial and sales operation and strengthening the balance sheet."