The chief executive of Johnston Press, the regional media owner boasting around 190 UK titles, has taken a swing at Facebook and Google in the group’s mid-year earnings call as total revenues dropped 10% year on year.
David King, chief executive of Johnston Press, blamed two issues for the current predicament: firstly debt including pensions, and secondly, “tough market conditions”. These market conditions were reportedly largely compounded by “the continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes". He said that had contributed to total digital revenue decline.
Taking non-operating expenses off the table, the group boasted a profit of £7.4m in the first 26 weeks of the year, up from £4.9m year-on-year. However, total revenue was down 10% to £93m, driven by a steep decline in ad revenue.
Classified advertising dropped 28.5%, making up £4.8m of the £7.6m ad revenue decrease. Print and digital ads together were down 8.3% to £31.1m. Print made up two-thirds of the non-classified ad revenue. It was down a tenth year-on-year to £21.4m. Digital fell 4.3% to £9.7m.
The most positive story to come from the earnings report was the performance of national title The i which was bought from ESI Media in April 2016. It saw a 61.0% increase in adjusted EBITDA on H1 2017 to £6.0m, up by 18.3% on the previous year. Newspaper sales revenue was up 17% and ad revenue up a fifth to £3.6m.
King said: "The strong performance of The i demonstrates that it is possible to grow a newspaper brand, despite the prevailing headwinds."
He added: “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. We will engage with the Cairncross Review into the future of high-quality journalism with a view to helping address the challenges faced by local news organisations in monetising its content.”
King concluded: “As part of the strategic review, the group continues to explore its options for the refinancing or restructuring of the group's debt but, as yet, no decisions have been made nor agreements reached. We will provide an update as soon as possible."
Looking ahead, the group predicted that Brexit “may have an impact on the group's operations” in the coming year.
The publisher's ad and circulation declines are fairly on par with the wider industry as it adjusts for growth and greater profitability in the coming years.