Earnings: Newsquest's Herald & Times Group Profits Slump Amid Digital Growth

A colourful sandwichboard headline from Newsquest's Glasgow Evening Times

Newsquest’s Glasgow division — publisher of The Herald, the Sunday Herald and the Glasgow Evening times — made 15.1 percent higher digital revenues year on year in 2008, and its directors expect more growth this year.

But it’s not nearly enough to stem the decline from the industry’s age-old reliance on now evaporating print ads: pre-tax profits were down 39 percent to £14.4 million in 2008 and revenue fell from £86.8 million in 2007 to £79.5 million, as Herald.co.uk itself reports.

Profits were hit by a restructuring charge of £2.2 million and a £3.8 million impairment on the division’s licence to publish Great Outdoors and Scottish Farmer magazines — earnings before tax and exceptionals were £21.4 million.

Herald & Times MD Tim Blott says its magazine division — and online classifieds business S1 — put in “stable performances” in 2008 but it wasn’t enough, forcing him to launch a new restructuring drive in April: there was further integration of staff across the papers and online and its sites were merged into Heraldscotland.com — a move which led to 40 redundancies. Like most other publishers, Blott is confident his actions will leave the business “in a stronger position when the recovery comes”. But if that recovery does come, regional newspapers may never reach the profit margins they enjoyed five or 10 years ago.

Newsquest — the UK arm of giant US local newspaper publisher Gannett (NYSE: GCI) — is classed as a private company in the UK despite its parent’s public status in the US so it isn’t obliged to release its full earnings figures, aside from briefly stating its percentage growth figures.

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