Earnings: Johnston Web Ad Sales Down By Nearly A Fifth

John Fry

Regional newspaper publisher Johnston Press saw it’s digital advertising revenues slide 18.8 percent in the first half of 2009, showing there’s no hope digital growth can take local publishers out of the recession any time soon. January-to-June revenues are down by a quarter from last year to £293.1 million, with operating profits more than halved since to £38.2 million. Release.

Who’s the culprit for all this decline? That meddlesome internet: “Regional press has suffered more than other media due to its reliance on recruitment and property and continuing structural change,” Johnston says. “As we come out of the recession we expect further losses of share to digital competitors though at a slower rate than before.”

But don’t forget the big, bad BBC which Johnston claims enjoys an “absence of any requirement to make any sort of financial return” and “distorts the markets through making the charging for news content extremely difficult.”

It’s odd to hear a company which publishes 319 websites, which this year doubled its annual spend on digital to £9 million and worked hard for years under previous CEO Tim Bowdler to become a serious digital publisher complain about “digital rivals” instead of digital peers.

Ads still down by a third: Johnston’s overall ad revenue was down 32.7 percent from last year in Q109 and down 31.4 percent in Q2; the company is clutching at the slightest of straws when it calls this a “stabilisation” of ad decline, but it expects the year-on-year reductions to continue through the rest of 2009. Recruitment ads were down 53.8 percent on H108, property by 54.2 percent.

Newspapers write-down: It’s become a question not of when the recovery is due but how much farther their fortunes can slide. For Johnston Press, there’s no end in sight yet: the publisher is writing down £126 million on its newspapers for H109, meaning it’s reduced the value of its portfolio since January 2008 by a massive £543.5 million due to the long-term collapse in the earning potential of local print publishing. There’s no update on rumours — which Johnston sought to quell this week — that it’s selling The Scotsman.

Cost cuts: In his half-year statement CEO John Fry claims he reduced overheads by 15 percent in the first half, or £31 million. Headcount is reduced by 439 to 5,969 and savings have been made through the “centralisation of key functions”, which broadly means giving fewer journalists in fewer offices more to do, or in management speak: “Consolidating services in fewer centres whilst keeping news gathering… at the heart of the markets we serve.”

Debt agreement reached: The real threat to Johnston has subsided, for now: the company has agreed a new three-year debt facility and reduced net debt by £52.8 million to £424 million (although £17.6 million of that is from favourable sterling-euro exchange rates). A sell-off of the company’s local Irish titles was planned as a solution to the dent problem, but the sale was abandoned in May.

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