Downturn Over? Johnston Press Sees Ad Revenue Malaise Lifting

A newspaper vendor seling Johnston's Scotsman and Edinburgh Evening News

Is there finally light at the end of regional newspapers’ tunnel? Johnston Press’s ad revenue decline hit its lowest point in the first half with a 32.7 percent drop year on year — but since then things have got better: in an interim statement for the year to October 31, Johnston says the first 18 weeks of H209 were down by 22.1 percent year on year — the last 10 weeks of the reporting period were down by just 19.1 percent. That’s still bad, but it’s stablising as property ad growth offsets more recruitment falls.

The company says it’s confident of “delivering an operating profit in line with current market expectations” — analysts expect full-year EBITDA to be in the region of £64 million (via Reuters). For 2008, the company made a £429 million loss after huge writedowns on the value of its portfolio.

Johnston staff should beware: the company says it needs to save another £50 million in this financial year. You could be forgiven for thinking the huge cost cuts across the regional newspaper biz in the last two years — scores of printing presses have been shut, including two of Johnston’s in Kilkenny and Edinburgh recently — are over and will start to positively impact publishers’ balance sheets some time soon. In fact, the benefits of cuts are still being deferred and Johnston expects a £12 million one-off charge for the year in redundancy pay-outs.

There’s no movement on the company’s debt pile — which stood at £424 million in August — as Johnston had to pay £15 million in re-financing fees when negotiating a new three-year debt facility. And there’s no update on how Johnston is meeting its real challenge, as outlined in the first half results when the company said it expected “further losses of share to digital competitors”.

Even if print ad revenue does return to pre-recession levels — and that is being hopeful — the regional press’s long-term structural, commercial and editorial problems in coping with the switch to online publishing are going nowhere.

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