Rays of hope for Johnston Press
Struggling media company Johnston Press has reported an operating profit of £43.3 million in 2009.
It slashed costs throughout the year and continues to do so, writes Paul Watson.
Printing of newspapers is being consolidated at fewer and fewer sites and editorial staff are still losing their jobs as processes are streamlined.
The profit before tax of £43.3 million becomes a loss of £113.8 million when write-down costs of the value of newspapers and closure costs are taken into account.
Johnston Press, in this part of the country, publishes the Sussex Express, Eastbourne Herald and Mid Sussex Times.
It has a further raft of papers in Sussex and also publishes in much of the Midlands, the north of England, Scotland and Ireland.
It is one of the biggest regional newspaper groups in the country.
In its heyday, Johnston Press was reporting a profit margin approaching 40 per cent.
The profit for 2009 is an operating margin of 16.8 per cent. The loss of advertising and business as the digital revolution grows has made all traditional newspaper companies struggle.
They have not been able to migrate the huge revenues from newspapers to their online offerings. Digital revenues remain tiny.
Newspaper firms have seen the money go off in many directions.
Chairman Ian Russell in his statement said: “Your Board believes that our ability to provide local news, through a variety of media, to the communities in which we operate remains unrivalled.
“The decline of printed media in general has been well documented, particularly as the number of online news providers continues to increase and there are further developments in the methods of accessing them.
“Although it remains an integral part of our business we are seeking to complement our in-print offering with additional projects and in particular, focussed commercial development of revenue opportunities within digital media.
“We are also increasingly looking to develop collaborative ventures with partners, particularly in the digital field, and a number of projects are underway.
"Users of our digital services continued to grow markedly during 2009 and the challenge for us now is to enhance the revenues from this increasing audience reach.”
There are cautious words on future prospects from chief executive John Fry.
He said: “The year ended with the Group in a much stronger position than it began: advertising is more stable; circulation trends have improved; digital revenues are growing; our cost base has reduced significantly and we have renegotiated finance facilities for 3 years. We are therefore well positioned to take advantage of any upturn as it occurs.
“Since the successful refinancing of our debt announced at the end of August 2009 we have been trading in line with the expectations we had at the time. That being the case we have no immediate plans to raise capital.”
That’s all positive news but it could depend on whether your glass is half full or half empty.
My eye was drawn to: “more stable” = not stable;
“circulation trends have improved” = not rising;
“digital revenues are growing” – but from what base and how fast?
There’s no dividend for shareholders – again – with any “excess cash” being used to reduce the debt.
The debt remains the millstone around JP’s neck. It is down to £422.1 million, from £477.3million at the beginning of the year.
Servicing this huge debt – built up by the rapid purchase of newspapers in Britain and Ireland – is the focus of the company.
It is put bluntly in a press statement: “Board’s short term priority remains debt reduction.”
I read that as meaning there will not be any cash in the short-term for rebuilding news operations which have been cut back heavily to keep the company in profit and a going concern.
(Added to site Friday, March 12th, 2010)
