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National titles to cease print versions

Johnston Press buys ‘i’ newspaper – Indy to become digital only

i newspaper12.30 news: Johnston Press, owner of The Scotsman, has today conditionally agreed to acquire the business and certain assets of the “i” newspaper for £24 million.

The Independent and Independent on Sunday newspapers are to cease print editions in March, the owner has said.

Announcing a move to a “digital-only future”, ESI Media said there would be “some redundancies among editorial employees”.

But it said there would also be 25 new “digital-content roles”.

Evgeny Lebedev, ESI’s owner, said: “This decision preserves The Independent brand and allows us to continue to invest in the high-quality editorial content that is attracting more and more readers to our online platforms.”

The last print edition of The Independent will be published on Saturday 26 March, while the last Independent on Sunday will be on 20 March.

ESI said the number of staff affected would be “confirmed following a consultation period”.

It said a “significant number” of staff would move to Johnston Press as part of the sale of the “i” newspaper.

The closure of The Independent‘s print editions will have “no bearing on the status” of the London Evening Standard – also owned by ESI – the company added.

In a statement to the stock market, Johnston said it will pay £22m in cash on completion and the remainder in cash on 20 April 2017.

It said it expected cost savings and revenue synergies. The “i” has a 20% market share of the newspaper “quality market”, or 8% of the combined newspaper “quality” and “mid-market”, said the company.

The acquisition will create the UK’s fourth biggest news publishing group, centred around a handful of leading brands (by circulation), selling the equivalent of more than 600,000 copies a day predominantly outside London.

77% of “i” readers are from the ABC1 demographic category. The average reader is aged 53 and 63% of its readership is male. It enjoys a broad reach across Britain, with 85% of its circulation outside of London, though currently it has no presence in Northern Ireland.

After London, the largest concentration of circulation is Meridian (15%), the Granada region (13%), Central (12%), Anglia (9%), Yorkshire (8%), West (8%), South West (5%), Scotland (5%) and Tyne Tees (3%).

Johnston Press said the acquisition of “i” comprises the goodwill relating to the i business; the benefit of certain trading contracts; and stocks of newsprint and the business intellectual property rights.

It  said the deal will be immediately earnings enhancing.

The directors believe it will provide financial flexibility for continued investment in digital and regional areas of the UK within Johnston Press’ core strategic focus.

They said that the combination is a strong strategic fit and the “i” will help build the group’s national print and digital display advertising revenues. This will be through access to a number of strategically important local markets and the ABC1 readers which comprise 77% of “i”‘s readership, as well as a number of blue chip advertisers, the majority of whom do not currently advertise with Johnston Press’s titles.

The board expects increased scale and contribution of circulation revenues. “i”‘s circulation revenue grew 24% year on year in 2015 and accounted for 64% of its total revenues in the financial year to 27 September 2015 (the equivalent figure for Johnston Press in the financial year to 3 January 2015 being 29%). This higher proportion will help Johnston Press to stabilise its combined circulation revenues.

The acquisition is expected to lead to accelerating growth of digital audiences and digital revenues. “i” does not currently have a standalone website. The directors believe this offers an opportunity to launch and develop digital products associated with i’s brand using Johnston Press’ network, and will help grow the 1XL digital advertising network.

The directors also believe that the acquisition of i would build strength into the existing portfolio of Johnston Press’ brands, such as The Scotsman, The Yorkshire Post and (the Belfast based) Newsletter, enabling the Group to offer a package of “premium brands” to the market.

Ashley Highfield, chief executive of Johnston Press said: “This is a transformational acquisition for Johnston Press and an important step towards delivering our long-term strategy.”

He said the “i” is a highly regarded newspaper with a clear market position and a loyal readership.

“By joining with Johnston Press the combined circulation will be equal to 9% of national daily circulation, making us the fourth largest player in the market. This enhanced reach represents a significant growth opportunity for Johnston Press in terms of national print and digital advertising revenue. It also rebalances our revenues towards less volatile circulation revenues.

“With our considerable digital experience the combination of Johnston Press and i will also allow us to grow digital audiences and revenues through the creation of inews.co.uk.

“We are delighted with the positive reaction of shareholders to the deal and are excited by the opportunities this acquisition brings. We look forward to working with the team at i as we deliver the next phase of Johnston Press strategy.”

Steve Auckland, CEO of ESI Media, added: “We are incredibly proud of the success of i since its launch in 2010. In just five years, i has changed the face of national newspapers,demonstrating that you can innovate in print.

“I would like to thank everyone who has contributed to the success of i for their dedication, ingenuity and creativity. A magnificent team effort.”

London-based Johnston, which recently announced further redundancies at The Scotsman, confirmed the talks on Thursday.

In the year ended 30 September 2015, the “i” had unaudited carve-out operating profit of £5.2m, said Johnston Press.

The “i” was launched by ESI owner and Russian entrepreneur Mr Lebedev, and its sale of 273,000 copies a day has been seen as helping its older stablemate The Independent stay afloat.

The Independent was launched 30 years ago and at its peak in 1989 sold more than 400,000 copies a day. According to the Audit Bureau of Circulation, by the end of last year it sold an average of just 56,005 a day, and little more than 40,000 at full price.

Since its launch, the “i” has doubled its cover price to 40p. Almost all of its content is derived from The Independent, raising questions for Johnston Press about how it could replace this content without The Independent.

Between 20 and 40 members of staff are expected to move to Johnston Press, The Guardian said, with many of the remaining 110-130 full-time staff on the Indy now at risk of losing their jobs.

>> As I See It: Who is getting the better deal?

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