i paper props up group

Johnston Press blames Google and Facebook for revenue hit

i newsNewspaper publisher Johnston Press blamed changes to search engine algorithms and news feeds for a slump in digital revenues.

The London-based owner of The Scotsman, Scotland on Sunday, Falkirk Herald and Yorkshire Post, said a strong performance by the budget publication ‘i’ helped it turn in a pre-tax profit for the half year to the end of June of £6.2m against a loss before tax of £10.2m last time. There was an operating profit of £7.4m compared to £4.9m in the same period last year.

Adjusted advertising revenues from continuing operations are down 15% with revenue from classified advertising falling 28.5% compared to the same period last year. Total revenue was £93m (H1 2017: £103.3m) down 10%.

Digital audiences across its 200+ titles grew to a record 27.3m average unique users per month. However, it said “the effects of algorithm and news feed changes by Google and Facebook” contributed to total digital advertising revenues declining by 7.4% (down 4.3% excluding classifieds) to £12.2m.

Adjusted newspaper sales circulation revenues fell by 1.7% to £38.9m, with price rises broadly off-setting the impact of circulation declines.

A strong performance from the i newspaper, which saw a 61% increase in adjusted EBITDA to £6m, has helped to mitigate a broader decline in revenues.

The group’s adjusted net debt position, which excludes mark-to-market gains on its bnds, is £203.2m – with interest payments consuming £9.5m of cash in the period.

Chief executive David King, who replaced Ashley Highfield earlier in the summer, said: “There are two sets of issues affecting Johnston Press. The first is the group’s historical debts, including its pension obligations, which continue to weigh on our balance sheet.

“The second is the tough market conditions affecting the performance of our newspapers and websites. However, our resilient performance allowed us to generate an operating profit of £7.4m in the period, up from £4.9m in H1 2017.

“The strong performance of the i demonstrates that it is possible to grow a newspaper brand, despite the prevailing headwinds. The i grew its circulation revenues by 17% and its advertising revenues by 20% compared to H1 2017. The digital audience for inews.com grew to 4.2m in June, up from 1.3m in December last year.

“The market backdrop for regional/local newspapers is extremely difficult, as evidenced by the 15% drop in our adjusted advertising revenues from H1 2017.

“We have continued to make progress growing digital audiences to a record 27.3m average unique users per month. However, the continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes, has contributed to total digital revenue decline, while balance sheet constraints has restricted the group’s ability to invest, and counter these effects.

“We will engage with the Cairncross Review into the future of high quality journalism with a view to helping address the challenges faced by local news organisations in monetising its content.

“As part of the strategic review, the group continues to explore its options for the refinancing or restructuring of the group’s debt but, as yet, no decisions have been made nor agreements reached. We will provide an update as soon as possible.”

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