Defends bond buybacks
Highfield defends plans to buy back Johnston Press bonds at a healthy discount. Prices vary but last traded values on the Frankfurt exchange were just under 60p/£, meaning that it could net a considerable saving of the full capital value that is due for repayment in 2019. The bonds have a 8.625 per cent coupon and cost the company nearly £20m per year just to service interest.
We have always stated we would use disposals to both strengthen balance sheet and pay down debt.
Reviews Sky TV ad sales deal
Johnston Press says it will review a three-year deal with Sky TV, over concerns that it may be losing some of its most lucrative advertisers to the pay-TV company’s AdSmart product. Highfield:
I think it is one of those products which we need to think hard about in terms of whether we are giving potentially some of our best customers away. It needs to be really closely reviewed in terms of making sure it is beneficial to both firms. Both firms, Sky and us, are still committed to try and make this work but I think it is a product we are currently under review on.
Daily Mail interview
Highfield is interviewed for a Johnston Press investor profile in The Daily Mail. On whether the i will increase national advertising share.
We have the opportunity now, if we can package ourselves properly, to go on the front foot to take a greater share. Even in a declining market this should be possible. For the first time we have enough clout, being the fourth largest publisher in the UK, to go to the agencies and forge our own agreements.
On Johnston Press’ general business condition:
We are only halfway through this journey. We have the debt down from almost £400m when I joined and a business that had a cost base that was unsustainable is a business with still almost the whole range of attractive brands. But as I say, the job is only half done.
Profits rise by more than a fifth but further cuts loom
Johnston Press reports total revenue for 2015 was down by 6.8% from £260m in 2014 to £242.3m last year. However, profits increased by 22.6% to £31.5m by reducing costs to £191.7m from £205.3m in 2014. CEO Highfield says the group hopes to sell some brands and some of its key assets. However, he said he “could not rule out” closing some titles. Debt is down by £14.8m to £179.4m from £194.2m in 2014, with interest payments reduced by almost £10m to £19.1m. The number of people reached through Johnston’s digital titles was up by 40.7% to 22.6 million, with digital advertising revenue rising by 12.4% to £30.6m.
We are a plc and our primary objective is to keep the business moving forward … we have to make profits. We are all on the same side here, which is try to get the business back to growth and get the long-standing debt off our shoulders. The tough trading conditions have already been highlighted by DMGT and Trinity Mirror. We are being prudent in not anticipating it getting better and we are going to make sure we are cutting our cloth appropriately.
Highfield also says Johnston has filled all but two of 50 roles for i for when it takes control of the title on 10 April, filling the roles from The Independent within two weeks.
Issues profit warning as advertisers cut spending
Johnston Press reports that full-year profits would be down by around 5.5% and half year profits by around 5% after it saw a fall in advertising revenues and circulation sales in the 26 weeks to 4 July 2015. The company said advertisers chose to hold off and slash spending across print and online amid the uncertainty caused by the election. The share price falls by more than 16%. CEO Highfield:
Trading conditions in the first half of 2015 have undoubtedly been challenging, especially in the period around the general election – a time when there was also a high degree of uncertainty in the wider market.
Journalists job losses warning
While speaking at the Digital Media Strategies conference, a gathering of more than 400 CEOs and senior leaders from the media industry, Highfield warns that the number of full-time journalists working across the group’s local titles will fall from its current figure of about 1,000. He says Johnston Press is aiming to increase the proportion of its revenue from digital advertising to about 23% in 2015, up from 17% in the current financial year, and that the group is headed towards a point at which digital ad revenue is growing four times faster than print declines.
The economics of this business means we will end up with fewer full-time journalists on our books. What you end up with is a much more fluid model with contributors producing a larger percentage of the newspaper. That’s not something we can duck. The economics of the digital world are going to mean our businesses can grow, not just survive but grow, but we need to go about things in a different way. It doesn’t mean the front of the book or the quality of editorial oversight will be diminished.
‘Worst is over’ for local papers
Highfields says, contrary to the predictions of media pundits, that Johnston Press will still be printing newspapers in five years. The decline in Johnston Press revenues has slowed from 4.3pc in the first half of the year to 3.1pc in the third quarter. The company cited 40pc year-on-year growth in the audience for its websites, to 27 million users in September, as the main force behind the improvement.
We’re increasingly confident in saying the worst is over for the regional press. We might not be completely out of the woods but the growth in digital audiences, and in fact the performance of print, tells us we’ll get there.