Johnston Press revenues hit by Google and Facebook changes
Johnston Press reported a 10% fall in half-year revenues to £93 million, but a strong showing from the i newspaper helped boost earnings.
The Scotsman and Yorkshire Post publisher Johnston Press has seen trading woes compounded after Google and Facebook platform changes knocked online ad sales.
Johnston Press – which is under pressure as it looks to secure a debt refinancing deal – reported a 10% fall in total revenues to £93 million for the first half of 2018, despite a boost from the i newspaper.
The group said underlying advertising revenues fell by 15% while classified ad sales plunged 28.5% year-on-year.
The continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes, has contributed to total digital revenue decline. David King, chief executive of Johnston Press
Digital advertising revenues – which have previously helped offset a decline in traditional ad sales – also fell, down 7.4%, as the changes to Google’s online search algorithm and Facebook’s news feed took their toll.
But Johnston’s results showed it swung out of the red with interim pre-tax profits of £6.2 million against losses of £10.2 million a year earlier, although the turnaround was largely thanks to a one-off £8.8 million accounting gain.
It saw operating profits rise 50.1% to £7.4 million, while underlying earnings fell 3.7% to £19 million.
The firm hailed another strong performance from the i newspaper, which notched up a 61% surge in underlying earnings to £6 million over the half year, helping lessen the hit to wider group revenues.
It added its strategic review was ongoing and said it will “update as soon as possible”.
David King, the newly-appointed chief executive of Johnston, said the group’s problems were two-fold – namely, historical debts and pension funding issues, as well as “extremely difficult” industry conditions causing sharp declines in ad revenues and newspaper sales.
He said: “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 have restricted the group’s ability to invest, and counter these effects.
“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,” he added.
But Mr King – who took over from long-serving boss Ashley Highfield earlier this summer – said the results for the i “demonstrates that it is possible to grow a newspaper brand, despite the prevailing headwinds”.
The i newspaper, which was bought by Johnston in 2016, grew it circulation revenues by 17% and ad sales by 20%, while its digital audience for the news.com site more than trebled to 4.2 million in June from 1.3 million in December.
Johnston Press shares fell as much as 21% after the results.
The stock has been see-sawing in recent weeks amid speculation over Johnston’s future.
It is looking at ways to refinance £220 million of debt that becomes repayable in June next year.
Golden Tree owns the majority of the debts owed by Johnston Press.