When Johnston Press CEO Ashley Highfield unveiled an ambitious and forward-thinking strategy plan (pdf) for the company earlier this year, it marked a key moment for regional media in the UK.
The business is now digital-first and some its most senior managerial and editorial leaders representing the old days are gone. Daily titles were turned into weeklies and iPad editions launched. Highfield is part of a new generation of media CEOs, digital natives not scared to overhaul the status quo.
One of the more striking pronouncements he made was that "every one of our newspapers are profitable. The smaller the newspaper, the more profitable it is."
He goes on: "This is not a burning platform that we all need to leap off. We can manage the migration to digital. We need to do it quickly but it’s not a panic stations (situation) that some of the other press players are facing."
This got me thinking. Are they really all profitable? Surely a standard weekly title in JP's vast empire is currently struggling to make ends meet?
Behind the strategy - the bare facts of revenue and profit
I've seen the balance sheet profit and loss figures for a JP title, typical of many of its 175 weeklies, with a circulation in region of 10,000 per issue. I'm not naming the title nor the region, but the figures come from a reliable source.
So, is it profitable?
In a typical month (I'm looking at figures for the second half of 2011) the paper makes advertising income of £70,000 and circulation income of £17,000. The online revenue is £3,600 but rising, so it's a total revenue of £90,600.
On the cost side, as might be expected, editorial and commercial staff costs are the biggest expense at £28,000 including contributors. With printing costs, premises and distribution that's £38,750 in operating costs.
In all, that's a £51,000 monthly profit - translating into about £600,000 a year.
Of course, that's not including the shared costs that all big businesses have to bear - IT, HR, editorial technology, thus making a real profit margin hard to calculate. And this is just one title.
But that's not an insignificant amount of money - especially when you consider the sheer number of the UK weekly newspaper titles owned by Trinity, Newsquest, Johnston, Tindle and others.
Two things scream out from these figures: Johnston, like its industry peers, has been ruthless in cost-cutting. The entire editorial budget is barely £16,000 a month, which means not many peobalaple are doing a lot of work.
It also shows that keeping fixed costs low are crucial to preserving profit margins - so there is real business sense behind Highfield's decision to talk more JP titles from daily to weekly.
Glass half full?
Predictions of extreme gloom - such as Claire Enders' famous, later retracted, assertion that half the UK's 1,300 papers would shut by 2013 - have not come to pass.
There's no doubt that the print advertising returns are falling, however. In March ZenithOptimedia downgraded its 2012 adspend forecast, shaving £60 million from the all-media total and predicting a 1.7 percent fall for newspapers.
The current model is not futureproof and I don't think you find many in the press world who would argue otherwise. It's a decline, but it's a slow one. Here's what JP wants its revenue by medium split to look like in 2020:
But Highfield's optimism for a longer lifetime for weekly printed papers than some expect might just be well-placed.
Picture via Invantory.com, via a Creative Commons licence.