One thing you thing you don’t want if you’re a business trying to work out how to revive an ailing business model is a mountain of debt to hold you back. So amid the doom and gloom accompanying the regional media these days, it’s nice to see two of the UK’s local newspaper businesses Johnston and Archant – making significant progress in freeing themselves from their creditors.
Johnston Press’ H1 results for the year show a familiar tale of declining revenues but a small jump in profits.
Underlying revenue at Johnston Press is down 4.3 percent from £141.9 million to £135.8 million, for the 26 week period ending 28 June 2014.
Print advertising revenue fell 9.2 percent from £78.1 million to £70.8 million, while revenue from newspaper sales dropped 4.4 percent from £41.6 million to £39.7 million.
Total ad revenue decreased 5.1 percent from £89.5 million to £84.9 million.
Profit before tax was up 188.5 percent from £2.1 million to £6.1 million.
Digital audiences also increased 39.4 percent year-on-year to 15.9 million unique users a month, while digital advertising revenue grew from £11.4 million to £14.1 million – a rise of 23.4 percent – fuelled partly by growth in digital ad categories including Employment (+15 percent), Property (+72 percent) and Motors (+132 percent).
Mobile is also on the up for the publisher – there were 6.7 million mobile users in June, representing 88 percent year-on-year growth and now representing 46 percent of all digital traffic.
In its interim statement, JP said the first half of 2014 had seen the continuation of a strategy set out at the beginning of 2012: “to grow our overall audience through re-launching our print titles and investing in new digital products across all platforms, to stem the decline in top line revenue and return to top line growth.”
JP also planned to grow digital revenues and reverse the decline in operating profit enabling the downpayment of debt.
It looks like decent progress has been made with these targets, and the publisher’s new digital marketing service that chief marketing officer Lucy Sinclair told TheMediaBriefing about in June – Digital Kitbag – is growing, too.
Buying more time
It’s a mixed bag, but there’s one major highlight – Johnston’s success in reducing net debt from £306.4 million to £181.6 million – a decrease of 40.8 percent.
And what the company is saving in interest payments more than offsets the drop in revenue – a £16 million saving compared to a drop of £6.1 million in revenue.
That’s bought the publisher more time to work out how to continue its gradual digital transition, which it’s making good steps towards – leveraging its relationship with SMEs for hyperlocal targeting of national ad campaigns and focusing on repurposing its skillset for businesses through Digital Kit Bag.
That doesn’t mean things aren’t tough, but CEO Ashley Highfield is achieving his plan, and should be pleased with a solid first half performance.
Confidence at Archant
Meanwhile, at Archant, chairman Simon Bax has written to shareholders announcing that the publisher should be debt-free by the end of the year, and current performance is broadly in line with expectations:
“Our half-year financial performance is broadly in line with expectations, and we currently expect reported numbers to be at similar levels to last year. A number of initiatives are beginning to show results, though we still face a difficult operating environment in many parts of the business. Cash performance remains strong and we expect this to continue in the second half of the year and anticipate having no bank debt at year end.”
The gist? These are two companies that are going to have difficulty delivering more revenue year-on-year reliably until they really work out what the regional media business model should look like. Reducing debt in these circumstances gives them a bit more time to get there.