Nic Newman, Associate at Reuters Institute spoke to Ashley Highfield, CEO of Johnston Press on the future of local news.
The recent acquisition of the i has made Johnston Press the fourth biggest player in the UK newspaper market, with a combined circulation equal to 9 percent of the national daily circulation.
That’s a great first step towards marrying its national and regional papers’ respective strengths, but it’s a far cry from guaranteed sustainability. Credit ratings agency Standard and Poor’s recently downgraded its rating to CCC+, representative of ‘substantial risks’ to the group’s long-term viability.
Ashley Highfield, CEO of Johnston Press, recently spoke about how the acquisition of the i can bolster that viability – but many questions still remain.
He began by commenting on new opportunities afforded by the move. He explained that the i is a “highly regarded newspaper with a clear market position and a loyal readership” which has given Johnston Press the ability to create new commercial synergies as it increases its local and national footprint:
“This is a transformational acquisition for Johnston Press and an important step towards delivering our long-term strategy.
“This enhanced reach represents a significant growth opportunity for Johnston Press in terms of national print and digital advertising revenue. It also rebalances our revenues towards less volatile circulation revenues.”
Highfield reassured the audience at the Guardian Changing Media Summit that the quality of the i is central to the strategy, noting “it is precise news with a loyal readership.”
Crucially, the i is a very non-London-centric paper with 85 percent of readers based outside of London, and so bringing in further regional content is important to the long-term strategy. And Johnston desperately needs a good long-term strategy – in 2008 it had a turnover of just under £600 million and employed around 7,000 people. But seven years later that was down to a turnover of around £300 million.
With the purchase of the i, Johnston Press have taken on 50 staff to form a full team, in addition to independent.co.uk hiring 30 new staff. The majority of those staff are existing staff members at the Independent, with the current editor Oliver Duff staying on in the role.
The national-to-local focus of the scheme is evident from Jeremy Clifford, editor-in-chief at Johnston Press’ statement that:
“There is a huge opportunity in front of us to combine their expertise with that of the 900 journalists in Johnston Press and their knowledge across our portfolio to really provide our readers with effective and relevant content at a national level.”
Highfield announced that they have a three year content supply deal with The Independent, in which the content will only appear in print and not digitally to prevent duplication and cannibalisation of the others’ readership.
Johnston Press have the task of building and launching the new i website, inews.co.uk, within a month. It aims to be in constant flux with ‘what you need to know’ essentials, grouping the content into categories such as ‘essentials’, ‘long reads’ and ‘distractions’. Highfield also says that they aim to have trend graphs on the site, but no Daily Mail-style ‘sidebar of shame’:
“With our considerable digital experience the combination of Johnston Press and i will also allow us to grow digital audiences and revenues through the creation of inews.co.uk.”
He noted it is both “scary and exciting” to create the website, which will “echo the brand values (concise, quality, daily digest), without replicating the independent.co.uk or theguardian.com.”
Newman asked how Johnston Press hopes to monetise the site in such a crowded market with no money from digital advertising, and the issue of ad blocking, to which:
“We have a launch sponsor. Online is going more creative, we have high level solutions. We don’t want to cover the site with low end inventory – we have innovative solutions around native and strategic.”
In 2015, 20 percent of Johnston Press’ revenue came from digital. Highfield says that this needs to be between 30 and 40 percent within the next few years.
As such, Johnston is looking to scale quickly with the acquisition of i, increase market shares, focus on key markets with good growth (such as in Leeds and Edinburgh) and the fastest growing economy, which turns out to be Milton Keynes.
Highfield also says that they will take costs out of business and journalism, but are keenly aware of the danger of losing the quality that made the i successful in the first place.
Instead, they’ll be focusing on working on providing advertising solutions for local businesses, without pinning their hopes on classifieds, noting that “marketing services are where we are heading”. That’s in line with what Highfield told TheMediaBriefing at last year’s Digital Media Strategies:
“People do not buy a local paper to turn to the small ads and sell a push bike. With that having migrated… you can argue it was a major missed opportunity for the regional press not to make more of those verticals like motoring or property… but that’s the past, and now we have a much more stable environment, and our audience numbers… have never been bigger.”
But, as S&P’s downgrade of Johnston’s rating demonstrates, the group is “unlikely to grow its digital operations fast enough to offset relentless declines in print advertising sales and paper circulations”. Its 2014 annual results demonstrated that it wouldn’t return to revenue until 2020 even if its rates of print decline and digital increases continued apace – which they evidently have not:
Regardless of the wider reception to the acquisition – and Highfield’s argument that the i affords them access to a national audience – Johnston Press still has a long way to go before it can truly claim to have a sustainable model.