Ad sales slump hits revenues at Newsletter owner Johnston Press
THE biggest shareholder in the News Letter and Scotsman owner Johnston Press has reported a 10 per cent slump in revenues for the first half of the year.
Johnston Press - which is under pressure as it looks to secure a debt refinancing deal - reported a slump in turnover to £93 million for the first six months of 2018, despite a boost from the i newspaper.
The figures were heavily impacted by a sharp fall in advertising sales, with underlying revenues falling by 15 per cent and classified ad sales plunging 28.5 per cent year-on-year.
Digital advertising revenues - which have previously helped offset a decline in traditional ad sales - also fell, down 7.4 per cent, as the changes to Google's online search algorithm and Facebook's news feed took their toll.
In spite of the negativity the latest Johnston results show the publisher has moved out of the red, posting interim pre-tax profits of £6.2 million against losses of £10.2 million a year earlier. This was largely thanks to a one-off £8.8m accounting gain.
It saw operating profits rise 50.1 per cent to £7.4 million, while underlying earnings fell 3.7 per cent to £19 million.
The firm hailed another strong performance from the i newspaper, which notched up a 61 per cent surge in underlying earnings to £6 million over the half year, helping lessen the hit to wider group revenues.
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.
"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 per cent and ad sales by 20 per cent, while its digital audience more than trebled to 4.2 million in June from 1.3 million in December.
Johnston Press owns the Yorkshire Post and around 200 local titles including the Morton Group of weekly titles, which includes the Ulster Star, Mid-Ulster Mail and Ballymena Times.