Executive Summary
Johnston Press operates regional newspapers (and their web sites) across the UK and Ireland, with a portfolio of over 300 papers. It has grown through acquisition of smaller newspaper groups, leaving it highly indebted; an agreeent has just been reached on refinancing. Over the next few years the company will be focused on cutting costs in its print business, and maximising the income from its digital operations.
Company History
Johnston Press was founded in Falkirk in 1767. It was listed on the London Stock Exchange in 1988. In 1996, it purchased EMAP's regional newspapers, making it the fifth largest regional publisher in the UK. This was followed by the acquisition of Portsmouth and Sunderland Newspapers in 1999, Regional Independent Media Holdings in 2002, and a number of acquisitions in 2005. In 2006, it acquired The Scotsman Publications, gaining a number of regional papers. In 2008, with advertising revenues declining and high levels of debt, Johnston Press held a rights issue to shore up its balance sheet.
Current Events
Johnston Press has recently finalised its renegotiation of its borrowing facilities, which had been continuing through the first half of 2009. This should give it a stable base for the medium term.
Business Model
Johnston Press operates 300 local newspapers, and 319 local web sites, reaching a total audience of 15m. There are two main drivers for its revenues; circulation (or, increasingly, reach - which includes online users) and advertising.
Circulation brings in circulation revenues, which are generally stable. Circulation of local newspapers in the UK has been declining steadily for the last ten years, though at low rates of decline. However, circulation revenues have generally been stable owing to periodical price increases. Circulation is also important in creating the newspaper's appeal to advertisers; while newspaper advertising is not overtly priced per thousand, like web advertising, larger advertisers clearly base what they are prepared to pay on the circulation of the newspaper. Circulation revenues in 2008 fell from £102.4m to £101.4m[1].
Advertising accounted for 65.9% of total revenues in 2008, a year during which advertising declined 17.1% and the rate of decline increased throughout the year, reflecting the economic downturn. Property advertising was 16% of the total, jobs 24%, and motor advertising is also an important element; all these areas have been hard hit by the recession. Display advertising is now the single largest element of Johnston…
