Advertising slowdown hits Johnston Press revenues

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Revenues at Johnston Press fell six per cent in 2016 as it continued
to suffer from the severe headwinds of falling advertising revenues
and rising costs caused by the vote for Brexit.

The owner of the i newspaper and publisher of 200 local and regional
titles including The Scotsman and the Yorkshire Post said in a trading
update that advertising revenues declined by seven per cent in the 52
weeks to the end of December.

But excluding the i, which Johnston bought from the Independent owner
Evgeny Lebedev for £24m last April, total revenues were down 14 per
cent – although the company added that the picture improved
considerably in the final quarter of 2016 after a sharp decline in
revenues in the third quarter.

The company said the weakness of sterling since the Brexit vote had
also increased the cost of imported paper and ink.

Johnston Press is under pressure from investors and bond holders over
the performance of the company despite slashing costs by £100m since
2012. The company must refinance £220m of bonds in 2019.

The company’s market capitalisation has fallen from £175.8m in March
2014 to £16.5m when the markets closed on Thursday evening.

Chief executive Ashley Highfield said:

Despite the challenging print market, including a very difficult summer prompted by Brexit-related uncertainties, we have seen some improvement in our markets during the fourth quarter.

Whilst we expect the overall market environment to remain challenging
for both the Group and the industry as a whole, we remain focused on
delivering on our strategic priorities.

Before Christmas the group disposed of a number of what it described
as “non core” titles in East Anglia and the Midlands raising £17m
which Johnston says will reduce net debt and allow it to cancel its
revolving credit facility.

The company signalled today that it would continue to consider further disposals to strengthen its balance sheet, after it took a £216m writedown on the value of most of its newspaper assets last August.

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