Johnston Press eyes ad revenue tipping point in 2015

By Simon Nias, Thursday 30 October 2014

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Johnston Press chief executive Ashley Highfield has said the regional publisher is close to returning to top line advertising revenue growth following continued slowing of the rate of decline in the third quarter.

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Johnston Press CEO Ashley Highfield: "At some point next year we should get back to top line advertising growth"

Advertising revenues declined 3.4% year-on-year in Q3, compared with 4.6% in the first half of the year, while group revenues were down 3.1% in Q3, versus 4.3% in the first half.

Highfield said: "We're seeing more and more of these tipping digital tipping points - where digital growth outweighs print decline - such that we have a degree of confidence that at some point next year we should get back to top line advertising growth."

Highfield highlighted the jobs category, which grew across digital and print in Q3, as well as motors and property as areas where the publisher was experiencing overall growth.

"We are not in a classifieds business, we are in a display advertising business and motors is a good example of where dealers have realised increasingly that putting all their eggs into one basket with Auto Trader sees them being intermediated and commoditised," he said.

"They need to get their brand messages across and they're using us in print and they're using us increasingly in digital as well where motors is up 79% year-on-year. The same can be said with the property category where we're printing more ads than we've done for a while."

Highfield cited the Northampton Chronicle and Echo as one example of this boom in property advertising and said that it was "not unusual" for the weekly title to be over 200 pages "of which 80 pages will be the property supplement".

While circulation revenues continued to decline at a rate of around 4.7%, following volume declines of around 11% offset by cover price rises in the region of 6-7%, Highfield said that the publisher hoped to reduce volume decline to 10% and circulation revenue decline to around 3%.

He added that Johnston Press was continuing its efficiency and business transformation efforts and expected to achieve further cost savings through a "number of line items", including headcount reduction but also paper costs.

"Newsprint prices are not increasing - they're marginally getting better for us," said Highfield.

New initiatives, such as the partnership with Sky on its Sky AdSmart localised TV advertising product and Johnston's own Digital Kitbag which provides digital marketing services to SMEs, were said to be progressing well.

"[They're] not going to show through in the revenues for 2014 but certainly should in 2015 and beyond," said Highfield.

Other developments in the pipeline include the creation of a digital advertising network in partnership with other regional publishers that would then be the basis for offering online advertising space to agencies on a programmatic basis.

"I'd hope to be able to share something with you very shortly on that," said Highfield. "We all think this is a potential game-changer if we could pool our inventory to create something of scale but also something that would enable advertisers to address hyper-local markets and very targeted and behavioural advertising.

"I and my colleagues at other regional publishers are very excited about this opportunity."

Johnston Press's share price closed at 3.55p down 3% on the previous day's closing price. Shares are expected to begin trading around 170p following the publisher's share capital reorganisation, which will see a significant reduction in the number of Johnston Press shares in issue, with one new share being worth 50 old shares.

The capital reorganisation is subject to shareholder approval at a general meeting on 12 November.

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