Johnston Press profits fall 16% after sharp drop in ad revenues
The woes of Johnston Press, the regional newspaper group, continued yesterday as it posted a 15.6 per cent fall in operating profits following a substantial fall in ad sales.
The company, which counts The Scotsman and The Yorkshire Post among its 318 titles, reported that the decline in advertising revenues had led to a decreased operating profit of £81.6m. Overall, advertising revenues fell by 9.5 per cent in the first half of 2008, from £228.5m a year ago to £206.8m.
Three-quarters of the company's revenue comes from advertising, but a combination of the rise of the internet and the pressures on advertising expenditure has seen this source of income dry up.
The chief executive, Tim Bowdler, said: "Advertising trends have continued to deteriorate... and future performance will inevitably be linked to the eco-nomies of the UK and to a lesser extent the Republic of Ireland."
Although its digital revenues increased by 52.1 per cent and its newspaper audience grew, Johnston Press was not able to offset the impact of falling ad sales.
This decline is accelerating. In the first quarter of this year, advertising revenues were down by 6.7 per cent, but by the start of the third quarter, the figure was 21 per cent lower than last year. Traditional advertising sources, such as property, have been hit by the deteriorating economic climate.
The resulting cost-cutting measures have been passed down to advertising, with a 17.8 per cent per cent reduction in property print advertising across the UK over the last six months.
With estate agents battling against the confusion surrounding stamp duty, the traditional summer lull in house sales on top of an already depressed property market, there has been a 40 per cent drop in Johnston Press's income from property advertising for the seven weeks since 30 June.
A spokeswoman said that the importance of "external factors was very high," and it was hard to say when the decline in advertising would stop.