Struggling publisher Johnston Press’s share price dropped over seven per cent today on the news that it was putting itself up for sale.
The newspaper group behind the ‘i’ newspaper, The Scotsman and the Yorkshire Post, amid 200 regional titles, has a towering pile of debt totalling £220m that it must pay off by 1 June 2019.
However, its share price gives it a market cap of just £3.3m, an imbalance that has left investors rattled.
“In order to assess all strategic options to maximise value to its stakeholders, the board of Johnston Press announces today that it has decided to seek offers for the company,” it told investors today, with Rothschild advising on the process.
However, it hasn’t received an offer yet, saying: “There can be no certainty that any offer will be made for Johnston Press, nor that any transaction will be executed, nor as to terms of any such offer or transaction.”
Johnston posted a 10 per cent year-on-year decline in revenues for the six months to the end of June, to £93m, while pre-tax profit stood at £6.2m, compared to a £10.2m loss for the same period in 2017.
It also paid £9.5m interest on its then-debt of £203.2m.
The publisher owns around 200 local titles at a time when local journalism faces pressure from algorithm and news feed changes from Google and Facebook, through which people increasingly get their news online.
Accordingly, ad revenues fell 15 per cent in its latest financial results.
While the i newspaper grew circulation by 17 per cent in the first half of the year, and ad revenues by 20 per cent, Johnston Press’s historical debts and pension obligations weighed it down.
It comes as other newspaper publishers come under pressure, with Daily Mirror owner Reach saw like-for-like revenues fall earlier this week.
Julie Palmer, partner at Begbies Traynor, said: “We have all seen that there is a lot of stress in print newspaper with many of the regional newspapers across the UK culling staff and seeing news teams trimmed down to the bare bones.
“As such, this latest move by Johnston Press doesn’t come as a surprise. Even with the growing success of its flagship title, ‘i’, it still hasn’t garnered enough to be sure it will be able to pay the looming £220m of bonds next year.
“Like the retail high street that mirrors some of its issues, the move for media is online. Traditional newspapers have to find a way to adapt if they are to survive and thrive in this new world - and if they are to attract an investor the need for rapid evolution becomes even greater.”