REGIONAL newspaper publisher Johnston Press endured a worse start to 2011 than expected after government spending cuts hammered its advertising revenue, wiping a fifth off its market value.
The group, whose titles include the Scotsman and the Yorkshire Post, said total advertising for the first nine weeks of 2011 fell 11.4 per cent compared with a drop of 6.4 per cent for the whole of 2010.
The gloomy update mirrored a similar outlook from rival Trinity Mirror and prompted analysts at brokerage Altium to suggest the ad recovery seen in other media markets could by-pass press companies, which are also struggling with falling circulation.
The weak trading, together with chief executive John Fry’s decision to stand down by March 2012 and a forecast that the economic outlook for 2011 would remain uncertain, sent Johnston shares down more than 20 per cent.
Finance director Stuart Paterson said the advertising market had been poorer than expected. “Once the government got in, public sector recruitment really dropped,” he said. The British government has cut its spending on advertising as part of an overall drive to cut its budget deficit.