Earnings: Johnston Sales Indicate Recession, Digital Slowed In Last Few Weeks

Oh dear. The local news business is just getting worse and worse for the UK’s second-biggest regional network Johnston Press. Ad sales between March and November were 15.5 percent down on last year. The Scotsman and Lancashire Evening Post publisher had already reported ad sales down 9.5 percent for the first half of the year – this morning, it said things “have deteriorated since then” thanks to falling property and display advertising, rising unemployment and the general effects of the credit crunch.

It’s becoming clearer and clearer that not even digital will shield publishers from this perfect storm as much as they hoped. Offsetting a 17.8 percent print ad slump, Johnson scored 36.8 percent better digital ad sales – but, its statement said, “recent weeks showed slower growth, reflecting the performance of the wider economy”. The group’s digital strategy has been to train multi-skilled reporters and sell online ads; long-time digital manager John Bradshaw retired in June after ex AOL (NYSE: TWX) VP Lori Cunningham replaced Alex Green as digital director in March. CEO Tim Bowdler (pictured) retires in May.

With 323 local websites and 318 papers, Johnston is particularly exposed in the part of the publishing business most vulnerable to the classifieds downturn – and the local news market was already shrinking before the economy began sinking. Johnston’s classifieds breakdown perfectly illustrates the likelihood of a UK recession – property ads down 48.4 percent, job ads down 32.1 percent, car ads down 24.3 percent and display down 12.1 percent all in the last six months alone, and that’s across both print and web.

Circulations are down, too, though only slightly, “suffering from both the general economic conditions and a significant reduction in levels of interest in the property market”. Johnston says it’s knocked £19 million off its debt since July, now standing at £465 million, after it sold a 20 percent stake in May to Malaysian investment unit Usaha Tegas. The full-year forecast: lopping off more debt to post a small profit.