Johnston Press revenue dented by Google and Facebook changes

Newspaper publisher Johnston Press reported a drop in first-half revenues on Wednesday as it took a hit from algorithm and news feed changes at Google and Facebook, but said it swung to a pre-tax profit.

In the 26 weeks to 30 June, total revenue fell 10% to £93m, with digital advertising revenues down 7.4% compared to the same period a year ago to £12.2m on the back of changes at Google and Facebook.

Total adjusted advertising revenue was down 15% period-on-period, which the group said reflected "challenging" industry conditions. Revenue from classified advertising saw the sharpest drop, down 28.5% compared to the same period a year ago.

However, the company said it swung to a pre-tax profit of £6.2m from a £10.2m loss, while operating profit rose 50.1% to £7.4m thanks in part to a strong performance at the I newspaper.

Chief executive officer David King said the company was being affected by historical debts, including its pension obligations, which continue to weigh on the balance sheet. He also pointed to "tough" market conditions affecting the performance of its newspapers and websites.

King said: "The market backdrop for regional/local newspapers is extremely difficult, as evidenced by the 15% drop in our adjusted advertising revenues from H1 2017. We have continued to make progress growing digital audiences to a record 27.3m average unique users per month. However, the continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes, has contributed to total digital revenue decline, while balance sheet constraints has restricted the group's ability to invest, and counter these effects.

"We will engage with the Cairncross Review into the future of high quality journalism with a view to helping address the challenges faced by local news organisations in monetising its content. As part of the strategic review, the group continues to explore its options for the refinancing or restructuring of the group's debt but, as yet, no decisions have been made nor agreements reached. We will provide an update as soon as possible."

At 1345 BST, the shares were down 18% to 4.18p.