Scotsman and 200 local weekly papers recover from deep financial trouble

The Scotsman on Saturday front page

By Liam Hay

The future of newspapers previously owned by Johnston Press has been secured after they were acquired by JPIMedia, a spokesman has told BBC Scotland.

The newly-formed company bought out Johnston Press, publisher of the i, The Scotsman and 200 local weeklies, following the court appointment of administrators earlier on Saturday.  Johnston Press said it meant employees would keep their jobs.

The newspaper group put itself up for sale last month.  Johnston Press was one of the largest local and regional newspaper organisations in the UK, but had debts of £220m which were due for repayment in June next year.

Its chief executive, David King, previously said the debt had “constrained us” and that none of the offers they had received for the firm was enough to repay it.

Mr King, who is now the new chief executive of JPIMedia, said the sale was “an important one for the Johnston Press businesses as it ensures that operations can continue as normal, with employees’ rights maintained, suppliers paid, and newspapers printed”.

He said it would focus on ensuring the group’s titles continued to publish “the high-quality journalism we are known for and which has never been more important”.

And John Ensall, director of JPIMedia, said: “In the absence of another financial solution being available for the business, we are pleased to have reached this agreement to acquire Johnston Press, to protect the value of the business, preserve jobs and allow for the uninterrupted publication of its websites and newspapers.”

He said that as part of the transaction, it had reduced debt levels significantly and would invest £35m into the business.

Meanwhile, the National Union of Journalists has said it has “significant concerns” about the long-term intentions of the newspapers’ new owners.

The union is demanding “a commitment that this is not a transition leading to a carve-up of the group motivated by asset-stripping rather than a commitment to journalism and publishing”.

The NUJ is expected to meet Johnston Press management on Monday.

Johnston Press had titles covering more than 200 locations from Scotland and Northern Ireland to the south of England.

It was founded in Falkirk in 1767, and listed on the London Stock Exchange in 1988, growing through acquisitions.

The i, which was first launched in 2012 and sells for 60p on weekdays and £1 on Saturdays, was seen as the jewel in the crown of its papers.

In its latest results, Johnston Press reported a 10% fall in revenues during the first half of 2018. It swung back to a profit of £6.2m for the six-month period, but this was mainly due to a one-off accounting gain of £8.8m.

In September, the i recorded a year-on-year circulation drop of 9% to 242,408 copies.

Facing a debt repayment deadline next June, with no sign of a refinancing deal, and with the market valuation of the whole company below £3m, Johnston Press was cornered.

The new owners are led by GoldenTree Asset Management. Fidelity is a better known investor as part of the consortium, along with Benefit Street and Carval. They have set up holding companies for ownership of the titles.

Such companies do not have a track record of investing in titles for the good of the staff or the communities they serve.

But the spin on day one is that that is precisely what the new owners are doing.

Supporting the Johnston titles with a debt write-off and new investment is being aligned with the success of an underlying business that remains “profitable and cash-generative”.

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