If you look at the share price of Johnston Press during the time that Ashley Highfield has been chief executive, a dramatic pattern emerges.
When the former head of BBC Technology took on his first job in the newspaper industry in 2011, Johnston shares were flat-lining at around 5p compared with the heady days of 480p six years earlier.
Cue a drum roll. By February this year, Johnson had fought all the way up to 30p - and then there came a sudden catastrophic fall all the way back down to 5p, and even 4p in recent weeks.
Has Highfield been guilty of marching Johnston Press all the way up the hill and then taking them all the way back down, shedding more than 1,300 jobs along the way?
That at least is how some journalists have portrayed events at the regional and local newspaper group under headlines such as: “Johnston Press share price plunges 77 per cent in two weeks”.
In fact, while the share price was plunging, Highfield had successfully completed a £360 million financial restructuring package, which has cut the company’s debt, and therefore the money it has to pay the banks, and signed up BSkyB as a high profile shareholder.
“The big moment for us was the big refinancing. In some ways, it brings to an end the first phase of the regeneration of Johnston Press. We now have funding for the next five years on better terms and we now have debt of £200 million rather than more than £300 million,” Highfield explains.
The plunging share price was a result of the £75 million rights issue of new shares that was part of the refinancing package. As a result, many millions more shares are in circulation.
The share price didn’t go down in real terms for existing shareholders, Highfield explains, because shareholders got six and a half new shares for every old one, meaning they had more than 30p in value at the new base share price of 5p.
“The thing to concentrate on is not the share price but the market capitalisation (total value). I would hope to get it to more than £300 million quite quickly. When I joined, the market cap was £26 million,” says the Johnston Press chief executive.
The sometimes obscure financial details are important because they provide the essential information to be able to judge whether Johnston Press is a corporate basket case - or a business starting to take on the feel of a normal company after years of crisis, with normal levels of debt. For Highfield, and the City, the important point is that total debt is now less than the equity value of the company and underlying profits are still running at more than £60 million a year.
“Provided we carry on delivering what we say we are going to deliver, we will get rid of that ‘legacy’ stigma that attached itself to Johnston Press,” says Highfield.
And the former television executive points to ITV by way of comparison as another established ‘legacy’ media company which was written off prematurely.
“Some old technologies get killed off, like vinyl, but most find an accommodation. What we will find is that like ITV, people will come to realise that providing we move with the times, both in print and online, I think we have a healthy future and we have been massively oversold,” he insists.
The tie up with Sky
The £5 million stake taken by BSkyB in the company that owns The Scotsman represents only two per cent of the shares but is, Highfield believes, of more than mere symbolic importance.
Sky was looking for a partner to develop its AdSmart local service, which tailors what is shown in TV ad breaks according to a household’s profile and location.
“We had the most sophisticated way of selling our digital products and a pretty good track record. So they actually approached us,” Highfield explains.
“We said, what can we do to signal to the market that this is something that both sides take seriously and alighted on an equity investment,” he added.
It obviously helped that Sky’s chief marketing officer, Stephen van Rooyen, was a Johnston Press non-executive director.
When the AdSmart service is rolled out, Johnston will be able to offer a medium-sized car dealer in Sheffield, for example, a Sheffield-only TV campaign on Sky, as well as the usual print half page, the purchase of Google AdWords and even website design.
“You can see the direction of travel of the company - that we want to become a one-stop shop for all the advertising and marketing needs of small to medium-sized enterprises,” says Highfield.
The Johnston chief executive, one of the new breed of newspaper executives, who previously worked at Microsoft as well as the BBC, was hired primarily to boost the company’s digital presence. Highfield can point to evidence that this has been happening.
Johnston Press now attracts 16 million unique users a month via digital –a year-on-year rise of 50 per cent on top of a print audience of 9.5 million.
“We now have a digital audience that is growing very strongly, far outweighing any decline in print. It was the first thing I wanted to address, which was a declining overall audience,” says Highfield.
At Johnston, as for all newspaper executives, the challenge remains to turn digital eyeballs into serious revenue.
Last year, digital revenues rose by 13.3 per cent to £11.6 million but that was only a small part of overall revenue of £143.3 million.
“I don’t want cannabilisation of what is our biggest source of revenue (print). The great thing about the regional press is it’s not like the Guardian where people stop buying print and consume online,” Highfield explains.
“Actually we have pretty much created a new audience online who never bought us in print,” he adds.
Johnston Press now also has 6 million mobile users, many of them young, compared with none two years ago. The men are coming for football - Sunderland, Leeds, Portsmouth - and men and woman are attracted equally by local entertainment news.
It remains difficult to get the mix right between print and digital and the Johnston executive says he is starting to get more of a feel for how to make local papers “ever more relevant” to the communities they serve.
Highfield cites “the very well respected” Jean McQuarrie, editor of the Harrogate Advertiser, as an example of what he is talking about. She is the sort of person needed to oversee what goes into the paper.
“We will always have our own journalists and the front of the book will always be written by us. The percentage between what we write and what our readers contribute, that is going to shift,” Highfield concedes.
McQuarrie, for example, emails out the templates that all Johnston Press papers now use, to a number of trusted contributors, such as the owner of a local garden centre who writes a gardening column.
“No, because the article is pure and simple about gardening. It’s not advertising just contributed content. But I do see native advertising as an important part of the mix, although it needs to be well-managed and sign-posted and not overwhelming,” the Johnston Press chief executive explains.
Slowing the rate of circulation decline
The experience of Harrogate and other Johnston papers such as the Portsmouth News, which covers the city’s different communities with micro-editions, Highfield believes is starting to provide evidence that the rate of circulation decline can, at least, be managed.
“I think that we can look at our more successful newspapers and say that the level of decline is levelling off,” is the cautious way Highfield puts it.
“The Portsmouth News has managed to slow its rate of decline down to low single digits. Am I thinking, is there going to be a point where we can turn that round, there might be,” he adds tentatively.
But in his third year in charge at Johnston, considerable structural changes have been made to the company, apart from reducing the debt.
A cross-company editorial board has been set up bringing together the editorial directors of the separate business units in Johnson, so that best practice can be identified and encouraged.
There is also a central design hub, which recently produced a special supplement on World War 1 to make available to regional editors who were then able to add their own local content.
Highfield concedes the changes have taken time, but emphasises the complexity of the process which amounts to a fundamental re-engineering of the business.
“It has taken a long time but you have to take all the designers from the field and put them into the central unit, change the management structure and create this editorial board and you have to template all the newspapers so that you can call these things down easily,” explains Highfield.
Most of the 1,300 jobs that have gone have not been journalistic posts, although the number of staff photographers is down by 50 per cent.
All journalists have been equipped with smartphones and laptops and many take their own pictures and readers send in pictures of local events such as floods.
“That’s just the reality of the world we live in now,” the executive argues.
Clearly there has been a lot of change in the past three years at Johnston Press but what of the next three?
“I want to be number one news provider to the communities we serve and cement the growth in our audience and in our advertising revenue. I can now actually see Johnson Press expanding and we couldn’t have said that before the restructuring,” says Ashley Highfield.