For sale: the business of bad news
The long-running decline of Scotland's national newspapers could be about to turn a page.
The owner of The Scotsman, Johnston Press, has announced that it's in the mood for selling assets.
A trading update on Tuesday said: "A number of brands have been identified that are not part of [the company's] long-term future, as they fall outside its selected markets, do not match the audience focus, or do not offer the levels of digital growth sought by the group.
"A process has been initiated to explore the sale of these assets to identified parties."
Which assets, and to which parties? Johnston Press won't say - adding only that it wants to focus on "geographies" (places?) with the best growth potential, and on higher-yield customers.
That much is sure to renew long-running speculation that a takeover could be getting cooked up by Newsquest, US-owned proprietor of The Herald in Glasgow. It could offer synergies (in this case, more cuts to costs) at least across the advertising, production, print and circulation departments, and maybe also editorial.
Or seeing similar logic, The Scotsman could be bought by the DC Thomson family in Dundee, who have been rather more canny custodians of the Courier and Press & Journal, resulting in a fat wedge of funds to invest.
But before assuming that The Scotsman is on the auction block, bear in mind that Johnston has well over 200 titles.
At the end of 2014, its accounts say that it had 13 dailies, 193 paid-for weeklies and 38 free titles.
That includes a significant presence in Scottish local papers, from the company's roots at the Falkirk Herald to the Stornoway Gazette in the north-west to the Berwickshire News in the south-east.
None of them come close to the brand power of The Scotsman, along with stablemates Scotland on Sunday and the Edinburgh Evening News.
And that alone might be one reason for holding on to it, in the digital age when brand power and a world-famous masthead count all the more. Also, The Scotsman probably ticks the "retain" box by having some of the group's highest-yield readers and advertisers.
On the other hand, The Scotsman could be seen as "not matching the audience focus" of a company that is otherwise made up of local titles.
A new post of editor-in-chief comes with the brief of ensuring that "common content is optimised" - that is, cutting costs by making papers ever-more similar.
The Scotsman doesn't fit that local mould - or at least, not comfortably - and has held out against moves to centralise sub-editing and production.
That is affecting the Evening News, however, and the Scottish titles are due to lose around 25 more jobs with a new round of cost-cutting.
The trade publication Press Gazette reckons that Johnston has shed around half its journalists in five years. The company promises investors that 2016 will see yet more cost-cutting.
That's because it has to bear down on the debts it built up in the early part of last decade. It was buying newspapers at a high price, apparently without realising what the internet was already doing to their readership and advertising bases.
In the first 11 months of 2005 alone, Johnston had already spent around £500m on buying newspaper titles.
Then in December, it did a £160m deal to buy The Scotsman titles from the Barclay brothers. Already based in Edinburgh, the capital's morning daily would become Johnston's flagship. This was "Scotland's national newspaper" run, at last, by a company not only based in Scotland, but with a fine family heritage.
And what is the company worth now? The value placed on the whole of Johnston Press through its London Stock Exchange listing is barely above £40m.
In investment terms, it looks grim. Using a comparable share price, the current price of about 40p has fallen from a peak of more than £60.
So suppose you had invested £1,000 in Johnston Press in the month that it took over The Scotsman, when the price had already fallen 13% from the peak.
Ten years on, that would now be worth around £7.50.
That's right. A grand reduced to seven-fifty.
The people now in charge, including chief executive Ashley Highfield, can hardly be blamed for the debt binge that fuelled the buying spree of 10-to-15 years ago.
But they do have the task of turning the company around, while burdened by debt, and as tectonic plates keep shifting under the publishing industry.
As with others weighed down by a newsprint legacy, Johnston is attempting the transition to being a digital-led publisher. But it's a hard slog to grow digital revenue anything like as fast as Johnston has been losing conventional print ads.
According to this week's trading update, underlying digital revenues were up 12% last year, and the online/mobile monthly audience grew to 22.6m last month, from less than 17m in only one year.
That looks impressive. The digital readership number is. But the monthly audience gets content for free. And revenue is still heavily weighted towards the old print publishing business. For years, it's been falling fast.
The accounts for 2014 showed total revenue of £266m, declining 4%, while digital revenues rose 20% to £29m. That's only 17% of the business.
With this Tuesday's trading update, Johnston Press informed the market that 2015 underlying total revenue was down 7% - in other words, the decline has accelerated.
Print advertising revenue was down 12%. Within that, job ads fell 13%, property advertising by 17%, cars by 11%. Buyers of Johnston newspapers spent 7% less last year at the newsagent.
The best that can be said of sales is that the decline slowed a bit in 2015.
And the best that can be said to reassure investors is that the full-year figures - to be published on 22 March - will be "in line with expectations".
By Johnston Press standards, that cliche - roughly translatable as "no nasty surprises expected" - is very welcome. Simply by not publishing worsening news about the company's finances, Johnston's share price rose by 12%.
The Press Gazette is reporting that an internal email for Johnston Press staff has listed Scotland on Sunday and 17 local Scottish papers as "sub-core".
It explains that does not mean all 59 titles are going to be sold, though it does seem like change is on the way.
"We intend to review these first and will look to establish new innovative models to enable us to improve the levels of return from this group," the email is quoted as saying.
"It is critical that our resources are used to the maximum effect and we will be working speedily to establish an effective publishing model for these brands."
The categories also include "uber" newspapers within the Johnston Press group. There are eight of these, including The Scotsman, Edinburgh Evening News and the Yorkshire Post.
Other titles are categorised as "primary" and "core". But being "uber" or "primary" does not mean that the titles are not up for sale.
The "non-core" for Scotland on Sunday may reflect losses on it. Most Sunday papers lose money when they are accounted for separately from their daily stablemates.
But they can also be a platform for selling advertising space seven days a week. The staff journalists who put together Scotland on Sunday all work also for the Scotsman, as extensive cost-cutting has already taken place.
Scottish titles included in the "non-core" group are: East Fife Mail, Galloway Gazette, Glasgow South & Eastwood Extra, Midlothian Advertiser, Arbroath Herald, Buchan Observer, Carrick Gazette, Deeside Piper, Eastwood Advertiser, Ellon Times, Fraserburgh Herald, Glenrothes Gazette, Hawick News, Linlithgow Gazette, Mearns Leader, Selkirk Weekend Advertiser and The Buteman.