Regional news publisher Newsquest grew its revenues in 2022 and stayed in profit despite being hard-hit by the jump in energy and newsprint costs.
New accounts on Companies House show Newsquest Media Group increased revenues by 6% to £150.6m in the year to 31 December 2022.
However, this remains below pre-pandemic level of £187.7m in 2019.
The accounts also saw Newsquest reveal it has surpassed 65,000 paying digital subscribers and that almost half of its advertising revenue now comes from digital, while it also took the opportunity to criticise the BBC and the tech giants.
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Pre-tax profits were down 38% compared to 2021 but remained above 2019 and 2020 levels. Newsquest is ultimately owned by US news publisher Gannett.
Meanwhile adjusted EBITDA (earnings before interest, tax, depreciation on tangible fixed assets and right of use assets, restructuring costs, write-down of investments, net credit on disposal of long leasehold property and share based payment charges) was down by 15% to £30.4m. The adjusted EBITDA margin was down by 4.9 percentage points to 20.2%.
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The accounts explained this was because “substantial inflationary pressures in 2022 have significantly increased costs, particularly newsprint and energy”.
Despite this, they said, “The performance of the business demonstrated considerable resilience in 2022 when it faced the challenges of escalating and newsprint prices, wage inflation and UK economic growth came to a standstill.
“Prices for energy and newsprint increased far above the average rates of inflation in the UK. A clear strategy delivered by a committed and professional staff along with the diversity of our revenue streams has achieved these results.” It later additionally cited “efficiencies and restructuring to drive down costs”.
More than a fifth of operating profit (£23.9m, down marginally from £24.6m) was used towards funding the company's legacy pension obligations, its main financial liability.
Since 2016 Newsquest Media Group has paid £143.5m in pension contributions and £55.3m in dividends, which it said it pays "after taking account of likely future cash needs". Last year £17m in dividends were paid.
The figures include the Newsquest Specialist Media business, which transferred to Newsquest Media Group at the start of 2022.
During the financial year, in March 2022, Newsquest bought Archant, now a subsidiary called Newsquest Community Media Ltd. Its local news brands include the Eastern Daily Press, East Anglia Daily Times, Norwich Evening News and Ipswich News, as well as others in areas such as London and Devon and a portfolio of regional Country Life magazines.
The new accounts said of the deal: "The Archant business was in a fragile position when we took over but by applying the Newsquest approach and our local publishing model, we have been able to transform this enterprise to a much more stable and sustainable position benefitting both its quality local journalism and its advertising customers."
Newsquest remains 'very positive' about 2023
Looking forward, the accounts said: "Despite the economic headwinds from high inflation and volatility in economic confidence the group remains very positive about the opportunities in 2023 given the resilience of the business and skills of its teams to build the necessary audience growth and deliver the value sought by our advertisers."
This resilience, it said, can be put down to the mixture of print and digital advertising and circulation revenues, and "wide geographical dispersion". Newsquest's titles range from The Herald and Glasgow Times in Scotland to the Isle of Wight County Press and Dorset Echo in the south of England.
"Newsquest has had particular success in transitioning its advertising business to digital with almost half of our advertising revenue coming from digital," the accounts statement continued.
"Similarly, we continue to make good progress with our digital subscriptions strategy, launched only three years ago, and we now have over 65,000 paying subscribers to our digital content - this is in spite of the ongoing encroachment of the BBC which is now deploying even more of its licence fee to compete with and duplicate the output of commercial news publishers such as ourselves."
Top Newsquest director earns £660k
Newsquest and other commercial regional publishers have opposed the BBC's plan to cut its local radio services and instead create more online local content in some areas.
Newsquest chief executive Henry Faure Walker has said the BBC's online local news expansion "will further undermine the efforts of ourselves and other commercial news publishers to build a sustainable future because it diverts eyeballs away from our sites - which we rely on to drive advertising revenue and to drive digital subscription revenue - to the BBC".
The Companies House statement added that Newsquest hopes to see the Digital Markets, Competition and Consumers Bill, which will force the likes of Google and Facebook to pay publishers for their content, enacted this year. It said the bill would "start to address the huge imbalance in the online marketplace which sees the dominant tech platforms free ride the content of quality news publishers and share crumbs from their table in return.
"Google's monopoly of the online advertising market will continue to undermine sustainable journalism until this is properly addressed."
The company also promised to be "competitive on pay reviews to make sure the employees delivering the results for the business are retained throughout the organisation, this can only be achieved by continuing to re-engineer the business to take out inefficient costs. These measures are essential to protect the company during these challenging times."
By the end of 2022 Newsquest Media Group had an average of 608 editorial employees each month and 1,504 in total - up from 571 and 1,489 respectively in 2021 following the transfer of Newsquest Specialist Media and acquisition of Archant.
Staff costs have increased to £66.9m from £62.9m.
The company's highest-paid director, who was not identified, earned £640,390 alongside pension-related payments by the company of £20,195 - compared to £793,452 and £17,761 respectively in 2021.
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