Newsquest Media Group’s pre-tax profits fell by 88% from £108m to £13.4m last year, according to its latest Companies House filing.
The regional publisher’s turnover fell by 5% in 2019 to £187.7m but it said “robust cost control” had maintained the overall profitability of the business, leading to a 10% rise in adjusted earnings (EBITDA) to £38m.
Operating profit fell from £78.2m to £9.7m.
Newsquest group finance director Paul Hunter wrote in a strategic report accompanying the 2019 accounts that there had been “no significant changes in resolving the question of how funding for independent local journalism on a systemic scale can be achieved”.
He said: “During 2019 the trading environment for regional newspapers, particularly free newspapers, remained challenging as audiences and advertising move to digital solutions while the unit costs of production and distribution continued to rise.”
The company closed ten free newspapers deemed no longer viable in 2019, following the closure of 16 in 2018, while a review of printing operations led to the closure of the Southampton press.
It now has a three-pronged strategy, Hunter said: leverage economies of scale by acquisition and product launches, develop digital revenues for the newsbrands, and diversify into digital marketing services.
The company looked at several acquisition opportunities in 2019 but ultimately made none, compared to 2017 and 2018 when purchases included the CN Group in Cumbria, the Isle of Wight County Press and the Mold-based NWN Media.
Ultimately, declines in print revenues continue to outweigh the growth in digital revenues, meaning cost savings are still needed.
Staff numbers fell 12% from 2,413 in 2018 to 2,125. In editorial it was a 9% decrease from 746 employees to 676. Total staff costs fell 3% to £84.5m.
The company spent about £4m on making redundancies in 2019, and £3.2m in 2018.
Since Covid-19 began to impact the UK in March, revenues at Newsquest have been “significantly impacted”.
Mitigating measures included making use of the government furlough scheme and later making redundancies, as well as pay cuts, unpaid leave for managers, reducing non-essential expenditure and travel, and deferral of pension deficit reduction contributions.
Hunter said: “While the pandemic has brought significant disruption, the company remains confident about its ability to emerge from this crisis because of the diversity of its revenue streams, the support of staff and the actions of government to address the economic weakness.”
NMG made charitable contributions of £5,000 (compared to £21,000 in 2018) while Gannett Foundation, the charitable arm of Newsquest’s US parent company Gannett, made donations to UK projects of £140,170 (in 2018 this was £253,403).
NMG’s total profit after tax was £15.7m compared to £94m in 2018, but the earlier figure included £56.5m of a “non-cash pension credit net of tax from pension plan amendments” and £29m from restructuring subsidiaries into the main media group.
The majority of the company’s cash flow continues to be devoted to funding legacy pension commitments.
Newsquest is the second-largest publisher of local news in the UK with about 165 news titles, including The Herald in Scotland, Bradford Telegraph & Argus, South Wales Argus, Northern Echo and Oxford Mail.