Newsquest boosts profits to £45.2m and cuts 331 jobs: Full 2021 accounts

Newsquest boosts profits to £45.2m and cuts 331 jobs in 2021

Herald and Northern Echo front pages

Newsquest Media Group swung back into £45.2m profit last year following a £45.1m loss the year before.

Average staff numbers reduced by 18% from 1,820 in 2020 to 1,489 in 2021, and are now down 30% compared to 2,125 in 2019. The latest drop includes an 11% loss in editorial jobs from 643 to 571.

The biggest departmental drop was in sales and marketing, down 28% from 566 employees to 407. Total staff costs however were up from £61.4m to £62.9m.

Revenues grew marginally from £139.7m to £142m in the year to 31 December 2021.

The 2020 loss included an impairment of the group’s publishing rights of £61.8m and a £2.4m write-down of fixed assets due to the initial impact of the Covid-19 pandemic.

Finance director Paul Hunter said in the Companies House report that 2021 had been a “resilient” year despite the final Covid-19 lockdown in the first quarter and higher newsprint prices in the second half of the year “when the impact of significant inflationary pressures became more widespread”.

These pressures have continued into 2022 due to the impact of the war in Ukraine on the global economy, particularly on energy prices, Hunter said.

But he added: “Despite these inflationary head winds, the company remains positive about the opportunities for 2022 given the resilience of the business and skills of its teams to drive the necessary audience growth and deliver the value and quality response sought by our advertisers.”

Hunter said the company would 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.”

More than half of the year’s £24.6m operating profit went towards paying £14.6m of pension contributions as Hunter said legacy pension obligations are the company’s main financial liability.

He added that revenue growth of 1.6% and “prudent cost control” had maintained overall profitability of the business and led to a two percentage point increase in its adjusted EBITDA margin to 25%.

Hunter addressed payments from the Duopoly for the Google News Showcase and Facebook News, which both launched in the UK in 2021 to provide the type of support Newsquest says is increasingly important as the subscription models it is hoping to grow are less feasible in small local markets. Newsquest did not disclose the size of the deals it has made.

Hunter said: “The purchases of content by Facebook and Google for their news services that began in 2021 is a positive development, but still only represents a tiny fraction of the value that these tech companies garner from using quality news journalism on their platforms. In smaller towns and communities a viable subscription model that can fund quality local journalism in the long term remains hard to envisage.”

Newsquest made use of the Government’s Covid-19 job retention furlough scheme to the tune of £5.2m in 2020, but only claimed £183,000 in 2021.

During 2021, following a widespread adoption of hybrid working, Newsquest sold some of its office space making £21m.

Dividends of £15.2m were paid in 2021 after a year of no shareholder payments at the start of the pandemic. Previously they received £5m in 2019, £18.1m in 2018 and nothing in 2017 or 2016. Hunter noted that £138.5m in pension contributions to closed defined benefit schemes were paid in the same six-year period.

Newsquest made charitable contributions of £1,275 in 2021, compared to £3,000 in 2020, and said its US parent company Gannett’s foundation also made £145,000 of donations to projects in the UK and £10,000 to the NCTJ’s Journalism Diversity Fund. As of 2022, the company now offers staff a day off for charity volunteering.

In March Newsquest bought fellow regional publisher Archant but Culture Secretary Nadine Dorries subsequently said she was “minded” to intervene over plurality concerns and asked Ofcom and the Competition and Markets Authority to examine it.

Hunter said: “The acquisition provides the opportunity to achieve more economies of scale and in so doing provide a more sustainable future for the Archant local news brands and their local journalism.

“The Newsquest overarching goal is to empower its local communities to thrive – we do this by providing a sustainable model for trusted local journalism and providing local businesses with highly effective advertising solutions. The successful execution of this strategy is expected to enable the company to continue its evolution from a traditional print media business to a digitally led one.”

Chris Morley, the National Union of Journalists' national coordinator for Newsquest, said in response to the accounts: “It is sadly ominous that the company believes that there is an 'opportunity to achieve more economies of scale' in relation to its on-hold acquisition of Archant. Given Newsquest’s track record on cutting jobs, we are not convinced that good 2021 results will restrain management from seeking to squeeze even greater savings out of the staffing budgets.

“We note that the company has swung strongly back to exporting decent profits to the coffers of its American parent in the shape of a £15m dividend. This will in effect do little more than pay the share options bill on the main board directors in the US. Even in a relatively good year, Newsquest reports that it still had 331 fewer staff – 72 of them editorial workers – than the previous 12 months.

“Newsquest has also turned to selling off the property portfolio to boost funds and while we would like to think that those £21m sales proceeds have gone into investing in journalism, the net result has been to leave many of our members without an office and having to work from home with little to mitigate soaring domestic energy costs.

“While Newsquest has said it was now positioned as 'competitive' on pay reviews, this does not go near to repair the damage of years of general salary pay freezes. These left its staff as very much the poor relations of the media industry. We would like to think that Paul Hunter meant that the pay reviews he is talking about are local settlements, but we don’t think that is the case.

“Any general pay offers being made are way behind inflation rates – apart from the highest paid director, of course, whose pay package last year leapt 35% to £810,000 – equivalent to the wages of 32 senior reporters.

“We look forward to the company now widening its largesse to bolster historically modest journalists’ salaries which are proving so inadequate at this critical time.”

Newsquest Media Group is the second largest regional publisher in the UK with more than 120 news brands and 29 magazines.

Its accounts do not consolidate results from all companies in the Newsquest group but at the end of 2017 many of its publishing subsidiaries Newsquest (Herald and Times) Limited, Newsquest (Midlands South) Limited, Isle of Wight County Press and NWN Media Limited transferred to Newsquest Media Group. Newsquest Specialist Media transferred to Newsquest Media Group in January this year.

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Comments

1 thought on “Newsquest boosts profits to £45.2m and cuts 331 jobs in 2021”

  1. Cutting jobs is what they’re good at,when it’s cutting corners and gerting it cheap over producing quality content they’re market leaders

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