Johnston Press revenues hit by property ad plunge

The harsh reality facing media companies in the wake of the credit crunch was underlined yesterday by the regional newspaper group Johnston Press, which reported a 15 per cent plunge in advertising revenues.

The downbeat numbers prompted Johnston's chief executive, Tim Bowdler, to say that the sector "is in as bad a state as anyone has seen", adding that one industry peer had said that market conditions were worse than during the downturn of the 1970s.

The group, which publishes the Yorkshire Post among its regional titles, released a statement yesterday covering the 44 weeks to the beginning of November. It revealed that cash brought in from advertisers had fallen by 15.5 per cent, hit by a halving of property adverts.

Johnston said the economic conditions had forced the group to concentrate on managing its costs and reducing debt levels but still expects to deliver a profit for the year, although "at the lower end of current market expectations". Analysts predicted that this would be about £120m.

The group's shares lost as much as 11 per cent of their value on the news, and making it a staggering 93 per cent fall over past year.

Johnston said it had suffered as the decline in advertising was "combined with significant falls in employment and display advertising as the UK and Republic of Ireland economies suffered from both the 'credit crunch' and a reduction in economic activity, as both countries encountered recessionary pressures". This comes in a year that Johnston has already been forced to cut 900 jobs this year as it battles with the market downturn, a process that it says is continuing.

Mr Bowdler said advertising revenues and subsequently the decline in the media sector were key indicators for the wider economy. "The media industry is having a tough time. This shows the economy isn't in a good shape and heading for recession," he added.