Despite Johnston Press‘s share price plunge, chief executive Tim Bowdler has insisted the dip will not harm investment in content.
All media shares have taken a pounding on the stock market in recent months and regional press giant Johnston has been among the hardest hit.
Despite making a pre-tex profit of £178m in 2007, the current share price-based valuation of Johnston is around £450m, a third of what it was worth a year ago.
Bowdler told Press Gazette: ‘The share price is hugely disappointing but it is not a reflection of the underlying trading of the business
‘We did see advertising revenues go down by 4.2 per cent in the first three months of the year. It’s the downturn in advertising and the market’s expectation of what might happen to advertising through the year that’s driving share prices.”
Bowdler said the problem was being exacerbated by ‘short selling”, or traders effectively betting on the share price going down further.
‘That is a situation which is not in the control of the company – they are taking a bet on the way in which the advertising markets are going. It’s not a reflection of the underlying performance of the business.”
He said: ‘In terms of the business we continue to invest in the business, in content, in trying to improve the newspapers and trying to drive revenue and that remains the case.”
When asked what the share price plunge meant for Johnston staff, Bowdler admitted that it was not ‘not an easy time’for employees who may have acquired shares under the company’s ‘save as you earn scheme”. But he added: ‘You can’t run your business looking over your shoulder at the share price every five minutes. You simply run your business as best you can.”
He said: ‘When the share price was riding high it didn’t mean we were creating more jobs or investing more heavily in content than we are currently.
‘In many ways quite it’s distinct and separate. It’s a market assessment of the forward cash flows of the business.”
Writing in Press Gazette’s Insight column this week, Peter Kirwan analyses the Johnston Press share price downturn asking investors.
‘If most of Wester civilisation – or at least the bit of it that sells stuff to consumers – is going to hell in a handbasket, where’s left to hide?’he writes.