David Montgomery’s National World has said it has already made £4m in annual cost savings at JPI Media, with a further £1m to come before the end of the year.
The investment vehicle, which bought the third-largest regional publisher JPI for £10.2m four months ago, said it would spend £4m on restructuring costs this year as it pursues a decentralised strategy for the operation of its newsrooms.
The cost savings will come mostly from “delayering and flattening” the publisher’s management structures, National World said in its annual report.
Senior staff to have left following the takeover included editor-in-chief Jeremy Clifford (who has since joined Archant as chief content officer), group commercial director Andy Sumner and group development director Jason Rowse-Davies.
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JPI’s new owner has been pursuing a “swift” pace of change since the New Year to make the most of the revenue potential expected in the second quarter as the UK emerges from lockdown.
As well as streamlining the head office, it has reorganised operations into seven regional media divisions, appointing numerous dedicated local editors for newspapers that previously shared a group editor.
Montgomery (pictured) cited payments from platforms such as Facebook and Google as one reason why he wants the publisher to produce more exclusive content. JPI is benefitting from a licence fee for its content appearing on Facebook News, which launched in the UK in January and has since added a local news section.
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“Many titles, print and online, are in the process of being upgraded with richer and exclusive content,” he said. “This accords with National World’s strategy to introduce payment for premium online content at an early stage which recognises that original and unique local content is highly prized by social media platforms.
“Those platforms are now making payment for such content, including to JPI Group, and this trend is likely to increase either through voluntary arrangements or as seems possible through legislative intervention.”
Montgomery, who was chief executive of Local World before its sale to Trinity Mirror (now Reach), said his “Localise, Energise, Digitise, Monetise” programme was “empowering local news teams and re-energising titles” in the search for a sustainable news model.
“We have exciting plans for the future and look forward to continuing the development of the business on a UK-wide footprint and securing new acquisition opportunities as they become available,” he said.
JPI has also launched a national website named National World, which Montgomery said is edited from outside London and draws “on the quality of our regional publishing strength”.
Further launches in areas neighbouring its existing patches could also come shortly “to strengthen market share and grow audience”.
National World has left open the possibility of expansion outside the UK. It said: “As the operating model can be applied to many territories, the company will not be limited to particular geographic regions. However, the initial focus will be to invest in the UK.”
Montgomery revealed e-commerce operations are being expanded across the new national brand and the regional titles, which include the Yorkshire Post and The Scotsman, “to take account of the attractive demographics of its quality audience that some other publishers lack”.
Other monetisation priorities include digital display advertising, in particular higher-yielding video and local content, and digital subscriptions targeting both consumers and businesses to “drive daily engagement with premium content”.
In the year ending 2 January, JPI had revenue of £88.2m and earnings before interest, taxes, depreciation and amortisation of £7.7m.
National World reported a loss of £1.1m in 2020: £0.2m from administrative expenses and £0.8m related to the JPI takeover.
The company held £12.7m in cash at the end of 2020, compared to £4.4m one year earlier.
In January and February, it raised a further £11.6m through the issue of convertible secured loan notes and £1m through the issue of interest-only unsecured loan notes, which it said provided “significant headroom to fund operating expenses and costs associated with evaluating acquisitions and investments”.
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