British media group Johnston Press has abandoned the sale of its Irish regional newspapers because the expressions of interest were below the price it hoped to secure.
In an interim management statement today the company said advertising revenue fell 34.4 per cent in the 19 weeks to May 9th, although added there had been signs of stabilisation in recent weeks.
The company said it had cut costs by £30 million over the last 12 months but said this would not off-set the fall in advertising revenues. Redundancy and other non-recurring costs would rise to approximately €8 million this year.
“Whilst these cost savings are encouraging, they will be not be sufficient to offset the fall in advertising revenues which are running below market expectations. This means that operating profit for 2009 is likely to be towards the lower end of current market expectations,” the company said.
Johnston Press had sought to sell its 13 regional papers, including the Leinster Leader group, in the Republic and had shortlisted three interested parties.
However, it has terminated the “sale process” because the interest was not at a “sufficiently high price to be in the company’s best interests”, it said.
The company had warned that a failure to sell its Irish papers would mean there was a strong likelihood that it would breach financial covenants in its debt facilities.
Johnston Press said it had started discussions with its debt providers to relax these covenants.
“The company expects to have the refinancing discussions completed and new facilities in place before its half year announcement in late August.”
Chief executive John Fry said the stablising of advertising revenue in recent weeks provided encouragement that “we will be well placed to benefit from any recovery in the economy as and when it emerges”.
