20/03/2008

Shares in Johnston Press - owners of The Scotsman, Scotland on Sunday and the Edinburgh Evening News - yesterday rose by 5p to 130p after it was reported that company senior executives had bought a significant amount of its stock.

The Times on Tuesday reported that five directors bought nearly 300,000 shares the day before, which had pushed the share price up by one per cent, to 125p, after it had earlier dipped by four per cent.

On Tuesday, chief executive, Tim Bowdler, was reported saying that he could not guarantee that the Edinburgh-headquartered company could keep up with the conditions attached to its overdraft in the event of a sharp downturn in the economy.

The newspaper publisher's shares fell sharply on Monday - dropping ten per cent to 123p, their lowest level in more than a decade, as the market worried that the company may not be able to meet the conditions attached to its banking covenants.

“I'm not making any forecast as to what will happen to market conditions,” Bowdler told The Times, explaining that advertising was booked only a few days or weeks ahead. “There's plenty of speculation about what we are dealing with, speculation that we could see something more serious than an advertising downturn.”

Acccording to The Times media editor, Dan Sabbagh: “The carefully hedged language reflected the reality that it is - as insiders admit - 'mathematically possible' for the publisher to breach its covenants. City analysts estimate that advertising revenues would have to deteoriate by a
further ten per cent for that to become possible.

"Johnston is banking on trimming its overall borrowings to avert a crisis. ‘This continues to be a very stable, cash-generative business,’ Mr Bowdler said. Last year, the publisher cut its borrowings by £55 million in a year of no big acquisitions and the City is expecting a reduction by a slightly smaller amount in 2008."

Sabbagh continued: “The company reported downbeat results two weeks ago, in which it said that advertising revenues had fallen 4.2 per cent in January and February."

Johnston Press plc is one of the top three largest local newspaper publishers in the UK, and a major force on the internet. It is reportedly worth around £550 million.

* Send your Scottish media news and gossip, in the strictest confidence, to  info@allmediascotland.com