The publisher of the ‘i’, The Yorkshire Post and The Scotsman is slashing newsagents’ profit margins to as low as 10% on some titles after reporting a £300m pre-tax loss.
Johnston Press will implement the cuts from Monday, coinciding with a hike in the cost on 41 of the affected titles by between 10p and 20p.
The move comes three months after the Edinburgh-based company reported a £344m write-down on the value of its printing and publishing assets in 2016, which includes more than 200 local newspapers.
President of the National Federation Retail Newsagents Linda Sood said she was “absolutely livid”. “I’m shell-shocked,” she said. “Johnston Press has displayed complete contempt for hard-pressed and hard-working independent retailers who are responsible for such a large percentage of their regional newspaper sales.
“This move is a travesty, made even worse by the fact that there has been no prior consultation.”
NFRN head of news Brian Murphy said he was appalled by the move and has since summoned Johnston Press group head Richard Thomson to its head office to explain.
“Raising the cover prices by as much as 20p while cutting the retailers’ margin to between 10% and 13% is misguided, unprecedented and downright disgraceful,” added Murphy.
“We want some urgent answers from Mr Thomson, not least as to whether independent retailers are the only ones to see such vicious cuts to their margins or whether larger news retailers are having their trading terms hacked too.
“No doubt the NFRN’s phones will be red hot with calls from disgruntled members. What a shame Johnston Press has chosen to announce the cuts via letters due to be sent out today (Friday) rather than actually having the bottle to speak to customers directly via a free phone hotline that retailers could use to register their dismay and disgust.
“Particularly shocking is the fact that we have been given next to no notice of the changes. We therefore call on Johnston Press to postpone the price increases and margin cuts for a minimum of six weeks to enable retailers to decide whether they will accept these new terms or to refuse them, as is their right under their terms and conditions of supply.”
Earlier this month, Johnston Press sold Telegraph House, the home of Sheffield daily The Star, in a £3.6m deal.
Thomson said: “Our partners in the retail trade are very important to us, and we don’t make changes to terms lightly. However these are tough times for smaller local newspapers as they face competition from the likes of Google and Facebook.
”Johnston Press’s larger titles are responding dynamically to the changing market, for instance by growing their already substantial online audiences and developing fresh advertising propositions. But for some of our smaller titles these changes to terms are driven by a need to ensure they stay viable in print, and by doing so, to continue driving footfall into retail stores.”
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