Johnston Press: the greatest comeback story ever told?

Read all about it! And watch - and get the Facebook update. Local newspapers may not be dead.

"The digital tipping point" has been reached, declares Ashley Highfield. He's the man who swapped developing new technology at the BBC such as the iPlayer for an ink-stained desk at Johnston Press, owner of The Scotsman and the Yorkshire Post.

His mission has been to offset declining print sales and advertising with digital services across the 13 daily, 154 weekly paid-for and 37 weekly free newspapers, and a handful of lifestyle magazines.

He also had to deal with JP's massive debt, built up as the Scottish publisher acquired titles in the noughties before their value slumped as classified advertising moved online and to national brands such as Auto Trader.

After a restructuring last year, net debt stands at £184.6m, down from £302m in 2013.

That has freed cash to invest in the business, Mr Highfield says. Still, he will continue to cut journalists' jobs and rely on more content provided by the public.

In the year to January 3, 2015, JP made a pre-tax loss of £24m, compared with £287m the year before, which was affected by a writedown of the value of its titles and printing facilities. It reported total revenues of £268.8m. On an underlying basis, year-on-year revenues fell 4.4 per cent, slowing from 2013's 5.2 per cent.

Underlying operating profits grew by 2.2 per cent from £54.3m to £55.5m, a second consecutive annual rise. Digital revenues were up by 20 per cent, from £24m to £28.8m. Combined print and digital advertising revenue was down 4.2 per cent to £167.2m.

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Reducing advertising to a small area also reduces the chance of employers being swamped with applications. It has also teamed up with some of its biggest competitors. It has pooled some online advertising sales with Local World, Newsquest and other independent local media businesses.

Last year, it struck a deal to sell Sky Adsmart, which customises TV ads to show different ones at the same time in different households. It is available in one-fifth of UK homes. Sky, the broadcaster, spent £5m on a stake in JP. That business would bring in "low millions" this year, he says.

JP's "digital kitbag" advertising service for small and medium-sized businesses sells Google Adwords to lift companies to the top of Google searches. It also offers -email marketing and website design.

Some analysts are enthusiastic. Alex DeGroote of Peel Hunt forecasts revenue growth within two years. JP is "one of the most intriguing turnround stories" on the market, he says.

<>There is even good news in print: the group in March announced a five-year deal to print the Express and Star titles in the north of England. "There is life in newspapers yet," says Mr Highfield. The group still attracts 24.5m readers monthly.

Chancellor George Osborne is also consulting on whether to exempt local papers from business rates.

Douglas McCabe, of Enders, the media analysts, notes the "enormous traffic growth" that JP and fellow news groups Trinity Mirror and Local World have achieved in the past 12 months. "Since the decline in local print a huge chasm for SME display has opened up," he says. It "has nowhere to go other than Facebook, which is a less attractive environment for many advertisers than local platform hubs", he says.

However, SMEs can use cheaper self-service sites and 80 per cent do not use the local press at all. So local news sales teams need to reach them. The "decline in print advertising is still perilous", says Mr McCabe. Overall revenues are likely to continue to fall for some time.

The day Small Talk met Mr Highfield, Google launched its digital hub in Leeds. That aims to teach SMEs to take advantage of technology, including how to use Google Maps and other tools. One of the speakers at the event, Roy Powell, of Blinds R Us, which sells and fits blinds, said Google and YouTube had boosted sales.

He still advertises in the Yorkshire Evening Post because "we have done for years". Has it helped? "Not really." Keeping such clients as well as attracting new ones is a big challenge for JP and others.

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