Deloitte: Consolidation alone will not save regional press

Relaxed ownership laws will not do enough to ensure the regional press survives the recession, a new report by business advisory firm Deloitte has warned.

The study, published today, has predicted that more newspapers will change frequency or rethink the geographical area they serve in order to remain profitable.

And it has recommended that the industry do more to centralise non-editorial back-office functions to allow continued investment in the core product – journalism.

Deloitte media director William Yarker, who oversaw the research, said the business model underpinning the regional press would come under increasing pressure in 2009.

The group predicts that classified advertising revenues could decline by up to 30 per cent this year – and says an increase in online revenue will not cancel this out.

“Arguing for a relaxation of media ownership legislation and exploring a mutually beneficial partnership with the BBC are critical, but we suggest the companies need to take further measures,” Yarker said.

“These include the ongoing review and evolution of their product portfolios in order to combine the breadth of local coverage with sustained profitability, for example by changing the print frequency or geographical area covered.

“We would also recommend moving further in the centralisation of middle and back office services, by bringing various non editorial departments under one roof, in order to focus resources on local journalism and the local commercial relationships that make their products truly unique.”

He added: “With the right business approach, local newspapers can flourish.”

Deloitte has warned newspaper publishers against using “single measures” such as staff cuts to save money – and said there was an array of other cost-cutting options, including renegotiating the cost of paper supplies.

In January, the chief executives of seven major regional newspaper publishers – Trinity Mirror, Newsquest, Johnston Press, Northcliffe, Archant, Guardian Media Group and DC Thomson – joined forces.

The Local Media Alliance, chaired by outgoing Johnston Press chairman Roger Parry, was set up to negotiate with the Government to safeguard the industry’s future.

One of the reforms the group is hoping to achieve is a relaxation of the media merger regime which currently prevents any widespread consolidation in the industry.

This summer, communications minister Stephen Carter is due to publish the final edition of his Digital Britain report on the future of the UK media and technology industries.

He has asked the Office of Fair Trading and media regulator Ofcom to carry out a review into the current merger regime, to examine whether they might be a case for it to be changed.

But the Conservative shadow media secretary Jeremy Hunt has warned the Government that as many as 1,800 jobs could be lost between now and the final report.

Last week alone, the Guardian Media Group announced a total of 245 job cuts at its regional papers in Greater Manchester, Surrey and Berkshire.

The publisher also said it was turning the daily Reading Evening Post into a twice-weekly title.

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