Johnston Press has warned "a widespread state of flux" will lead to further consolidation in the regional newspaper industry.
In its preliminary results for 2006, released today, the newspaper publisher said its acquisition of The Scotsman and cost savings of £13.9m had helped the group boost revenue and operating profit in 2006.
Despite falling advertising revenue, turnover at the group was up 16 per cent year on year to £602.2m, with operating profit up 4 per cent to £188.8m.
The publisher — which runs more than 300 local websites on top of its 18 daily papers and 291 weeklies — has seen digital revenue increase by 36 per cent year on year to £11.3m.
In today's update to the City, Johnston said the number of unique visitors to its websites was up by 63 per cent, with an estimated monthly audience of 6.6 million.
Advertising revenue was down some 3 per cent, with recruitment the worst affected, in part due to a reduction in local Government spending on job adverts.
Johnston Press chairman Roger Parry said: "Our online revenue continues to grow rapidly but from a small base. The investments in our new print operations and ongoing enhancements to our operating systems will bring benefits during 2007 but overall we expect revenues to be at a similar level to 2006.
"With newsprint and other underlying costs rising, our efforts will continue to be focussed on maximising the efficiency of the business and pursuing initiatives to drive new revenue growth both in print and online."
Johnston described its pilot of a fully integrated digital newsroom in Preston as "very successful", and confirmed that the model would be rolled out across all of the group's primary publishing locations this year.