Last month, heeding communications minister Lord Carter's call to do so, the Office of Fair Trading launched a review into local and regional media ownership rules.
But Jonathan Helliwell, media analyst at JPMorgan Cazenove, said any relaxation in the rules will be "insufficient" to turn the local newspaper industry around. He said "the businesses already tend to be local monopolies" and "synergies", or cost savings, gained through consolidation allowed by new rules would be "limited".
In recent weeks, the Daily Mail and General Trust reported that ad revenue at its Northcliffe Media subsidiary fell 40% year on year in January, while Trinity Mirror said its regional ad revenue fell 37% year on year across January and February.
Helliwell added: "The recession and downturn has hit ad revenues enormously and one [allowing consolidation through a relaxation of ownership rules] doesn't compensate for another [declining ad revenues]."
Another analyst, who wished to remain anonymous, told Media Week that though consolidation was the "only way out" for the regional sector, the "synergies are less significant than expected" because the companies have already cut costs.
Last week, Trinity Mirror, for example, announced plans to make £5m cuts, on top of £20m already announced. A spokesman for Trinity Mirror said the issue with the current laws governing local media ownership is that they prevent media companies from even discussing merger deals. He stressed the rules need to be relaxed for as many titles as possible to survive.
Lorna Tilbian, executive director at Numis, said if companies are able to consolidate this will help preserve their future, adding: "They can spend the downturn cutting costs and investing in areas such as online."
Enders Analysis recently warned that "in our view, the scope of the [OFT] review needs to be wider".
The OFT declined to comment at this stage.
Regional media review
- Under current ownership rules, there must be at least three separately owned commercial media providers across TV, radio and newspapers, in addition to the BBC, in a given local area
- The OFT plans to complete its review by mid-April and submit its findings to the Government ahead of the publication of Lord Carter's final Digital Britain report, due in early summer
Publishers must make dailies relevant
Regional newspaper publishers must make their titles more relevant to their audiences and consider changing their distribution models, according to regional press buyers.
Responding to marked declines in circulation revealed by last week's regional ABC figures, Fiona Hodges, regional director, Mediaedge:cia, said publishers need to work harder to serve local communities.
Hodges said the ABCs show readers are stopping buying regional papers and "it's up to the publishers to make them want to buy them".
The three regional daily titles to increase circulation year on year in the last half of 2008 gave away free copies. Guardian Media Group's Manchester Evening News and Reading Evening Post, and Trinity Mirror's Birmingham Post were up 89%, 5.9% and 1.9% year on year respectively.
The huge percentage change in circulation of the Manchester Evening News reflects the introduction of 81,092 free copies into the ABC audit. Copies are handed out free in the city centre, but are paid for in the suburbs. Les Middleton, joint head of MediaCom's regional division, MediaCom Accent, said other city daily titles could benefit from adopting a similar distribution model. He said: "There's no reason why they can't do that in places such as Nottingham and Newcastle."
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