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Newspaper groups can still generate impressive online growth and continue to building their digital-only products, but it doesn’t make much…

imageNewspaper groups can still generate impressive online growth and continue to building their digital-only products, but it doesn’t make much difference if the vast majority of your business relies on printed display and classified advertising.

In its full-year 2008 results, regional newspaper publisher Archant, which owns the Eastern Daily Press and papers across East Anglia and London, made operating profits 27.2 percent lower year on year at £22.2 million, on nine percent lower revenue of £174 million. But the company, which is privately-owned and has around 1,500 shareholders, told investors digital revenues rose 51.1 percent to £3.8 million in 2008, helped by property site Homes24.co.uk. It’s a good level of growth and the kind of number we were used to seeing for newspapers before the recession put a near stop to property and recruitment advertising.

The print-only side of the business is faring less well: newspapers contributed £16.2 million in revenue, 31.8 percent less than in 2007, while magazines, including the Life series made £5.8 million, a 17.9 percent drop year on year. So how about a defiant statement from CEO Richard Jewson (pictured) on the durability of print and the cyclical nature of the crisis? Not this time: “We expect the difficult trading conditions, which have deteriorated through the last few months, to continue for 2009 and beyond. It is impossible to know the timing and extent of any recovery and difficult to foresee the shape and scale of our industry in the years ahead.” The company’s operating costs were 6.4 percent lower following an extensive programme of redundancies

So what’s the logical conclusion for newspaper groups with flagging business models and huge pressure from the economy? To put it bluntly, they could go out of business. Midlands-based free newspaper publisher Observer Standard Media Group has fallen into administration, according to Birminghampost.net, citing sources (via Roy Greenslade). The publisher is looking for a buyer after making 80 percent 20 percent of its staff in November following dramatic drops in ad revenue. The company publishes 20 weekly papers and 30 websites and founder Chris Bullivant at one point even expressed an interest in buying Trinity Mirror’s stable of regional titles, though Trinity decided to keep them eventually.

  1. Just FYI it was 20 per cent made redundant last year at Observer Standard, not 80 per cent. My mistake, been changed at the Post.

    Tom – Birmingham Post

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