Trinity Mirror seeks rule change to allow mergers of newspaper titles

TRINITY Mirror is understood to be lobbying for a relaxation of the media ownership rules so newspaper groups can merge their regional titles.

The company owns 150 regional paid-for and free newspapers, of which 32 are managed by Scottish & Universal Newspapers, including the Paisley Daily Express, Perthshire Advertiser and the Stirling Observer.

At present, the secretary of state can intervene on public interest grounds when a proposed merger of media companies breaches thresholds on turnover and market share. He may also take into account the likely impact of a change of owner on accurate presentation of the news or free expression of opinion.

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It is thought that the calls for change focus on allowing companies to merge even if it would result in a combined market share well in excess of the 25% threshold.

Analysts at JP Morgan have also called for a change in the rules to relieve the pressure on newspaper groups which are suffering from declining sales and advertising revenue.

In a recently issued note, JP Morgan said: "We worry that without a relaxing of M&A (mergers and acquisitions] rules, the worsening financial situation of some newspaper publishers could eventually force them into trouble with debt and lead to more local title closures – precisely what the Government aims to avoid."

Morgan believes a return to cyclical growth or an easing of credit terms, whether through amendments to banking covenants or extension of existing facilities, would lead to a revaluation of the sector, "possibly in 2009 in our view".

The bank is cautious on the sector due to the regulatory environment and the fall in advertising revenue. Trinity Mirror, which has a 400m overdraft, has just fallen out of the FTSE 250 index of leading shares.

Despite the economic pressures, newspaper groups remain profitable. Last year three of the biggest local newspaper companies made combined profits of 842m.

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