Recent sales of some of stricken publisher Highbury House's leading magazines are down by as much as half, according to trade estimates.
Ernst & Young was appointed last week to handle the sale of the remaining assets of the publisher, which had debts of £30m but a market value of only £2.2m when it suspended its shares last month.
Dennis Publishing, owner of Maxim and founded by the maverick entrepreneur Felix Dennis, is considering making a bid, as are Archant and Imagine Publishing.
The former Sun editor Kelvin MacKenzie quit as executive chairman of Highbury, whose titles range from lads' mag Front to Practical Woodworking, after debt restructuring talks with its banks broke down.
It is understood that the trading performance and financial state of the company are deteriorating. Ernst & Young, which is keen to complete a deal as soon as possible, is unlikely to raise more than £5m from the sale.
According to unofficial trade estimates, Highbury's monthly magazine Play, one of its best-selling gaming titles, sold on average only 35,000 copies for the last three months of 2005. In the last six months of 2004, its circulation averaged just under 70,000, according to ABC audited figures.
Another popular magazine for PlayStation players, PowerStation, has sold around 11,000 copies in the past three months, down around a third from the previous year.
Circulation of most computer gaming magazines is suffering from the delayed introduction of Microsoft's new Xbox games console. Industry sales are understood to be down by around 28 per cent, but Highbury's figures are worse than this.
Sales were not helped by the delayed publication of Highbury's titles iCreate, X360 and Games TM due to a dispute last month with printers, which were worried about not being paid.