Trinity Mirror's saw advertising sales drop by 8 per cent in the first half of 2008, and is predicting double-digit year-on-year falls for the rest of the year.
Revenues fell by 7.9 per cent to £461m in the period, although pre-tax losses narrowed to £20.6m from £70.4m, after significant efficiency programmes shaved £20m from the group's costs.
Its regional newspapers are the worst hit, with revenues down 4.7 per cent to £216m and operating profit down a whopping 21.7 per cent to £45.5m.
But its National Newspapers division, which includes the Daily Mirror, is not immune: revenue grew by 1.5 per cent to £244m, but operating profit was down 6.2 per cent at £42.7m. The downturn is not only accelerating – ad sales dropped by 15 per cent in July alone – but is expected to continue for some time.
"The next couple of years may very well be tough for the ad market," Sly Bailey, the Trinity Mirror chief executive, said. "A key driver of budgets is corporate profitability and when that is under pressure, as we are seeing pretty much daily at the moment, then budgets get cut.
"The market is still deteriorating and we expect double-digit declines for the remainder of the year," she said.
The company has already made £20m-worth of cost savings this year, and is putting in place a similar scheme for 2009.
This will include updated technology to improve the efficiency of editorial and production processes for both print and web.
Ms Bailey is emphatic that the group's problems – which have seen its shares drop by more than 80 per cent in the last year – are the result of the economic situation rather than the longer term impact of the internet on traditional business models for the publishing sector.
"The regional press has always been a leading economic indicator and the very harsh ad downturn we are seeing substantially due to these cyclical factors," she said.
But the digital sector is still seen as central to weathering the storm. In the first half, Trinity Mirror's digital revenues shot up by 24.5 per cent to represent nearly 5 per cent of overall sales. The target now is to double the digital audience to 24 million unique users by 2010, and produce digital revenues of £100m by 2011.
Last month, Trinity Mirror's shares dropped a staggering 18.6 per cent in a single day after questions about its banking arrangements. But the group emphasised the security of its financial position yesterday, and the shares closed up 3.92 per cent at 86.25p.
Richard Hitchcock, an analyst at Numis, said: "Trinity Mirror is in the eye of the storm: it is directly exposed to the economic slowdown and the outlook is deteriorating. But investors are still focused on the balance sheet and the statements indicating significant covenant headroom should give reassurance that whilst trading is extremely difficult, the company has a good chance of being able to get through it."
Trinity Mirror will pay an interim dividend of 3.2p per share.