Price war warning by Guardian Media

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Guardian Media Group, owner of the Guardian newspaper, has warned that the newspaper price war will damage its full year profits.

Interim results saw a 45 per cent increase in profits in the six months to October, said Harry Roche, chairman and chief executive. However, the future looked bleak with the price war and rising newsprint prices threatening second half profits.

Group turnover rose in the first half of 1994 by 18 per cent to pounds 142m while profits increased 45 per cent from pounds 11.5m to pounds 16.7m - higher than pre-tax profits for the whole of 1993.

Profits in 1993 tumbled partly because of the purchase of the Observer and the board's decision to take the full pounds 5.6m integration and redundancy costs in last year's results. Mr Roche said this year all operations, including the Observer, were profitable.

To date the Guardian has stood back from the price war, offering only a promotion linking purchase of the Saturday Guardian with the Observer.

However, Mr Roche hinted the group could not stay out of the fray much longer.

'We are very happy to have maintained the sale of our national newspapers without having to resort to cover price reductions but take a cautious view of the future, given the costs of competing in the market and the projected newsprint increases,' he said.

He would not allow the threat of falling profits to prevent the group pursuing further acquisitions.