Southnews waits for prices to drop

The high asking price for regional newspaper groups and a slowdown in growth in advertising revenues have made Southnews, the regional publisher, cautious about the future.

Gareth Clark, the group's chairman, said the growth in advertising revenues enjoyed by the regional press market had begun to slow over the past four months. As a result, Southnews was more circumspect in its outlook than at the same time last year.

Although the company has shied away from spending heavily on acquisitions, Mr Clark claimed the prices being asked for regional newspapers continued to be a major deterrent. He said he was "flabbergasted" at some of the prices paid in recent deals and would probably wait for prices to come down before looking to expand.

Mr Clark said: "Prices will only start to come down when people fall on hard times again. That may well take two years."

Southnews would only look at "the right acquisitions" in surrounding areas, he said.

The likelihood that newsprint prices would increase at the end of the year and the Government's plans for a minimum wage were also reasons for caution.

Mr Clark's comments came as he announced results for the year to the end of March showing a 44 per cent advance to pounds 5.9m in pre-tax profits.

The first full year's contribution from the Croydon Advertiser Group, which Southnews bought two years ago for pounds 13m from Portsmouth & Sunderland Newspapers, helped push revenues up 29 per cent to a record pounds 37m.

City analysts said Southnews was sensible to bide its time on acquisitions.

Cliff Hide, media analyst at ABN Amro Hoare Govett, said regional newspaper owners had been consolidating their businesses into geographic areas over the past two years and there were now fewer opportunities to buy papers in blocks.