Johnston Press urges looser merger rules

The competition Commission has "misjudged" how the local newspaper market works, according to Johnston Press, leading to no practical easing in media ownership rules despite the Government's attempts to relax regulations.

Tim Bowdler, the chief executive, said yesterday there was still uncertainty over how competition regulators were planning to treat changes in newspaper ownership. Recent Competition Commission conclusions were "unhelpful".

Johnston Press has been a leading player in local newspaper consolidation, buying Regional Independent Media (RIM) in 2002 for £560m. It now has 14.4 per cent of the local newspaper market.

"It is the opinion of Johnston Press that the [Competition] Commission has tended to take an overly narrow view of market definition which considerably underestimates the extent to which local newspapers are subject to competition from alternative media. We believe they have also misjudged the ease of new market entry and underestimated its impact on publisher behaviour," Mr Bowdler said.

His comments were echoed at the company's annual results by Johnston Press's chairman, Roger Parry, who said: "Plurality of editorial voice does not automatically flow from plurality of ownership."

However, Mr Bowdler said that, over time, Johnston Press was confident the regulators would "reach a clearer understanding of the ways in which our markets operate".

Excluding the acquisition of RIM in April 2002, operating profits at Johnston Press rose 8.8 per cent. Pre-tax profits rose from £97.1m in 2002 to £105.7m. The operating profit for RIM under the first 37 weeks of Johnston Press ownership in 2002 was £34.1m, rising to £57.3m for the whole of 2003.

Combining RIM for both years, the group announced headline figures including a 15 per cent increase in sales to £491.8m, with pre-tax profits up 38 per cent to £128m. Earnings per share at the company were up 21 per cent at 32.36p. Mr Bowdler said advertising sales at its portfolio of local newspapers and related internet sites rose 3 per cent in the first half of 2003, rising to 4.6 per cent in the second half. Cashflow and earnings per share would continue to grow, he said, as circulations and advertising also rose.

"Given that the new financial year has started well, with advertising revenues growing at a similar level to the second half of 2003, the board is optimistic that we will be able to achieve this growth in 2004 and beyond," said Mr Bowdler, who invested half his bonus in buying 15,848 Johnston Press shares.

The shares closed yesterday at 510.25p, up 1.25p.