Media: All the news, from up the road and across the globe: Regional daily newspapers are undergoing radical changes in an attempt to revive a flagging market, writes Michael Leapman

WHEN Joe Holmes, operations director of the Birmingham Post and Evening Mail, arrived in the city from Liverpool three years ago, he was taken to the 14th floor of the papers' office tower. There he looked out over a forest of cranes stretching towards the new National Exhibition Centre some miles distant.

'I thought: 'This is the place for me,' ' he recalls. 'There was a taste of the future here. These people had foresight.'

Today there is not a crane to be seen. The taste of the future is embodied in glistening office buildings plastered with To Let signs. The newspaper group, now sold to the management by its debt- plagued former owner, is, like the press all across the country, vainly seeking signs of an end to the recession.

Altogether, the regional morning papers now sell 1.2 million copies a day, compared with about 11 million for the national dailies. If the recession deepens there is a danger that they will be squeezed further. On the plus side, most are supported by strong local evening titles, whose total market is now around 4.5 million - but which often come out worse in the contest with television for both audiences and advertisers.

The depressed economy is only the latest bad news for the regional press. Local evening papers have seen their sales dip by 40 per cent over the last two decades. Morning titles have fared less badly but there are precious few of them: only 16 British morning papers are now published outside London, compared with 66 at the turn of the century.

The non-London morning press has an image problem. It is staffed by enthusiastic young people who produce lively journalism, yet more than any other section of the industry it finds it hard to define a typical reader or decide what kind of new reader it wants to attract.

A symptom of this identity crisis is the number of radical changes that the papers are undergoing.

The Birmingham Post, not long before the management buyout, reverted to a broadsheet after seven years as a tabloid; in February the Newcastle Journal switched in the other direction, from broadsheet to tabloid; this year the former Glasgow Herald became simply the Herald and a few months later went through a management buyout of its own.

The best way to grasp the dilemma of the regional morning press is to sit in on a daily news conference. At Thomson House in the heart of Newcastle, headquarters of the Journal and Evening Chronicle, half a dozen executives troop into the office of the Journal's editor, Neil Fowler, at 10.30 each morning. The news editor reads out the day's menu.

He starts with international and national developments: horrors from Bosnia, world reaction and calls for United Nations intervention. The Prime Minister is off to the Olympics. A strike may halt flights from Birmingham and Manchester - Newcastle so far unaffected.

Then come local stories and everyone perks up. Prisoners at a nearby jail are to get a lecture on how to keep pets; Gateshead man celebrates 105th birthday; man undergoes surgery after being bitten in face at a South Shields hairdresser; photocall for the Christmas panto at the Sunderland Empire.

From the global to the parish pump: no national newspaper is burdened with so broad a brief. The danger is of spreading the mixture too thinly, satisfying nobody. That was happening when Mr Fowler arrived in Newcastle as editor last summer.

'It had been in a 30-year sales decline,' he says. 'Down to just over 50,000 from 125,000 in the Sixties. It came through in our research that we weren't first choice for enough people. After the war, when people were buying two or three papers a day, the owners were happy for the Journal to be a second or third choice newspaper. But when papers went up in price and people bought fewer, the Journal fell off the end and we didn't get the advertising.'

In the past there had been moves to take the paper upmarket, appealing to ABs, the wealthiest segment of society, whom many advertisers like to reach. It was thought it could become a Tyneside version of the Scotsman, also owned by Thomson Regional Newspapers.

'Our research showed there weren't enough ABs here to make that viable,' Mr Fowler said. 'We'd have gone down to a circulation of about 35,000, and on that kind of paper you have to spend more on your journalism. Even the national broadsheets do badly here - they have about 7 per cent of the market compared with 15 per cent nationally. So there we were, producing a paper that turned a lot of people off.'

The new tabloid Journal is closer to the Daily Express and Daily Mail than the Sun or Daily Mirror. The change seems to have worked so far: before the redesign the paper was selling 51,000 copies a day, but it is now up to 57,000.

Advertising is holding up. Regional papers make much of their money from property and employment ads, two of the chief victims of the recession; yet because the Thatcher boom never boomed quite so loud on Tyneside, times in the North-east are today less hard than in the Midlands and South.

Birmingham, on the other hand, is the traditional centre of the motor industry, always sensitive to dips in the economy. When Chris Oakley, now group chief executive, led the pounds 125m management buyout last November of the company that publishes the morning Post and the Evening Mail, he, like many others, believed that the end of the recession was at hand. The group will, he says, be in profit at the end of the current year, but not by as much as he had expected.

The Post survives with the smallest circulation of any English regional daily: 26,000, roughly the figure before it was turned into a broadsheet in February 1991. After the change and subsequent sales promotion it went up to more than 30,000 but has since settled back where it was. Even so, it is an essential source of local political and business information and manages to find some good stories: the recent tale of a man who infected several women with the HIV virus was a Post exclusive.

Mr Oakley went to the company in 1989, after it had been bought by Ralph Ingersoll, the United States newspaper proprietor, who saw it as a base for expansion in Europe - until the recession forced him to sell. The main motive for turning the Post back into a broadsheet was to differentiate it from its much more successful stablemate, the tabloid Evening Mail, selling more than 200,000 copies a day.

'There was confusion in the market place,' he says. 'People just saw the Post as another edition of the Mail. Turning it into a broadsheet helped to differentiate it more, and people still associate broadsheet newspapers with quality. At the same time we tried to increase our appeal to young readers and women.

'It all worked. Our research shows that we did reach a lot of new readers. But what we hadn't expected was to lose so many of the old ones.'

Mr Oakley insists that the paper contributes to the group's profits and will continue to benefit from editorial investment. He wants to see sales rise to 50,000, but appreciates that this will take a long time.

Certainly he cannot hope to match the Herald, whose sales of 121,000 are the highest of any broadsheet published outside London. Yet in May, Lonrho, owner of the Observer, decided to divest itself of George Outram, the company which publishes the Herald and its tabloid sister the Evening Times. A team of six managers raised pounds 94m to buy it.

Arnold Kemp, the Herald's editor, was one of them. He was also behind the dropping of 'Glasgow' from the name earlier in the year. Like its Edinburgh rival, the Scotsman, it regards itself as a national paper for Scotland: the change in name reflects that.

'There's rapid demographic and social change going on here,' explains Mr Kemp. The city of Glasgow is in decline in terms of population - it lost around 100,000 people between censuses. Our constituency is expanding and we now cover most of Scotland. We still have 70 per cent of our sales in Glasgow and Strathclyde but the rest is growing.'

The Herald contributes more to the group's profits than the higher-selling Evening Times and Mr Kemp is gratified that the latest figures show its circulation down less than 1 per cent year-on-year in a declining market. 'As a percentage of the Scottish population we do as well as the Daily Telegraph does in the whole of Britain,' he points out.

Yet if newspapers are to make increased profits on a static circulation thay have to reduce costs, and here the Herald is at a disadvantage. Since the challenge to the print unions in the mid- Eighties, production costs have been rationalised nearly everywhere. The Herald and Evening Times, like the English regionals, have introduced modern colour presses and electronic typesetting, but trade unions are still strong here, which makes it harder to enforce cuts.

'Glasgow is traditionally a high cost centre,' Mr Kemp admits. 'It was a centre of intense newspaper competition when we had three houses competing - Beaverbrook, the Daily Record and Outram's. There is still the Record (now owned by the Mirror Group) and us and we have to pay people like our van drivers and clerical workers more than in most cities.'

Mr Kemp believes a paper such as his can provide a complete service for readers in his area, even though he has to provide full Scottish news as well as covering the British and international stories in the London papers.

'What sells the Herald is its direct relevance to the lives of Scottish people,' he says, 'although I wouldn't want to stop them buying the best London papers: it's part of the civilised way of life.'

It is easier to carve out a special niche in Glasgow than in English cities whose sense of identity is not as strong. Dougal Nisbet-Smith, director of the Newspaper Society, the trade association for the regional press, worries about its long-term future.

'We had a crisis conference at the end of last year,' he says. 'We're very worried that young people are losing the reading habit. At school they aren't being encouraged to read papers and at home they watch television.'

Certainly I detected nothing but confidence about the future in Newcastle, Birmingham and Glasgow. Yet if business does not improve, more management buyouts could be in prospect, as companies seek to realise capital assets. These are bold ventures; but without the resources of a large company behind them the new management teams may prove less able to withstand a long periods of adverse economic conditions. Confidence may not be enough.

(Photograph omitted)