Freesheets succumb to hard times

MATHEW HORSMAN

The one-day entry by the Times into the freesheet market, courtesy of the computer giant Microsoft, does little to mask the trials and tribulations of a market in trouble.

The UK's largest publisher of freesheets, Reed International, has put the whole of its regional newspaper arm up for sale. Yesterday it issued figures showing operating margins in the first six months of this year below 20 per cent, far lower than its consumer magazines division and the highly profitable electronic publishing arm.

The company, which prints more than 4 million freesheets daily, has been hit hard by the cost of newsprint rising 50 per cent since last year. It has also faced vigorous competition for advertising from local commercial radio.

Reed, which also owns four evening and 90 weekly titles in London, the Midlands and the North, is to concentrate on higher-value businesses like on-line information provision.

Most freesheet publishers have reduced print runs and formats in the face of rising costs, but titles have still folded. Media analysts suggest radio advertising may grow by another 10 per cent this year, and one of Reed's main rivals, EMAP, has responded by expanding aggressively into radio.

The number of freesheets took off in the 1980s. Regional paid-for newspapers reacted either by buying up or launching their own, in part to offset lost advertising revenue, but the sheer number of titles has fragmented markets even further.

Cost-cutting has tempted advertisers, worried about not getting the type of reader they want, away to commercial radio, seen as a more effective and sophisticated medium. It also offers the possibility of mounting both national and specially targeted campaigns.