Since autumn 1995, about pounds 5.6bn has been spent on merger and acquisitions in the UK's regional press. This frenetic activity has brought about two important changes in the sector's profile.
First, the regional press is now dominated by specialists. A few years ago, most big publishers were adjuncts of broad-based media groups trying to spread their investment across a diverse range of activities.
Second, consolidation of the industry has taken hold. The top 20 publishers now account for 84% of all regional and local newspaper titles in the UK, and 95% of the total weekly audited circulation, according to trade body The Newspaper Society.
This year alone, the sector's two biggest players, Trinity Mirror and Newsquest, have acquired Southnews (pounds 285m) and Newscom (pounds 444m) respectively.
Between them, the big four - Trinity Mirror, Newsquest, Northcliffe Newspapers and Johnston Press - publish 653 of the UK's 1300 regional newspaper titles.
By and large, consolidation has been a good thing for the sector, says Northcliffe managing director Alec Davidson, who this year took up the mantle of Newspaper Society president. 'In the face of consolidation in competing media and the availability of free information online, consolidation among regional press owners has created economically stronger groups that are better able to invest in the sector,' he says.
According to Davidson, areas that have seen the benefits of investment include editorial budgets, the presses, circulation management, a digital artwork delivery system called AdFast, and web publishing - Trinity, Northcliffe and Newsquest have clubbed together to launch online network Fish4, which provides a search facility for cars, jobs, local businesses and homes to consumers.
Another by-product of consolidation has been a reduction in the number of ad sales houses - a key development for a medium regarded as tough to plan and buy. 'I don't think a fragmented regional press would have seen the benefits of something like AdFast or got a project like Fish4 off the ground,' says Davidson.
The financial indicators support this bullish assessment. Ad revenues for the first quarter of 2000 were up 6.4% year on year to pounds 2.57bn and half of all regional titles achieved year-on-year circulation growth in the January to June 2000 period. This jumped to 61% for weekly titles.
The overall improvement in circulation is in stark contrast to a decline among national titles, although regional evening titles are in slight decline. Johnston Press chief executive Tim Bowdler believes this is largely down to investments in the editorial quality of the product.
But it would be wrong to assume there are no areas of concern for the regional newspaper business. Closer analysis of the ad revenue figures reveals that classified ads have been the real driver of the sector's growth. Local display revenue managed a modest 4.5% jump year on year, while national display revenue fell by 0.5% - despite the launch of a pounds 3m Newspaper Society campaign aimed at trumpeting the benefits of the medium for national clients.
Not only that, but competition for display revenue has intensified dramatically at a local level. In addition to the growing range of alternative media, the launch of Associated Newspapers' free morning paper Metro in London, Manchester, Birmingham, Newcastle and the central belt of Scotland (see box, page 33) has stirred up the big advertising markets. Not only is Metro a new rival for revenue, it is also forcing greater promotional and new product expenditure from rivals.
The regional press' lack of success in building on its 3.5% share of national display revenue comes despite a growing perception that the regions are undergoing a period of revival. A new report by Harrison Cowley, entitled 'The Renaissance of Regional Nations', concludes that factors such as devolution, economic regeneration and a resurgence of cultural self-confidence are making the regions a more important part of how people perceive themselves.
The research shows that twice as many people believe regional papers are trustworthy compared with the national papers. Regionals also out-score other media by three to one in understanding locals' concerns.
Why then has this generally buoyant picture not translated into a greater share of national display revenue? Newspaper Society marketing director Chris Stanley believes that Advertising Association figures, which are used to measure regional share, are deceptive. 'Ad campaigns by advertisers such as Ford are defined as classified, so they don't show up in our national share. We think pounds 600m - 10% - is probably a better reflection of the medium's share of national revenue.'
But the sector has nonetheless struggled to make itself a medium of choice for national advertisers, despite its long-standing optimism that state-of-the-art readership data from industry body Jicreg would bring agencies round.
At last, however, Stanley believes a range of substantive new industry measures will start to show dividends. In addition to the introduction of the AdFast system, he cites the launch of www.planregionalpress.co.uk, an online tool that gives agencies access to circulation and readership data, and singles out the collective pounds 100m that the industry has spent on improving its colour printing facilities.
These three measures form part of an ongoing commitment by publishers to improving the usability of the medium. The process was kick-started in early-2000 by a mass consultation exercise in which publishers canvassed the opinions of agencies and advertisers. When the results of the survey were collated, the regional press made 18 promises to advertisers, including a wide range of changes to be made over the coming year.
The next planned change is an integrated planning system - E-Telmar - that should make planning and buying easier. The fact that agencies can subscribe to the system by the day, rather than by annual subscription, should also encourage its use.
The Newspaper Society is also attempting to broker relationships between agencies and publishers. An example is Feature Link, a system that pairs clients with advertising features across a range of regional newspaper titles. In a recent campaign, Britannia Airways ads were placed in 58 Scottish papers with a combined circulation of 1.7 million.
This relationship drive is being actively supported by the regional press' leading sales houses - AMRA, Mediaforce, Newsquest, Northcliffe and Clacksons.
While regional adspace is more expensive than the national press, Stanley says: 'The regional press is extremely effective at getting people into shops and on the phone. The true measure of the medium is its cost per prospect, not per thousand. The regional press has much less wastage than the nationals, which will become much clearer when the logistics of planning and buying are sorted out.'
Zenith regional media director Cathy Richards, who broadly welcomes the changes brought about by consolidation, says that Stanley's argument must be backed by real numbers.'If regional publishers want a higher share of national ad revenue, national and local pricing should reflect this desire, with incentivised national ad rates,' she says.
Richards adds that the consolidated sales houses must retain their local knowledge of the portfolio of newspapers they are selling. 'The challenge facing the large sales points is to combine efficiencies of scale with a personal approach,' she says.
But it is important not to get the national revenue debate out of perspective.
As Johnston's Bowdler says: 'National display revenue only accounts for about 7% to 8% of our ad revenue. It is by no means our principal revenue stream.'
In addition to driving ad revenue, the sector is considering expansion into other media. Its biggest play to date has been significant investment by Northcliffe, Trinity and Newsquest in the Fish4 network. By July, Fish4 was recording ten million page impressions a month.
The sector is also lobbying on cross-media ownership - in particular, onerous rules that restrict regional newspapers' ownership of radio stations within their circulation areas. At the heart of this issue is a debate about whether the companies are perceived as publishers or platform-neutral providers of content.
The industry's argument is that the cross-media rules that govern the sector are outdated due to factors such as media convergence and increased consumer and advertiser choice. It hopes that its viewpoint will be heard when the government frames new legislation after the next election.
Bowdler, who chairs the Newspaper Society's work in this area, calls the current rules 'inappropriate', but does not foresee a rush of cross-media mergers if the rules are relaxed. 'Digital media is clearly an important area of development. But we wouldn't rush out and make deals that might dilute our offering to advertisers. The key for us is to be a newspaper publisher of choice,' he says.
The most persuasive argument against relaxing rules is the extent to which the regional publishing business continues to consolidate. With the sector's sixth-biggest player, Regional Independent Media (RIM) - which owns prestigious titles such as The Yorkshire Post - subject to bids of about pounds 650m from Newsquest's US owner, Gannett, Johnston Press and Guardian Media Group, it seems certain that more concentration of power will occur in the coming year.
While the sector plays down concerns about consolidation by pointing to trends in TV and radio, it is not insignificant that three of the top five regional publishers - Associated/Northcliffe, Trinity and Guardian Media Group - also sit at the national newspaper high table, while Gannet is owner of US title USA Today.
For Northcliffe or Newsquest, acquisition of RIM would confirm their dominance. If the Guardian group wins the battle, it will emerge with a stable of 96 newspapers, including a raft of titles across the north of England, headed by the Manchester Evening News and Yorkshire Post.
Devolution has had little impact on the make-up of the regional press - 'there has been some impact on the editorial in our newspapers, but no detectable commercial significance,' says Northcliffe's Davidson - but Scottish editions of London-based national papers have become more distinct from their southern counterparts. The Scotsman and Glasgow-based titles The Herald and The Evening Times have all undergone relaunches to reinforce their credentials within a devolved Scotland.
Political devolution has also created the right conditions for the launch of business daily Business am - which is aiming to reach a circulation of about 35,000.
One of the most significant regional stories of the year was the enforced sale of Belfast Telegraph Newspapers Limited by Trinity to allow its Mirror Group acquisition to go through. Trinity's reluctant pounds 300m sale of the business to Eire-based Independent News & Media gives the latter a powerful cross-border position thanks to the addition of The Belfast Telegraph and Sunday Life. The Belfast Telegraph, in particular, is a prized asset, with 115,000 sales a day.
In the midst of the wider ownership debate, there are two potentially damaging issues on the horizon for the regional press. One is an anticipated rise in the cost of newsprint, hitting the bottom line of publishers.
The other is a plan by WH Smith and Tesco to change their methods of magazine and newspaper distribution in a way that could put the existence of many regional titles at risk.
But the prospects for the regional press remain good - particularly if the Newspaper Society can finally convince agencies of the merits of its titles as a national display medium.
HOW METRO MADE THE NEWS
The most significant regional newspaper launch in the past two years was undoubtedly Associated Newspapers' free morning newspaper Metro, which now distributes 362,392 copies a day in London.
After breaking into the London market in March 1999, the paper now has a presence in Manchester, Birmingham, Newcastle and central Scotland, although the branding and ownership details vary between regional editions.
The success of the London paper was based on two factors. The first was the grip that Associated's Evening Standard had on the capital. Without the pressure of competition, Metro had a free run to develop its reader-base. The second was the comprehensive nature of London's public transport system. With distribution via Tube stations, Metro was quickly able to reach a wide audience. The story has not been so straightforward elsewhere in the UK.
In Manchester, Associated launched Metro North-West in November 1999 only to find itself in a turf war with the city's dominant player, GMG, which revamped its weekly Manchester Metro News. Not only has GMG now built Metro News into the UK's biggest free newspaper outside London - circulation 300,000-plus - it also won a court case that stripped Associated's Manchester title of the Metro name. Today, the Associated paper trades as News North-West.
In Scotland, Metro faces equally stiff competition from established titles such as The Glaswegian. But in Birmingham and Newcastle, Associated decided to team up with local market leader Trinity Mirror, which prints the paper under licence and gives Associated a revenue share. In Birmingham, for example, the local Metro sits in a portfolio that consists of titles such as the Birmingham Evening Mail, Birmingham Post and Sunday Mercury.
The deal means Associated can build its brand in a relatively protected environment. While the London paper is clearly a sustainable model, it is not clear whether the other UK cities have the necessary commuter infrastructure to sustain the papers.
Trinity Mirror spent pounds 2.5m in the first six months after launch on the Birmingham and Newcastle titles and will hope the UK doesn't slip into recession before the titles' advertising base grows to a sustainable level.
HOW THE TOP REGIONALS COMPARE
Top free regional morning paper (Jan-Jun 2000)
Rank Newspaper Circulation
1 Metro (London) 362,392
Top ten free weekly papers (Jan - Jun 2000)
Rank Newspaper Circulation
1 Manchester Metro News 301,757
2 The Glaswegian 201,254
3 Nottingham & Long Eaton Topper 199,516
4 Edinburgh Herald & Post 179,720
5 Nottingham Recorder 174,723
6 Southampton Advertiser 168,119
7 Kingston Guardian 158,700
8 Leeds Weekly News 158,405
9 Bexley Dartford & Gravesend News Shopper 142,303
10 Wirral Globe 140,397
Top ten UK regional evening papers (Jan - Jun 2000)
Rank Newspaper Circulation
1 Evening Standard (London) 445,517
2 West Midlands Express & Star 186,042
3 Manchester Evening News 176,051
4 Liverpool Echo 155,848
5 Birmingham Evening Mail 136,743
6 Belfast Telegraph 114,961
7 Leicester Mercury 111,652
8 Newcastle-Upon-Tyne Evening Chronicle 107,346
9 Glasgow Evening Times 106,839
10 Yorkshire Evening Post (Leeds) 100,794
Source: ABC/Newspaper Society
Top ten UK paid regional morning papers (Jan - Jun 2000)
Rank Newspaper Circulation
1 Daily Record (Scotland) 620,103
2 Press & Journal (Aberdeen) 101,642
3 The Herald (Scotland) 96,855
4 Dundee Courier & Advertiser 92,775
5 The Scotsman 84,716
6 Eastern Daily Press (Norwich) 76,579
7 Yorkshire Post (Leeds) 76,424
8 Daily Post (Liverpool) 66,930
9 Northern Echo (Darlington) 66,032
10 The Western Mail (Cardiff) 55,273
Source: ABC/Newspaper Society
Regional display top brands (July 1999 to June 2000)
Rank Brand pounds ''000
1 Lidl Discount Food 7,157
2 DFS - sofa suites 4,915
3 DFS - product range 3,224
4 Kwik Fit 2,485
5 T J Hughes 2,387
6 Bensons for Beds 2,302
7 Currys 2,044
8 Tiny Computers 1,896
9 PC World 1,776
10 Uno 1,616
11 Boddingtons 1,531
12 World of Leather 1,519
13 Tesco 1,493
14 Aldi 1,436
15 Courts 1,402
16 Time Computers 1,331
17 Allders 1,300
18 Morrisons 1,234
19 Sainsbury''s 1,201
20 Land of Leather 1,181
Source: Newspaper Society