Regional newspaper businesses will have to be "financially recalibrated" because they will have substantially smaller margins in future, according to Carolyn McCall, chief executive of Guardian Media Group.
Speaking to the Financial Times ahead of today's release of full-year results up to the end of March 2008, she said she now had different expectations of the company's regional and local papers, but was not about to ditch them.
GMG reports an 8.7% rise in group turnover to £438.8m. Profit before tax was £306.4m. The company benefited from the sale of 49.9% of Trader Media Group. GMG's chairman, Paul Myners called it "an exceptional year" for the company.
But the regional media division saw operating profits fall from £19.4m to £14.3m on revenues of £120.5m, down from £122.2m. Classified ad revenue fell 8%. McCall said the local paper business, led by the flagship Manchester Evening News (MEN), was in transition from a print model to an online model. She said: "They are good businesses, with potentially good profits, but the margins are going to come down.
"We have owned the MEN for a long, long time and it has turned over enormous amounts of cash. It's not costing us money. It's costing us profit and that's bad, but it's not that bad."
The full report can be found here.
