Regional newspaper publisher Johnston Press is reporting a 4.8 per cent drop in operating profit, and a 6.1 per cent fall in profit after tax due to weakness in the advertising market.

Operating profit for the first six months of 2007 stands at £96.7m and profit after tax at £55.1m.

But the company reports the rate of decline in UK print-based advertising has reduced from 9.2 per cent to 2.9 per cent. Overall advertising revenue was down 1.5 per cent.

Chief executive Tim Bowdler said: "Costs remain under good control and new publishing initiatives, especially in the digital area, continue to produce strong growth, albeit from a small base. These factors ... lead us to anticipate a satisfactory outcome for the year as a whole."

Digital revenues continued “strong growth” with rise of 33.5 per cent. Unique users grew 31 per cent to 7.9m/month and page impressions were 40 per cent ahead at 76.2m/month.

The focus is on building new revenue streams in both print and digital channels, while keeping costs under tight control.

The company has launched 68 community newsletters in both urban and rural areas. Johnston Press publishes around 200 community newsletters around the UK, which are typically free monthlies with a very parochial concept, covering areas of typically 4,000 to 6,000 homes.

And the roll-out of the 'newsroom of the future' project to all daily and larger weekly centres has been completed ahead of plan and is critical to delivering the substantial growth to its online audience.

UK newspaper sales revenues increased marginally by 0.5 per cent with selective cover price increases more than compensating for reduced circulations.

The company has spent £11.2m acquiring Archant titles in Scotland, including the paid-for Ellon Times & East Gordon Advertiser, the Buchan Observer and the Fraserburgh Herald, as well as the free Extra, which is distributed around Glasgow, Ayrshire, Lanarkshire and Paisley.

Old presses in Falkirk, Peterhead and Portsmouth and pre-press departments in Falkirk, Chesterfield and Scarborough have been closed.