The acquisition of radio stations and local newspapers by UK companies Johnston Press and Emap points to further consolidation in this profitable sector, writes Emmet Oliver.

For a modestly populated country on the western extremes of Europe, the Republic certainly has its fair share of media.

There are 54 radio stations licenced by the BCI and 56 local and provincial newspapers. This is in a country with a population of less than four million people.

The figures do not even include State-owned broadcaster RTÉ or television services like TV3, TG4 and Setanta Sports.

The amazing thing is not the amount of stations and local newspapers supported by the population, but how profitable and stable they are considering the advertising cake for the Republic - valued at €1.3 billion - is minuscule by international standards.

The dependability and sustainability of these various media businesses went unnoticed outside Ireland for most of this century, but in the last 10 years, companies in Britain have started to take note.

The first pattern one notes about the local press in particular are the stable circulation figures.

Take any title and you can see this trend. The Kilkenny People, purchased this week by Johnston Press plc from Scottish Radio Holdings (SRH), recently reported a circulation of just over 18,000.

The paper had a similar circulation over five years ago.

The Kerryman is the same, its circulation, almost like clockwork, comes in at between 27,000 and 28,000 almost every year.

National newspapers, and radio stations in particular, would kill for that kind of stability of sale.

With stable circulation figures comes stable finances.

The balance sheets of most local and regional newspaper groups are a study in consistency and good order - an accountant's dream.

Most of the local newspaper titles have had stable profits and stable circulations for years, but what has changed in recent years is the amount of advertising flowing in their direction.

The amount of money spent by advertisers on press has gone from €351 million in 2000 to €928 million in 2004, a staggering increase of 164 per cent.

It is not certain how much of this went on local newspapers, but advertising agencies claim that they have significantly increased the portion of their budgets dedicated to the sector.

With stable circulation figures, healthy balance sheets, rapidly rising advertising revenues and often highly lucrative contract printing businesses, the local newspaper groups have found themselves targets of the big UK publishers.

Scottish Radio Holdings were effectively the trailblazers, but others have followed.

The UK publishers have their own reasons for voyaging across the Irish Sea. The massive wave of consolidation in the UK local and provincial press happened - in the main - about 15 to 20 years ago.

This has resulted in 80 per cent of the titles being owned by 10 big publishing groups.

A similar trend cannot be ruled out for Ireland. Already, one senses the emergence of four to five major publishing groups.

At the top end are the heavy hitters like Independent News and Media with 12 titles and Thomas Crosbie Holdings (TCH), with eight titles.

These groups also have national titles and the TCH, owner of the Examiner and the Sunday Business Post, also has some radio interests.

Snapping at their heels are the likes of John Taylor's (now called Lord Kilclooney) Alpha Newspaper Group with five titles, and Irish born businesswoman Deirdre Romanes's group Dunfermline Press, with five titles.

Ms Romanes is believed to be interested in making further acquisitions, as is Lord Kilclooney.

But they have been joined - as of this week - by Johnston Press plc, the fourth largest regional publisher in Britain and owner of regional powerhouses like the Yorkshire Post. The chief executive of Johnston Press, Tim Bowdler, certainly gave the impression this week that his company was not going to confine itself to just the five newspapers that it picked up from the sale of SRH.

But others are not so certain the buying spree will continue. Cathal Friel of Merrion Capital, who has advised on the sale of the Meath Chronicle and the Midland Tribune group, says he is sceptical.

"If you look at other markets, there is always 20 to 30 per cent of people who just don't want to sell. It is their life and their job and they have no reason to sell.

"They are often very comfortable anyway, don't need the money and have their families working in the business."

This assertion may be true.

For example, despite intense speculation over many years, one of the most valuable regional newspaper groups, the Connacht Tribune Group, remains in the hands of Galway-based families.

But still there are still plenty of takeout targets out there for the insatiable media groups.

The following papers are still not affiliated to any of the major media blocks at present: Clare Champion, Connacht Sentinel, Connacht Tribune, Connaught Telegraph, Dungarvan Leader, Dungarvan Observer, The Echo Group (Enniscorthy, Gorey, Wexford and New Ross Echos), Kerry's Eye, Liffey Champion, Mayo News, The Topic (Meath, Westmeath and Offaly Topics), Munster Express, Nenagh Guardian, Northern Standard, Sligo Champion, Southern Star, Tuam Herald and the Meath Weekender.

While several of these newspapers will no doubt be sold at some point, only a few of them are large enough to interest the large UK publishers.

For example, the Kildare-based Liffey Champion has a weekly sale of just 7,500.

On the radio side, the rate of purchasing could be higher. In this sector, there are also some leading players: Emap is now the obvious one.

A company of true international scale, as of this week it owns Highland Radio, FM 104 and Today FM, the only national competitor to RTÉ.

Most observers expect it to swallow up a few more stations, although it will clearly not want to overpay for any assets.

Denis O'Brien's Communicorp and UTV are also major players in the radio arena. Also, Radio Kerry recently became an acquirer when it acquired Shannonside/Northern Sound.

However, unlike the no-holds barred world of regional and local newspapers, the Government (via its main regulator) appears a little squeamish about any one company building up an unhealthy presence in the radio sector.

The BCI imposed a cap a few months ago on the number of stations any one proprietor could have a substantial interest in.

While it is reviewing its whole ownership and control policy, the cap of 17.9 per cent has already put a block on further expansion by UTV for instance.

This was illustrated when UTV made its last purchasing decision when it took over the Wireless Group in the UK for £95 million and ignored the Irish market.

That kind of decision has probably exerted downward pressure on radio valuations, but with new companies flooding in Ireland to snap up newspaper assets, there is no sign of activity tapering off in that already exuberant segment of the market.