Amidst what was otherwise a fairly gloomy House of Commons select committee session on the future of local media in the UK [see Claire Enders’ prediction that half of the UK’s regional newspapers will close in five years and her comments on bloggers], Johnston Press chief executive John Fry remained staunchly optimistic about the cyclical/structural elements of the decline in local media.

While all members of the panel agreed that this was the worst crisis faced by local media in the industry’s history, Fry said the decline in advertising revenues for his group was more cyclical than structural.

“That implies that there will be a bounce in advertising when that changes. From here onwards we’re likely to bottom out. When the economy recovers we’ll see a recovery in advertising,” he said.

Guardian Media Group chief executive Carolyn McCall was quick to temper Fry’s optimism:

“I don’t believe the prospects for recovery, particularly in classified advertising are particularly strong. I don’t expect to see a great deal of those three big markets – I don’t think bounce is the right word – I think it will come back slowly, it will come back in a different form or shape,” she said.

“The structural change is too profound and the economic recession has just hammered it. Deregulation is one step towards helping. It’s not a panacea. It raises all sorts of important issues about jobs.

“One thing we’re going to have to face about this industry is that it’s going to be a smaller industry with less people in it. Consolidation will help because then the clustering of assets in the right place, will makes more sense, you’ll get more scale.”

All three panellists (Fry, McCall and Trinity Mirror’s Sly Bailey) taking part in the evidence session (which had earlier taken comments from Claire Enders and DC Thomson’s Christopher Thomson) supported consolidation and the relaxation of newspaper merger rules to help local newspapers.

Yet it was McCall again with the most sensible comments – a range of issues and possible solutions need to be considered: discussions about aggregators; consolidation; support for web development; the use of part-paid, part-free access; state-funding; and the problem of council newspapers.

The industry needs to move away from the display advertising model to – not just one business model – but lots of business models, she added.

If any of them can sustain quality local journalism, none should be ruled out, she said, echoing comments from the Society of Editor’s executive director Bob Satchwell to Journalism.co.uk last week.