Mirror and Telegraph drop advertising merger

Trinity Mirror has walked away from a ground-breaking plan to outsource its advertising sales operation to the Telegraph Group.

The company, which publishes the Daily Mirror, Sunday Mirror and Sunday People, said it had to concentrate on a series of initiatives to revive its flagging national tabloids. Insiders suggested that the proposed deal with the Telegraph was a "bridge too far" while the company sought to reposition the Mirror editorially and fight a vicious price war with its arch-rival The Sun. Critics have said that the Mirror's cover price cuts have lost it millions of pounds in revenue, with no discernible benefit in circulation.

Mark Haysom, managing director of the MGN national newspaper division at Trinity Mirror, said: "During the past few months, MGN has launched a number of important strategic initiatives and we need to maintain the focus of our management effort on these."

Under the deal, revealed in February, MGN would have transferred its ad sales operation to Apollo, a new company owned and run by the Telegraph Group, which publishesThe Daily Telegraph and The Sunday Telegraph. Trinity's regional newspapers were excluded from the plan.

Both companies insisted there had been no disagreement over the venture and that it may be revived at a later date. The groups said the current difficult advertising environment meant that now was not the right time to launch Apollo. The Telegraph already sells ads for The Business newspaper.

Chris Whyte-Smith, display sales director at the Telegraph Group, said: "The crucial point is that there has been no falling out over the structure of Apollo. And both parties agree that the principle of it remains sound. It's a postponement, not a cancellation."