By Paul Sandle
LONDON (Reuters) - The publisher of Britain's Daily Mirror is in talks to buy rival titles the Daily Express and Daily Star, raising the prospect of a fresh round of painful restructuring in the embattled newspaper industry.
A deal would bring together tabloids from the opposite ends of the political spectrum as the industry struggles to cope with declining sales, with readers and advertisers shifting online.
Trinity Mirror (L:TNI), which has over 260 national and regional titles including the left-leaning Daily Mirror, had been in talks to take a stake in a new company that would include the titles of billionaire publisher Richard Desmond.
It said on Friday it was now in talks to buy all of Desmond's Northern & Shell (LON:RDSa) assets, which include celebrity magazine OK! as well as the right-leaning Express and Star.
It did not give a potential value for the deal. Desmond, who made his name publishing specialist magazines, including adult titles such as the British edition of Penthouse, bought the Express titles in 2000 for 125 million pounds.
Analysts said a deal could herald more restructuring in an industry which has gone through years of upheaval and layoffs.
"In terms of operations, having a bigger print base is helpful because it will likely lead to scope for significant cost efficiencies," Citi analysts said in a research note.
"Coupled with greater scale in terms of audiences and ad sales, even in a declining market, we would anticipate strategic benefits from a deal."
DECLINING SALES
Desmond's OK! magazine, launched in 1993, led a burgeoning market for news about celebrities such as David and Victoria Beckham and reality TV stars, although its circulation has been hit by the rise of new online news sites.
The circulation of the Daily Express, which was founded in 1900, has also fallen far from its heyday in the 1950s and 60s, when it sold more than 4 million copies a day.
It sold 380,632 copies in July, according to industry specialists ABC, down 9.9 percent on a year earlier, while the Daily Star sold 421,812, down 18.4 percent.
Under Desmond's ownership, the Express has been a cheerleader for Britain leaving the European Union.
The Daily Mirror, meanwhile, sold 625,278 copies in July, according to ABC, down 19.1 percent on a year earlier.
Trinity Mirror said there was no certainty an agreement would be reached and any deal would need to be approved by its shareholders.
At 1025 GMT, its shares were down 0.6 percent at 91.59 pence.