DMGT issued a brief statement confirming the rumour this morning, after The Sunday Times claimed it was in negotiations with ex-Mirror Group chief executive David Montgomery.

It said: "In response to media speculation, DMGT confirms that it is currently in talks regarding the future of Northcliffe Media. No deal or transaction has been agreed, but if these talks move to the point where agreement is reached, an announcement will be made to the market."

According to The Sunday Times, DMGT would retain a stake in Northcliffe if the deal, which values the regional newspaper division at around £110m, goes ahead; Montgomery was said to be supported by privately-held media and property group Yattendon.

In its pre-close trading statement, DMGT revealed that revenues at Northcliffe had fallen 10% in the 11 months to 25 September, with advertising revenues down 11% and circulation down 5%.

Associated Newspapers, publisher of the Daily Mail and Mail on Sunday and the other half of DMGT's consumer business, reported a 2% revenue drop for the period, although on an underlying basis revenues grew 1%.

Martin Morgan, chief executive of DMGT, said: "The consumer business delivered a resilient performance and also benefited from incremental revenue from the Olympics. We expect our full year results to be in line with market expectations. Going forward our focus will remain on driving organic growth, operational and financial efficiency and pursuing an active portfolio management approach."

An Ernst & Young "vendor due diligence" report on Northcliffe, commissioned by DMGT last year, found that it's value had fallen to £150m from the £1.5bn DMGT was holding out for when it last put the division up for sale in 2005.