Newsquest, the UK’s second-biggest regional newspaper group, has held takeover talks with Archant, owner of titles including the Ham & High in London and anti-Brexit paper The New European, as consolidation continues to sweep the industry.

The talks apparently faltered in part due to reticence from Newsquest’s parent Gannett, the owner of USA Today and the largest newspaper proprietor in the US. Norwich-based Archant, which was co-founded by mustard magnates the Colman family in 1845, runs 120 newspaper titles and 80 magazines employing about 1,500 staff. According to industry sources, Archant is valued at up to £40m.

News of the talks emerged following the move last week by Newsquest, which publishes 200 titles including The Argus in Brighton, Northern Echo in Darlington and Glasgow’s Evening Times, to buy Carlisle-based newspaper publisher CN Group.

CN Group, which has been run by the Burgess family for four generations, is selling up after more than 200 years of independence, having admitted it is one of a swathe of mid-size publishers that lacks the scale to compete against Facebook, Snapchat and Google for advertising.

“Consolidation is inevitable,” Ashley Highfield, chief executive of Johnston Press, owner of the Scotsman and Yorkshire Post, said last week. “It’s the obvious and necessary road ahead and smaller publishers increasingly cannot survive without being part of bigger groups to bring economies of scale and shared content.”

Last year, Johnston Press, the UK’s second-biggest regional newspaper group, paid Evgeny Lebedev, owner of the Evening Standard and Independent websites, £24m for national newspaper the i to bulk up the publisher’s scale. It also was one of a number of suitors, including Lebedev, to look at buying national freesheet Metro when DMGT, which owns the Daily Mail, tested market appetite for a sale.

The shift of readers away from printed newspapers, which have traditionally provided the bulk of revenues and profits through sales and advertising, has been profound over the last decade.

Total weekly regional newspaper circulation fell by half from 42m to 22m between 2009 and 2016 , with paid-for copies falling from 26m to 13.8m, according to Enders Analysis. Similarly, the national newspaper market has shrunk from selling 9.3m copies per day in 2009 to 5.2m last year.

On Tuesday, investors in Trinity Mirror, the publisher of the Mirror titles, will vote to approve a £200m takeover of Richard Desmond’s Express and Star titles as the national newspaper industry faces the same issue of the need to build scale to survive in the battle for advertising against the tech giants.

The impact on publishers’ bottom line has been further affected by lower rates for digital advertising, exacerbated by giants such as Facebook and Google hoovering up to 90% of all new ad money being spent online.

Since 2008, almost £800m in ad spend has been stripped from national newspapers, from £1.54bn in 2008 to £757m last year. The impact is even more stark in regional newspapers, which have seen ad revenue fall from £2bn in 2008 to £723m last year, according to figures from Group M.

“In order to survive, consolidation is key to compete with the online players and retain some share of digital advertising,” says Alice Pickthall, media analyst at Enders.

“As the digital market grows, publishers aren’t seeing a proportionate amount of share gain. Facebook has had an especially big impact on the local market. If a local business is offered a lovely shiny [presence] on Facebook who wouldn’t use it? The largest [traditional] players in the market will win, they will continue to pick up smaller publishers to maintain scale in a shrinking market.”