A Sly look in Mirror suggests future is not so bleak

Yet this was a year in which a central plank of Trinity's strategy - as devised by Bailey - was a dismal failure. She promised to raise £600 million by selling off various regional newspapers and the Racing Post. In the event, her disposals programme resulted in a take of just £263 million, and Trinity was obliged to keep some papers when a mooted management buyout deal fell through.

But I am resisting temptation, even though I think Bailey's reward is excessive, because there are signs that she may be guiding the company towards a more secure future. Moreover, she is doing so against a background of continuing strife for the newspaper industry as advertising revenue becomes ever harder to come by, a situation that is clearly spooking investors.

When I say "signs", I mean just that. I don't want anyone to think that the weather is set fair for Trinity Mirror. It is, however, impossible to ignore the all-round improvement to the company's regional newspaper divisions because of dramatically improved online innovation. Month by month, revamped websites are coming on stream. They look good, they offer better content - especially video - and they are more user-friendly than before. Audience figures have certainly improved too, up by more than 27% in 2007 compared with the year before.

Trinity Mirror remains the country's largest regional publisher by circulation, which is both a blessing and a curse. The problem is that the bedrock of weekly newspaper income, classified advertising, is in rapid decline. Small ads are gravitating towards the net, often to non-newspaper sites that do not charge either seller or buyer.

The only hope for local papers, therefore, is in persuading classified advertisers that there are advantages to using their local sites to locate buyers within their communities. In order to do that, of course, they must maximise the audiences for those sites.

There is little doubt that Trinity has taken steps to do just that. It has just hired a new digital director, Chris Bunyan, a former executive with Virgin Media. It is also employing 100 new staff, half of whom are journalists, to work specifically in the digital arena.

What though of Trinity's London-based national papers? These once-dominant titles, the focal point of Britain's largest publishing empire from the 1950s to the 1970s, have long been in decline. So is there any hope for them?

The flagship Daily Mirror has been fighting a rearguard battle against The Sun for the best part of 40 years, and seen its sale fall from five million to 1.5 million at the last count.

Trinity, before Bailey's arrival in 2003, had proved to be a lacklustre owner. It has hardly sparkled since but, as with the regionals, there is some evidence, albeit faint, of a change of fortunes. Its current editor, Richard Wallace, has made a good fist of the job, winning accolades for giving the paper a sense of coherence and breaking a number of exclusives. The recent exposure of Tory leader David Cameron's wayward cycling exploits was a good example.

Scoops rarely win readers but they do lift morale among staff and, over time, they can sometimes translate into an improved public appreciation. I have also seen completed dummies of a Mirror revamp now that the paper can publish - following a £228 million investment in new presses - in full colour. They certainly pushed the boundaries and are sure to be toned down before being introduced, but the sports section looked good enough to publish right away.

However, given that the Mirror needs to do something to stop the sales rot, and cannot match the resources of its main rival, which sells almost a million issues at a discount, it is probably time for editorial bravery. Bailey also needs to have the courage of her editor's convictions because the Daily Mirror is the company's cash cow. It requires resources if it is to have any chance of reversing its sales fall.

The paper that defies logic is the Sunday Mirror, the best performer by far of the Sunday red-tops. It is also a credit to its editor, Tina Weaver.

By contrast, The People is in a terrible state. Without an editor since last November, it is reputedly about to report a single-digit circulation decrease for the first time in two years. Its acting editor, Lloyd Embley, and a group of senior colleagues are said to be developing a potentially radical editorial approach to reposition the paper in order to avoid the age-old clash with both the Sunday Mirror and the market-leading News of the World.

What is so heartening about all three nationals is that editorial initiative, rather than commercial, is leading the way. Is that because Bailey is giving her editors their heads? If so, perhaps she is worth that bonus after all.