The chief executive of regional newspapers giant Johnston Press today called for the BBC licence fee to be cut by a third to stop it creeping ever deeper into local news.

John Fry was speaking as Johnston provided some rare relief to the embattled sector by securing a refinancing of its £424 million debt facility with banks led by bailed-out Royal Bank of Scotland and Lloyds.

“If you cut the BBC licence fee it would then have to focus on its core public broadcasting commitments and be less likely to try and expand into other people's markets,” he said.

Johnston's refinancing, which follows its failure to find a buyer for its Irish titles at an acceptable price, comes at a heavy cost.

The interest rate on its debt goes up from 5% to 10%, meaning it faces an extra £20 million or so a year in extra payments. Johnston earlier this week denied there had been any takeover talks involving The Scotsman newspaper.

Advertising revenues fell 32.7% in the past six months compared with a year earlier. Operating profits slumped from £81.6 million to £38.2 million.

Meanwhile, The Independent newspaper's owner Independent News and Media warned profits would be at the “lower end” of previous forecasts of €0 million (£158 million) to €10 million for 2009 due to the collapse in advertising spending.

Its operating profits halved to €3.2 million in the six months to 30 June. INM cut 900 staff in the period.

While Johnston Press did not give details of lay-offs, Fry said £3.9 million would be cut from its spending on editorial this year, mostly due to redundancies.