Local newspaper groups suffered a blow to their hopes of curbing council-run freesheets today as the Audit Commission said local authorities were not wasting or misusing money on the publications.

The watchdog's chief executive, Steve Bundred, said few councils that publish the controversial newspapers were in a position to attract local advertising, one of the major complaints made by media companies.

"The money being spent by councils is not unreasonable, though they should always consider whether it provides good value," Bundred wrote in a letter to the Digital Britain minister, Stephen Timms, to accompany a review of council spending on communications. "Few council publications are published sufficiently frequently to be viable media for most local advertising."

More ...http://www.guardian.co.uk/media/2010/jan/25/council-run-newspapers-money-watchdog