The company owns three Glasgow-based titles - The Herald, the Sunday Herald and the Evening Times.

The publishing division also includes 11 business and specialist consumer magazines, as well as the online content and advertising business s1.

We are confident that a sale will be progressed quickly in the interest of staff, among other things

Don Cruickshank SMG chairman

The company said it expected a deal - which would be likely to be referred to the Competition Commission - would be completed by the middle of next year.

SMG chairman Don Cruickshank predicted that the division could be sold for more than �200m.

"There are a number of interested organisations," he told BBC Radio's Good Morning Scotland programme.

"I cannot name any one for confidentiality reasons, but we are confident that a sale will be progressed quickly in the interest of staff, among other things."

Mr Cruickshank denied that the sale was a desperate move by the company, which is struggling to reduce a debt of nearly �400m.

SMG acquired the titles in 1996.

He said SMG had been looking at advertising and the way that new communications legislation was likely to pan out.

"Our strategy is to be a cross-media group concentrating on national businesses," he said.

"Newspapers don't fit into that and now is the right time to sell."

SMG acquired the titles from Caledonian Publishing for �120m in 1996.

Almost 800 people are employed in the publishing division, with 690 of them working for the three Glasgow papers.

Worrying time

Twenty people are employed on s1 and 81 work on the magazines, which include Scottish Farmer.

The Herald and the Evening Times have daily circulation figures of 91,400 and 98,760 respectively, while the Sunday Herald has a circulation of 60,500.

Former Herald editor Harry Reid said the sale was not a surprise, but admitted that it would be a worrying time for those employed on the papers.

Andrew Flanagan: "Difficult trading conditions"

He said SMG had been a "benign" owner which gave independence to its editors.

"They should also get a lot of credit for launching the Sunday Herald, which has been the one big success story of the Scottish press scene over the last three or four years," he said.

SMG, which also owns Virgin Radio, Grampian Television and Scottish Television, made the announcement as it posted results showing a slump in pre-tax profits.

Excluding the group's online activities, they fell by 43% to �11.5m in the six months to the end of June.

Turnover was down 6.4% to �131m.

Advertising upturn

Directors said that a decline in television advertising across the ITV network and the commissioning of fewer programmes accounted for �4m of the drop in profits.

Commenting on the results, chief executive Andrew Flanagan said: "In difficult trading conditions, the group is performing robustly and all our businesses are profitable.

"We are well-prepared for the advertising upturn when it comes."