News Ltd has today announced that David Penberthy is no longer the editor of the Daily Telegraph. He has been replaced by Gary Linnell, a former Director of News and Current Affairs at Nine and Editor of The Bulletin. Linnell has been “editor at large” at the Tele for about a year or more following his departure from Nine.

But Penberthy won’t be leaving the company. Late this morning, News Ltd announced that he has been appointed “to a new role as editor of a national, multi-media editorial operation for News Limited,” a venture which will “combine print, online and television content under a new brand.”

“It will be unlike anything News Limited has done before and unlike anything else in Australia,” News Ltd CEO and Chairman John Hartigan said in a press release. 

Penberthy’s departure is considered to be something of a surprise. He has just overseen the first redesign of the paper in years. He was considered a favourite of News Ltd executive chairman John Hartigan, who is a former editor of the Tele and editorial boss of the group. Hartigan overlooked a number of candidates to give Penberthy the editorship in 2005.

Penberthy was supposed to bring a more youthful view to the paper in a bid to make it more appealing to younger readers. But in the past two years the fall in sales has been remorseless, like at most other titles around the country. The internet is hurting, as are rising petrol prices and the increasing commutes for drivers. Now the slumping economy is adding pressure on ad revenues as well.

Earlier this year the paper featured a front page pic of Reserve Bank Governor Glenn Stevens and asked: “Is this the most useless man in Australia?” Stevens can afford a wry smile today.

But the audited sales figures for the September quarter tell the story. They were released overnight and showed that the Daily Telegraph saw sales slip 2.1% in the quarter, compared with the same quarter in 2007, while the Saturday paper slipped 3.4%. That wasn’t a good look for Penberthy, coming as it did on top of a 3.8% drop in Monday to Friday sales in the June quarter, and a 2.1% drop in the Saturday sales.

But it has been a long slide for the paper. In the December 2007 audit, the paper’s Monday to Friday sales were off 4.3% and more than 6% for the Saturday paper, compared with the December, 2006 quarter.

Late last week Bruce Guthrie, editor of Melbourne’s Herald Sun, lost his gig and will leave News next month.

The Monday to Friday Herald Sun shed 2.4% of its circulation in the quarter. The Herald Sun’s Sunday edition lost 1.2% and the Saturday paper, 1.3%.

News Corp referred to lower revenues and circulations at its Australian papers in its first quarter profit statement. That’s when Murdoch told the world that the forecast 4%-6% rise in profit for 2009 had become a “mid teens” fall. He specifically referred to a loss of ad revenues in Australia, especially the company’s suburban papers.

Murdoch was in Australia for around a week early this month to attend a News Ltd awards night, give the first of his Boyer lectures, to brief analysts (but not tell them about the earnings slump) and to go assess various editors and their papers. That’s when the replacement of Penberthy and Guthrie would have been set in train.

News Ltd papers in Adelaide and Brisbane have been hurting, losing sales, while the Sunday Tele in Sydney under Neil Breen has lost staff and sales this year. Hartigan has been fielding complaints but telling people at News that Breen needs more time. Will News make a third senior change in quick time?

And will Hartigan retain his position? There’s increasing speculation that he will step down to assume another role. Peter Blunden, former long time Herald Sun Editor and now General Manager of the Herald and Weekly Times is the tip, but watch for Rupert Murdoch’s son-in-law, Alistair McLeod.