A potential combination between The Bermuda Sun newspaper and VSB may be closer to reality in the new year.

Such a deal would almost certainly mean a merger between the newspaper's parent, Island Press (Holdings) Ltd., and DeFontes Broadcasting, which operates VSB radio and television.

Yesterday, two central figures in the organisations were tight-lipped about such a transaction.

Randy French, the chairman and CEO of Island Press and the publisher of the Bermuda Sun simply said, "I have no comment,'' when asked about the rumours circulating that the two sides held talks.

Moments later, the same response came from Kenny DeFontes. Neither confirmed nor denied that there had been any talks.

Market rumours have had the two media heading for a union over several years.

People close to the organisations believe the circumstances may now be more suitable for the consolidation, than at any time in the past.

Observers believe the deal would make substantial sense as a counterweight to the influence exhibited over the market by Bermuda's dominant news group, Bermuda Press (Holdings) Ltd., which owns the daily newspaper The Royal Gazette ., sister weekend newspaper The Mid Ocean News and two magazines, The Bottom Line and RG.

It would be the most significant news group merger since radio and television company Bermuda Broadcasting Co. Ltd. brought out Capital Broadcasting Co.

Ltd. some 20 years ago, bringing radio and television operations of ZBM together with those of ZFB under one roof. If the latest rumours are true, it would bring the total revenue for the combined operations of Island Press and DeFontes Broadcasting in at around $10 million, sources say.

Island Press Holdings derives revenue from printing subsidiary Island Press, the newspaper, tourist guide Preview Magazine, a cable TV guide, and paper supplier Paper House.

DeFontes derives revenue from radio and television operations.

Bringing the news groups together would make sense commercially, because marketing and other administrative functions could conceivably be combined.

An observer who has been close to one of the operations said that the combination would be the best opportunity to increase annual revenues by two or three million dollars, making it a stronger and more viable operation.

Getting such a deal done may be relatively easy. One person, Mr. DeFontes, has controlling interest in the broadcasting operations, owning an estimated 75 percent of the company.

On the other side, Island Press Holdings shareholders should be looking for a better pay day, after many years of less than stellar returns.

Last March, the company reported a net loss of $95,000 to September 30, 1997.

It was just one of many years that profits were either slim or nonexistent.

The results were released as the company indicated a new policy of publishing twice weekly in a bid to increase revenue. It is thought that the company could move to publishing three times a week, further bolstering revenue.