Russian billionaire Alexander Lebedev’s agreement to bail out the once-mighty Evening Standard is further indication of an industry in decline. An industry that is now forced to turn to unusual alliances and co-operation agreements in the face of competition from freesheets and the internet.
Lebedev, a former KGB officer, has bought 75.1% of the paper from the Daily Mail & General Trust’s Associated News division for a “nominal sum”, suggested to be £1. In return he will spend £25m revamping the unprofitable title, and has vowed to close it in three years if his turnaround plan fails.
Meanwhile, Associated – the parent company of morning freesheet Metro and the free evening paper London Lite – looks to be ditching its paid-for London title in favour of its free alternatives.
Observers see the deal as make or break for the 181-year-old London paper that has suffered a dramatic slide in circulation and profits since March 2007.
Jo Blake, a press buyer at Arena BLM, says: “Lebedev and the Evening Standard have their work cut out. Three years is certainly an ambitious timeframe.”
According to Audit Bureau of Circulations figures from November 2008, the paper has a circulation of 174,438, compared to News International freesheet thelondonpaper’s near 500,000. The highest ABC figure for the Evening Standard was recorded for the January-June 1981 audit period, with an average net circulation per issue of 641,443 copies.
Ian Clark, managing director of thelondonpaper, says: “I believe the sale of the Evening Standard will make a huge difference to us. Associated is a large, powerful publisher. I can’t see how the Evening Standard can do a better job than it already does with Associated.”
Lebedev wants to restore the Evening Standard to its former glory and has hinted at plans to turn it into the equivalent of a New York Times, which has international resonance. Copysharing with titles such as the NYT and El Pais is part of Lebedev’s ambition.
However, media buyers agree that Lebedev has a huge task on his hands competing with the evening freesheets, especially as previous owner DMGT said it “couldn’t indefinitely provide the investment needed to ensure the Standard’s future”.
Carat head of press Dominic Williams says the increased editorial budget will help to improve perceptions of the Evening Standard but suggests huge changes will have to be made to convince readers. “I wouldn’t be surprised if he reduced the cover price to accommodate this,” he says.
DMGT will continue to provide printing plants, office space, financial systems and use of the staff cafeteria, but will withdraw its sales team, which the new management must now recruit.
At the end of February, when the takeover is set to complete, London Lite will continue to take editorial from the Evening Standard. Steve Auckland, managing director of Associated’s free newspaper division, says: “A contract has been agreed keeping everything as we are now.”
The decline in circulation and advertising is something freesheets have capitalised on. In a full-page ad the day the sale was announced, thelondonpaper boasted: “If it were not for the Standard taking its eye off the ball and losing touch with its audience, we could not have broken its monopoly.”
Clark adds: “Nielsen advertising figures show that our advertising is up 44% and the Standard’s is down 6% in the past six months. I don’t see how this will change.”
His confidence seems well-founded. Many media buyers question what Lebedev can do to reignite public interest and boost circulation.
One says: “Lebedev has to use some of his investment on getting the public attracted to the Evening Standard brand again. The bottom line is he must get circulation up – a difficult task with circulations widely declining across all papers.”
Others suggest that Associated executives are rubbing their hands with glee at the deal they have negotiated. According to DMGT, the Standard’s sale will save the group £10m a year and boost its annual income by 6% based on last year’s £181m profit.
Lebedev, meanwhile, seems to be setting himself up as an unlikely saviour of loss-making UK newspapers. Already a media baron in the making with interests including Russian title Novaya Gazeta, Lebedev is in talks with Independent News & Media over its struggling daily title.
Lebedev, though, says he “won’t do anything until I can lay my hands on more money”.
Question marks over even the short-term future of the Indy and Sunday Independent, which are losing £10m a year, grow ever stronger. INM’s largest shareholder Tony O’Reilly effectively put the titles up for sale this week under plans to raise at least £94m as it struggles to manage its €1.4bn (£1.3bn) debt.
For now, though, all eyes are on the Standard. At a press conference called when the sale was completed last week, Lebedev said he wants to help the newspaper “survive through the bad times and hopefully become more attractive and one day maybe break even”.
He adds that he wants it to “preserve its civic duty role as well as entertain”. Come 2012 and the end of Lebedev’s three-year turnaround window, all eyes will once again be on London, with a fresh set of Mayoral elections and the Olympics coming to town. What of the Evening Standard is far less certain.