Thursday, March 25, 2010


The sale of the Independent

Bought for a song
Mar 25th 2010
From The Economist print edition

A Russian tycoon buys an ailing British newspaper

ALEXANDER LEBEDEV was a rising star in the KGB in the dying days of the cold war. All he will say now about his time in the Soviet spy service’s London station is that he used to “read the newspapers”. Now, as a successful Russian tycoon, he owns several. Last year he bought the London Evening Standard, for a pound (twice its then cover price). On March 25th he bought the Independent, a national daily, and its Sunday stablemate from a company owned by Tony O’Reilly, an Irish businessman. Mr Lebedev paid a mere £1 ($1.49) for the titles.

The papers’ fortunes have fallen since he first read them. Launched in 1986, the Independent gained hugely from the collapse in newspaper costs that followed Rupert Murdoch’s defeat of the print unions. It pioneered the used of big photographs, and prided itself on extensive foreign coverage and on its independent political stance: its advertising slogan was “It is. Are you?”

But the recession, plus what looks like a structural shift in newspaper economics, has hit all British newpapers badly, the upmarket ones worst, and the Independent titles the hardest of all. People are buying and reading fewer copies. Advertisers are looking elsewhere. Internet revenues are not filling the gap. As losses mount, editorial budgets are shrivelling. That matters most for papers dependent on costly real news rather than cheap gossip. Without Mr Lebedev, the future of the

daily and Sunday Independent seemed bleak indeed.

Now it looks a bit brighter. Mr Lebedev appears willing to meet the Evening Standard’s losses from his own deep pockets (his fortune is estimated at around $3 billion). His decision to distribute it free of charge has raised circulation—though probably not enough to make up for the lost sales. He has not interfered in its journalism. The paper made an unusual public apology for what it termed an excessively negative editorial stance. The new approach is breezier.

Mr Lebedev’s motivation is hotly discussed. The authorities seem sanguine about his move into national media, though in the shadowier corners of Whitehall, some old hawks see at least a risk of mischief from any ex-KGB man with influence. But Mr Lebedev’s relationship with Russia is unclear: he has big investments there, but also part-owns Novaya Gazeta, a paper that is highly critical of the authorities. The British papers may be partly a status symbol, partly an insurance policy and partly simply an enjoyable toy. Compared to the costs of a football club, even their losses don’t look very expensive.

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