After weeks of will-he-won't-he, Russian tycoon Alekandr Lebedev has completed a buyout of the struggling UK newspapers, The Independent and Independent on Sunday.
Despite the token purchase price – £1, the cover price of the Independent – there remains hidden costs for the Russian businessman.
The deal will see the Irish company, Independent News & Media (INM), pay Mr Lebedev's Independent Print Limited £9.25 million over the next 10 months to invest in the newspapers’ news operations.
In return, Lebedev will assume all liabilities and obligations of the papers, which lost $18 million last year.
Rumour has it that a small cheer went up in the Independent newsroom when the deal was announced. Staff see this as a shot in the arm for a newspaper that’s been ailing for years – by a benefactor who still believes the Indy has a place in today’s volatile media environment.
“We’re all jolly pleased,” Independent’s managing director Simon Kelner said after months of negotiations.
With the papers believed to be losing £1 million per month, INM had been desperate for a sale with CEO Gavin O'Reilly describing the Lebedev offer as the best available. In the release of its results this week, INM disclosed that advertising revenues at its UK businesses fell 33.1% in 2009, under-performing rivals.
The sale will need to be approved by Irish competition authorities. Further, INM UK head Ivan Fallon announced his retirement upon completion of the takeover in May. The broadsheets will join the London Evening Standard as part of Lebedev’s stable of English media interests.
Ahead of the deal-signing, speculation about how Lebedev would transform the Indy was rampant. Some worry what ex-KGB officer Lebedev wants with the Independent.
Lebedev said he plans to inject millions into the newspaper, but denied rumors that he would make the paper free, as he did with the Evening Standard.
“It doesn’t make any sense to distort the market by making it free,” he said.
Another idea is to turn the paper into a glossier daily opinion magazine with a higher price tag. But whatever happens, Lebedev is no stranger to a challenge.
Last year, he took over the ailing Evening Standard newspaper, and came under fire when he turned into it a free newspaper.
Since then, advertising revenue has increased significantly after circulation shot through the roof, with some estimates saying it has tripled.
The previous loss-making title could be turning a profit by the end of the year. Industry experts say Lebedev’s successes speak volumes.
“People aren’t that bothered about his KGB past because he’s got a great track record in newspapers,” Richard Addis from Shakeup Media says.
Lebedev is steeped in the newspaper industry. He has a 40% share in the Russian paper, Novaya Gazeta, which is known both for its vocal criticism of the Kremlin and for being the newspaper that prominent murdered journalist Anna Politkovskaya worked for.
Lebedev isn’t stopping here. He and his son Evgeny also announced they have set up a media investment fund.
Called Novaya Independent Media Foundation, Lebedev says it’s to encourage philanthropists to invest in maintaining quality journalism and protecting freedom of speech – something that he appears to hold dear.