"It begs more questions than it answers, but there are plenty of journalists with worried faces around this morning," was how one senior Independent editorial executive summed up the mood as the news broke of talks to sell the ‘i’ to Johnston Press in a £24m deal.
The stock exchange was notified that talks were at an ‘advanced stage’ between the Lebedev family, owners of the i and its stablemates the Independent, Independent on Sunday and the London Evening Standard, and Johnston Press, owners of more than 200 regional and local UK titles.
Source of those worried faces was the clear message that the planned takeover only involves the i, the ‘quality’ tabloid that sells 275,000 copies a day to a mostly youthful and student readership and represents a remarkable success story on the UK’s long-depressed national newspaper landscape.
“The great mystery about the announcement is that it doesn’t take into account the fact that the i has hardly any staff (five at the last count) and is largely sourced from the Independent’s own depleted staff levels. So, is the idea to take on the staff or is Johnston Press, which has no pedigree in running a national UK title, planning to run it using its own editorial staff and is merely, in effect, buying the ‘I’ masthead and readership?”, said my senior Lebedev group editorial source.
The clear fear is that if the deal does go-ahead, it will trigger the closure of the loss-making Independent and Independent on Sunday which – ironically – have been largely kept afloat by the success story of the i, the spin-off tabloid ‘baby’ which has in reality kept the mothership afloat. (The best hope, it would seem, is that the Independent might survive, with substantial job losses, as an online publication only).
A senior source close to the Lebedevs confirmed to me that they are "determined if possible" to try and develop the independent.co.uk website into an international digital newsbrand, citing the "highly encouraging" growth of the newspaper's website. But he wouldn't speculate on whether that meant the inevitable closure of the Independent and Independent on Sunday as print entities. Significantly, the website ownership is held by a different Lebedev company to the print titles which would effectively 'ring fence' it from any decision to close the newspapers.
Neither would the source say whether the Lebedevs were "open" to a sale of the two newspapers if a buyer emerged, or whether they might even be open to a counter-bid for the i itself despite the advanced negotiations with Johnston Press.
"The £24 or £25m being discussed would certainly help expand our digital expansion ambitions and it would mistake for people to imagine the Lebedevs are going to disappear from the UK scene... they are committed to the Evening Standard, too, and to London Live despite the obvious challenges on the TV front," the source explained. He also said a Guardian report that Johnston Press would licence editorial content for its i acquisition from the Independent and Evening Standard as "a distinct possibility" and "an aspect of our ongoing discussions".
The prevailing question among the Lebedevs' journalists was how many of them will be taken on by Johnston Press as part of the planned deal....or how many would be retained by the Lebedevs if the Indie and its Sunday sister become online-only titles. Currently the editorial strength across the stripped-down group totals only around 150 full-time journalists, augmented by casuals, already well below the staffing levels of rivals like the Times, Guardian, Telegraph and Mail and the Mail Online.
It's understood that the Lebedevs have spent the last two years trying to find an outright buyer, or major investor, for the Independent and Independent on Sunday without success... although a potential deal with a wealthy Middle Eastern buyer reached an advanced stage early last year before it fell through.
Despite their fears for the future, however, there was still considerable respect among the journalists for the Lebedevs' previous commitment to the titles despite the heavy cost of keeping the newspapers going against the odds. The Lebedevs are known to have pumped at least £111million into their UK media ambitions, with £65m committed to the Independent and its Sunday version and an acceptance in the newsroom that – without the gambles on launching the 'i' and turning the Evening Standard into a freesheet – the Independent and the IOS would have died at least 18 months ago.
A fiscal hard truth underpinned by the fact that when the Lebedevs bought the Independent (30 years old this year if it’s still around) six years ago it was losing over £20m annually, a figure the Russian owners struggled to stem until Evgeny Lebedev made his bold ploy to launch the i – a move that many rivals and analysts rather disparaged as ‘Evgeny’s Folly’ at the time.
But Lebedev junior was proved right and the doubters wrong as his ‘upmarket tabloid’ seized a growing core audience of students and readers new to newspapers or turned off by the red-top tabloids. Last financial year Independent Print, their holding company, showed a £2.5m operating profit, according to would-be purchasers, Johnston Press, who boasted the proposed deal would expand the group’s paid copy reach to over 600,000 per day and make it the UK’s fourth biggest print publisher and substantially boost its share of the national advertising market.
In a statement to the City, Johnston Press indicated the mooted £24m purchase cost would be funded by its ‘cash resources’ and would be subject to shareholder approval: “There can be no certainty the discussions will lead to any definitive agreement concerning the possible acquisition or as to the final terms of any such agreement.
“i has growing circulation revenues and new opportunities from a proposed digital product, new geographic markets and the potential cross-selling of ‘I’s’ advertiser base and vice-versa’, the statement spelled out.
Significantly, perhaps, Steve Auckland, chief executive of the Lebedevs’ ESI Media, confirmed the talks in a less bullish tone, saying “no decision” had been taken and that the “company remains committed to our brands”. Some saw that as leaving the door ajar to any potential last minute suitor who might care to come knocking.
So why are the Lebedevs willing to sell? The answer to that lies partly in the fact that, genuinely enthusiastic newspaper proprietors that they are, their fortunes have suffered a major decline on the Russian oligarch Richter scale. They are also thought to want to prioritise their other trend-bucking success story, the free-version London Evening Standard, which is now turning a handsome profit, winning over valuable advertisers in and around the capital and, it’s rumoured, soon to increase its daily print run to a million-plus.
There is also the little matter of the Lebedevs’ costly and ambitious investment in struggling local TV station London Live.
Inevitably, rumours swiftly circulated that the Lebedevs might also be open to offers for the Evening Standard, but my sources insist that Evgeny Lebedev, who ‘treasures’ the influence his London flagship brings him, would be hostile to anything but an ‘out of the ballpark’ offer. If it did come, the odds would have to be on Daily Mail owners, Associated Newspapers, which still owns a stake in its former title, laying claim to the free – but revitalised – Standard again.
But the news of the i deal quickly triggered speculation of a wider shakeup in the newspaper world. With the Johnston Press deal not quite ‘done’, there was revived talk that Trinity Mirror, previously interested in buying the i might make a dramatic late move to hijack it rather than press ahead with its plan to launch its own freebie or cut-price i-style tabloid.
“At least Trinity Mirror know about running national newspapers, unlike Johnston Press and better the devil you know than the one you don’t,” was how one Independent journalist put it to me, more in hope than expectation perhaps.
Whispers have also been growing that Rupert Murdoch, taking a closer, first-hand personal interest in his UK newspapers of late, has been pondering launching an ‘i-style’ title too, largely utilising his existing journalistic corps.
If there is any substance to those whispers, the notion of leaping into a fight for the i, with its established and – crucially – youthful readership, might prove tempting.
That said, this week’s news that his News Corp’s revenue has fallen for the fourth successive quarter had sparked speculation of further cutbacks rather than expansion in his UK publishing arm. But, even more than the Lebedevs, Rupert is the master of surprise gambles so don’t totally discount a longshot wager on him floating in a speculative call to Evgeny and his dad.
Meanwhile, as a strange week in the UK newspaper world draws to a close, many worried Telegraph group journalists are convinced that, despite denials, the Barclay family’s decision to call in Deloitte to carry out a ‘review’ is the prelude to offers being invited for the Daily and Sunday Telegraph.
Turbulent, testing, traumatic times indeed for a lot of journalists and their future careers.
Paul Connew is a media commentator, broadcaster and former editor of the Sunday Mirror and deputy editor of the Daily Mirror. He has also worked as an executive for the Murdoch empire and is a longstanding judge of the British Press Awards