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Will Lebedev wreak havoc in British media?

Robert Peston | 17:58 UK time, Wednesday, 6 January 2010

Is Alexander Lebedev about to do to the newspaper industry what Roman Abramovich has done to association football?

Alexander LebedevWhat I mean is this: the ex-KGB billionaire may be on the brink of destroying any residual hope for newspapers at the quality end of the market that they can make a respectable financial return.

My question is prompted by recent conversations with some of those who know Mr Lebedev well. They confirm that he remains in deadly earnest about buying the Independent and - more germanely - that he would turn it into a free newspaper.

This possibility is putting the fear of something very unpleasant into those who run the other quality papers.

As you'll recall from my notes of last summer, news groups' fervent hope is that they can engineer something of a revival in their ailing financial fortunes by starting to charge for online services.

So the last thing they need or want is the loss of the cover price on their titles, which is one of their few reliable sources of revenue.

What a bizarre industry. And I say that as someone who spent more than 20 years immersed in it.

At just the moment that newspaper publishers try to charge for their web content, the inky stuff may become a freebie.

The industrial implications would not be trivial, for organisations whose profitability ranges from slim to big minus numbers.

Most vulnerable would presumably be the Indie's closest competitor, the Guardian: how many paying customers could it retain if the Indie were gratis?

What's more, almost no newspaper could claim to be invulnerable to what would be the mother of all price wars: the Times would be exposed; as would the Mail and Telegraph.

I'd love to know the private thoughts about Mr Lebedev of those at the Daily Mail and General Trust who gave Mr Lebedev his first opportunity to shake up the UK media industry, by selling him the Evening Standard a year ago.

The Standard has been reinvented and redesigned under his ownership, prior to becoming a free title. And most would probably say that it doesn't read or feel like a free newspaper (you know what I mean).

So here's the big and obvious point which is so scary for other news groups. Mr Lebedev is prepared to spend and invest proper money.

One of his colleagues says he has already disbursed about £20m on the Standard, which is considerably more in such a short time than he originally flagged up that he would do.

What's changed for him? Well I am told that he no longer suffers from the cash-constraints that limited his ambitions when he first bought the Standard.

Although he is allegedly worth two or three billion dollars, a year ago he conceded that his wealth was not in liquid form, that he could not lay his hands on an inexhaustible supply of readies.

But the cash drought is over, apparently. He has the wonga and is prepared to spend it in Britain and on newspapers.

Why is it raining money for him? I can't quite fathom.

That said, if the money is as real as it seems, I can understand why the rest of what used to be called Fleet Street are shivering at the prospect of the icy financial blast from Russia.

Comments

  • Comment number 1.

    Robert:

    Personal opinion---I don't think that there is not enough evidence on Mr. Lebedev and the theory of wreaking havoc in the British media.....

    -Dennis Junior

  • Comment number 2.

    Things of value are worth paying for.

    I would not read the Independent or the Guardian if they were free.

  • Comment number 3.

    The fundamental reason that media industry in the UK financially struggle to survive is that we have this "free" BBC. Think about it - what if the 130-ish pounds every year for every family are up for grab?

  • Comment number 4.

    If a model based on higher advertising charges works fair enough.

    But its vital that the authorities enforce competition law if there is predatory pricing.

    If I had the money, I would see this as a golden opportunity to control the media that would be well worth a franctional loss in my wealth for the influence over the population.

    To the extent that I am a meglomaniac, I would still fully expect the authorities to stop me.

  • Comment number 5.

    You're right... absolutely fascinating.

    Oneday though Mr Lebedev will need to make money, but by then which (old tech) competitors will have gone out of business and what will the (new tech/online) environment look like?

    Electronic paper that auto downloads via wi-max, which you can read on the train/bus.....?

  • Comment number 6.

    We already have virtually unlimited access to newspapers, radio, tv, magazines, music, films' games and everything else on the internet.

    Newspapers only have a future for advertisements, and then only if they are given away.

  • Comment number 7.

    Cant see whats in it for Lebedev, unless he thinks his pockets are deep enough to put the Guardian out of business and capture the "thinking middle-class" market. Perhaps he sees the writing on the wall for the printed news papers, and is positioning himself for the day we all get our news online (which I mostly do now) at which point the only way to make it pay is to be the news site of first choice and survive on the advertising revenue.

  • Comment number 8.

    It's welcone news that yet another Russian Billionaire is so willing to invest a great deal of cash into our economy. Especially as, like Chelsea FC, those investments are geographically bound to the UK. Maybe he knows something about our prospects you've missed?
    Alexander Lebedev's purchase of the Standard is rather like Rupert Murdoch's 1960s purchase of the Sun from the Mirror group: Murdoch bought a loser and turned it into a winner. Now Alexander Lebedev wants to buy the Independent. Not quite like RM's buying the Times Group - another loser he bought and transformed - but both are reminiscent of times past.
    Why shouldn't newspapers go back to being even cheaper than they were in the 1960s? Since advertising is their main earner, they need to claw back readers from the 'free' web news published by the BBC and this is one way to do that.
    We should welcome entrepreneurs to our shores who're willing to revive our traditional industries with massive investments.
    This is a good news story for publishing and for scribblers too.

  • Comment number 9.

    What ever do you mean Robert?

    Do you mean throw lots of money at a hopelessly loss making enterprise without any seemingly rational business model(you know the kind where at some point profit is involved)in evidence?

    I am sure News Group would be upset but then perhaps the price of tweaking Ruperts nose is worth it to whoever actually provides the cash for this?
    News Group may of course be more able to improve their fortunes if the quality of their journalism improved which is after all the whole point of newspapers in the first place (clue being in the name).

  • Comment number 10.

    Why this country accepts the Russian oligarchs' dodgy money is beyond me!

  • Comment number 11.

    tyhe Independent is far and away the most independent of newspapers in the uk maret the guardian and observer lean to the mid left
    all the rest + sky which provide much online newsare extremely biased towards the tory party even the bbc often accused of being pinkemployed a biased conservative to be it's political editor more obvious perhaps because his predecessor Andrew Marr was straight down the line impartial
    I truly hope that another major news organ doesn'tgo into the hands of forgein owners with dubious motives regarding the best interest of the uk and howthese media moghuls use their influence as for lebdev wreaking havoc on the british media the havoc has already been wroughtthe times is a shadow of it's pre murdoch self tbhe telegraph while biased is quality though the motives of the barclay brothers are clearly political rather than financialthe observer and guardian are while slightly biased to the left remain quality all the rest are of spurious value to the culture of our nature many are as intellectual as the beano,others are simply unpleasantpandering to perceived public cocerned which actually is
    little more the hysteria whipped up by stories of dubious accuracy but sadly poidonous due to their wide circulationsa russian independent wouldn't be!

  • Comment number 12.

    Change is the only constant.

  • Comment number 13.

    Surely he can't do any worse than the fascist Murdoch!

  • Comment number 14.

    What's his agenda? Political? Economics? Cultural? be interesting to find out!

  • Comment number 15.

    Robert...you seem very excited today , is it the snow?

  • Comment number 16.

    Murdoch has vowed to make us all pay for our news. He has bought Cameron and his payback will be the emasculation of the BBC. His creeping meglomania snaps up titles, TV channels and websites, worldwide. He is quite determined that eventually there will be the Murdoch view or no view at all, (and you will pay for that view).
    Lebedev may not be your vision of the white knight but if, 'wreaking havoc', is the same thing as stopping the expansion of the appalling informational black hole of News International, then, 'Cry havoc...'

  • Comment number 17.

    The newspaper ownership is similar in some ways to football club ownership. It is not all about profit but prestige, and in newspapers about having influence in politics.

    I think this is this chap's true motivation.

    Interestingly about Abramovich, I read once that his motivation for buying Chelsea was so that he could claim asylum in the UK if thing turned dodgy in Russia for him.

  • Comment number 18.

    Maybe I'm missing something here but how will he get the free indy into the hands of the consumer? Newsagents who sell the title now will not handle it if its free. Its one thing putting out a free 'local' evening paper but a national morning paper, he would have to have very deep pockets. Perhaps he might only distribute in major cities and at certain points like railway stations, supermarkets etc. To be a real danger to the likes of the guardian, times etc he will have to be very radical.

    Must say I agree with others its a sad day when another foreign tycoon will use his money to further his agenda and influence the powers that be through the 'free press'

  • Comment number 19.

    My limited understanding is that until recently newspapers were cash cows, and made their owners quite rich, with very little need to be actually very accurate.

    The world is changing, and personally anything which might add competition to Murdoch is probably a good thing

  • Comment number 20.

    The formula for the 'quality' press is to provide an article set that draws in a set of reader-customers that their advertising-customers wish to target. So long as any publisher can square this circle then he has a chance. Newspapers are a business (as indeed is the BBC).

    The problem with the Evening Standard model is that there are far more potential readers than there are papers produced and this would be an even more difficult problem for a national newspaper such as the Independent - there will be some sort of rationing (as there is with the Evening Standard (and indeed with the BBC!))

    Newspaper advertising is presently going through a hard time and has not yet recovered from the depression as the advertising-customers perceive that the reader-customers (their demographic) has little spare money - this is particularly so for the rational expenditure management of the supposed quality press customers (whereas the readers of the mass market press can be supposed to have little of no ability to manage their money and thus can be persuaded to be far less rational in their expenditure management - i.e. they are both more suggestible and more gullible. (Hence red top advertising picks up first.)

    The BBC's free model works for them as they get a licence fee - I doubt an advertising based Independent would work - If I was going to try this approach I would pick "The Sun" as a trial publication(!)

  • Comment number 21.

    Mr Peston, Since the time of Your lecture on information distribution (may I sum up the topic in this way? it's conveniently ambiguous) I keep thinking from time to time about it. There is this concept of information asymmetry and it grows proportionally to Pareto curve of income distribution. In the age of corporations most of the information is distributed by them down the hierarchy. Then there are "horizontal structures" or "tribal structures". TV/radio, Internet and newspapers come rather as a ritual than a real source of information to go by in real life. Their function now seems to be much more one of social bonding, introducing some (more, or, maybe,to much) homogeneity. Most of the science is corporate now and news, newspapers especially are serving corporate interests too. A man on wages/lower grade salary earns cost of supporting himself and it's cheaper and less troublesome for the corporation to provide him with the information necessary through internal channels where it can be filtered through ranks. I would risk an opinion of Lebedev's entering UK newspaper market being a non event. High salaried people got their Blumberg et al (and some insider views, probably). Newspapers are a by- product of a very specific period of highly dispersed capital, that needed information to survive. Now small and medium capital only survive in medieval manner. It look as an end of informational press.

  • Comment number 22.

    What's a newspaper?

  • Comment number 23.

    It strikes me as incomprehensible that the Canute courtiers of Fleet Street are still trying to hold back the sea. The 'inky stuff' as you call it is already universally free in London, and as yet nobody has a viable business model for an online title.
    As a freelance,it's perfectly obvious that none of the quality newspapers has any money to pay us for opeds, blogs and so forth: everything has dried up. Yet no imagination whatsoever is being applied to an online product format with multivariate income. Between bods like me at http://www.notbornyesterday.org/index.htm and the Timesonline (definitely not in my view worth paying anything for)there is nothing beyond Huffington Post and The Daily Mash.
    Only Murdoch is working on this enormous gap....as you'd expect.
    The redundancies by May 2010 are going to be horrendous.

  • Comment number 24.

    What's this Robert, a story about newspapers and not about banking, what's going on ?

    Hang on, doesn't old Lebedev own the National Reserve Bank ?

    So another story about banks then.

    Interesting that a banker feels the need to own a media outlet, perhaps they feel that the press that they have been getting has not been painting them in the same rosy glow that they inhabit.

    Don't forget that he closed down the Moscow Korrespondent after it published stories not to his liking.

    How long will the 'not so' Independent last with him at the helm ?

  • Comment number 25.

    Printed Newspapers have fallen greatly in demand because they are so far behind unfolding events followed on the internet.

    People are bored with newspapers and do not wish to spend money on them.

    The market will decide.

  • Comment number 26.

    # 2
    > Things of value are worth paying for.

    Of course, one should ensure that costly things have value.
    But that is no reason to insist that valuable things must
    be costly. Linux is "free", but it used to determine the
    origins of the universe, and to discover new drugs.

    We are at the very start of the Internet social revolution.
    I should not have to say this, but newspapers are doomed -
    doomed I tell you! So look on the bright side - the Sun will be unobtainable in all our cities, not just Liverpool!

  • Comment number 27.

    Better try and talk to Lebedev then to get the SP, Robert. Rather a lot of hearsay in this report

    From a market point of view there are many titles which should have gone already, and I find it difficult to understand how businesses continue to survive by paying huge salaries to people who obviously aren't attracting the revenue and continue to run at a loss

    I think the fact that the other papers are scared is that they originally believed that the Independent would be the one that disappeared and allowed them to soak up that revenue pool, but now they are having to confront their own demons

    Who would miss the Grauniad? The Times is a shell of the paper it once was.

    I'm not so sure that the readership of the LieBourgraph or the Mail would trade over initially, but I do think that some of the readers of the Mirror, Express and Sun might trade up if the current social democratic editorship is retained, although I think the Mirror might actually be affected by the possible disappearance of the Labour Party if it is forced into bankruptcy after the election

  • Comment number 28.

    #27, who would miss the Grauniad?

    If the Grauniad disappeared where would all the adverts for "5-a-day outreach coordinators" and "diversity awareness consultants" end up?

    Perhaps it would be a good thing for it to disappear, ideally followed by the aforementioned coordinators and consultants.

  • Comment number 29.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 30.

    Lebedev is indeed like Abramovich. Just like a football club, a newspaper can only be owned and enjoyed as a toy in the early 21st century, not as a means to get richer.

    The age of intelligent newspapers v1 is almost over.

    They will be missed. But they will be back once online technology reaches it's peak in 5 years and we all have laptops the weight of paper, universal WiFi and fortified advertisers. Then people will begin to concentrate on quality content again, not just on how to get free content.

    Intelligent newspapers have to die once, for people to stop taking them for granted and for folk to pay for their content in the future.

  • Comment number 31.

    Having not bought a "news" paper for at least 30 years, do I really care? I don't think so!

  • Comment number 32.

    BCOXFORD wrote:
    "The age of intelligent newspapers v1 is almost over."

    When did it begin ?
    I must have been on holiday that week.


    "They will be missed."

    I doubt it.


    "Intelligent newspapers have to die once, for people to stop taking them for granted and for folk to pay for their content in the future."

    Why would I pay for an extremely biased view of yesterdays news that also involves wasting millions of tonnes of paper every day when I can get today’s news, as it happens and from the perspective of many different people and all for free at the touch of a button ?

    The idea that newspapers provide any sort of value is little more than a myth, most journalists write what their editors tell them to write and their editors only ever want them to write about things that their owners and advertisers agree with.

    The only printed news worth spending your money on is Private Eye, everything else is just lies, spin and propaganda designed to keep you in a state of perpetual fear.

  • Comment number 33.

    The future of ink-on-paper is in the form of free content that in turn will take its place in driving opinion-formers, movers-and-shakers and other curious visitors online - where the money will be being made.
    In surveys, even the heaviest users of the internet say they prefer to receive their information initially in the conventional ink-on-paper form (basically because it is the least obtrusive way of information elbowing its way into our lives - we individually choose where, when and how we access/read it).
    Once online the cash will no longer be generated by charging a few thousand people a quid or so for a newspaper, but by charging many thousands/millions of people a few pennies for imperative content that can only be created and delivered in real time on digital media.
    The only limit to what can be charged/generated is the journalist's (and I include editors, writers & production people here) knowledge, expertise, imagination, creativity and innovation.
    The history of information distribution shows that the forefront is always linked to the fastest mode of transport/delivery/technology at a particular moment in time - hand-to-hand, donkeys and horses, stage coaches, trains, planes, radio and TV, and now digital.
    If it's Lebedev that wreaks this welcome "havoc" then so be it, but somehow I think whoever does it will do so with the blessing and support of Rupert Murdoch and his clan (anyone remember Eddie Shah!)
    But after all is said and done, it's in all our interests - not just a handful of old fashioned press barons and the agencies (e.g. the Scott Trust) that have grown up to behave in similar ways :-)

  • Comment number 34.

    If a Russian billionaire becomes a significant power in the UK press, how fair can we expect the level of reporting to be on matters that involve Russia at a time when relations between our two countries remain strained? He'd be a pretty brave (or foolish) individual to allow his UK newspapers to be overly critical of Putin and his cronies.

  • Comment number 35.

    Lebedev is only really doing a Google - expanding the market and then charging for advertising.

  • Comment number 36.

    Free news is not free - the price. to me, is having advertising inflicted on me. I am happy with the concept of informative ads but not those which attempt to influence my emotions rather than my reason.
    I support the principles of the BBC and challenge the Media Moguls to produce a better product and then ask me to give them an annual subscription.

  • Comment number 37.

    If Lebedev has so much readily available cash why doesn't he put it into 1 of his AIM registered oil companies ie Timan Oil and Gas ! This company has been mismanaged, virtually defrauded of its assets , delisted all whilst it seems that this man could not give a toss ( he is not the only party to blame here ). All other parties involved including Lebedev seem to have lost all will to resolve this companies fate which given a bit of negotiation any reasonable businessman/entrapeneur could resolve. The directors at this company seem more interested in evading negligence rather than their obligations as Directors and now it seems that he wants to meddle with our media industry.
    Is there any company/business lawyers reading this who want to make a name for themselves, look into the events at Timan Oil and Gas as there is far too much underhand tactics and rulebreaking to list here.
    How can he have so much readily available cash yet this company is on its knees for the sake of some attention and a cash injection. This man has not finished with one saga yet is determining his next move at the detriment to who.......................

  • Comment number 38.

    Funny how Russia is canvassing for foreign investment at the moment .

    Can we expect an honest report on matters Russian ?

    This man Lebedev champions himself as a man of integrity yet he cannot even keep the lights on in his oil company Timan . Which have vast proven reserves some have valued the company in excess of $500 million!!

    Now he wants two of our newspapers .

    To what avail ?

  • Comment number 39.

    Press barons are not new, and they all instil worry in those who are around them.
    The failure of the papers is more down to the constant nagging doubt they put into print and the fall in sales (we all have to make economies these days and who needs to buy a paper to tell me how bad things are? )
    And the fall in advertising. If a company stops adverts and still sells who needs adverts in papers when point of sale works?
    We should really worry when Tesco buys up a newspaper.

  • Comment number 40.

    It looks like that "the icy financial blast from Russia" is a problem. Why icy? Or simply you do not like Russians to do business in UK?

  • Comment number 41.

    I like the 'new' Evening Standard, and buying The Independent would spare it a long, lingering death. I read the Telegraph, and New York Times for free on my iPhone but until ereaders get better, I still prefer paper.

  • Comment number 42.

    Russians in the U.K. doing good business is not a problem infact would be welcomed in this day and age/current economic climate . However a particular Russian who cannot fulfil his obligations as a Director ( & also Lebedev did't really wish to be acknowledged as a Director so he was not accountable for any negligence !)
    who just sits idle whilst this company is robbed and devalued . We must ask ourselves if this is the calibre of person we want to run two of our major newspapers ? Someone who puts personal gain before sound business acumen must surely be questioned ? Whether foreign or a British national !!

  • Comment number 43.

    I am sorry if I am stating the obvious, but for ages I have noticed that the Independent is a lot of money and, I hope he buys the paper so he can drop the price and take on the other papers and get the ciculation up again to a more sensible level, say 400,000 copies.

  • Comment number 44.

    I actually subscribe to the Independent but, paradoxically, loathe the paper. Though I love the crosswords. It's a long story.

    Thank goodness I can borrow a friend's Times for a decent and often humerous read.

    I'm less than comfortable with the new owner but maybe he'll manage to ditch some of the more biased, blinkered and disingenous commentators of any of the "quality" papers (Mail excluded for the purpose of this comment). Fisk & Hari would be a good place to start with the hatchet. And lose the pink ink please, Alecks.

 

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