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| Version 0 | Version 1 |
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| Lebedevs seek financial security at strike-threatened Independent | Lebedevs seek financial security at strike-threatened Independent |
| (about 2 months later) | |
| This week MediaGuardian 25, our survey of Britain's most important media companies, covering TV, radio, newspapers, magazines, music and digital, looks at Independent Print Limited. | This week MediaGuardian 25, our survey of Britain's most important media companies, covering TV, radio, newspapers, magazines, music and digital, looks at Independent Print Limited. |
| Uncertainty about financial backing for the Independent may have been laid to rest when its Russian owner, Alexander Lebedev, avoided a jail sentence earlier this month over a TV brawl. Yet with journalists balloting to potentially strike over the latest round of cuts to an already much reduced editorial staff of 190, questions about the newspaper's long-term survival continue to be asked. | Uncertainty about financial backing for the Independent may have been laid to rest when its Russian owner, Alexander Lebedev, avoided a jail sentence earlier this month over a TV brawl. Yet with journalists balloting to potentially strike over the latest round of cuts to an already much reduced editorial staff of 190, questions about the newspaper's long-term survival continue to be asked. |
| With as many as 27 roles under threat, and veteran journalists departing, staff have warned management that they have reached a "tipping point" where the Independent titles cannot continue to maintain editorial standards. Amol Rajan, the Independent's newly installed editor, responded on Friday by warning journalists in an email that strike action would send a "catastrophic" message to Lebedev's son Evgeny, who runs the London media operation. | With as many as 27 roles under threat, and veteran journalists departing, staff have warned management that they have reached a "tipping point" where the Independent titles cannot continue to maintain editorial standards. Amol Rajan, the Independent's newly installed editor, responded on Friday by warning journalists in an email that strike action would send a "catastrophic" message to Lebedev's son Evgeny, who runs the London media operation. |
| Lebedev has poured £86m into the Independent, Independent on Sunday and London Evening Standard since acquiring them about four years ago, and the 2010 launch of 20p title i, according to a filing at Companies House. | Lebedev has poured £86m into the Independent, Independent on Sunday and London Evening Standard since acquiring them about four years ago, and the 2010 launch of 20p title i, according to a filing at Companies House. |
| For the Evening Standard, in which Lebedev owns a 75.1% stake, the investment meant a high-risk, make-or-break strategy of turning it into a freesheet that appears to have paid off. | For the Evening Standard, in which Lebedev owns a 75.1% stake, the investment meant a high-risk, make-or-break strategy of turning it into a freesheet that appears to have paid off. |
| The paper was facing a £30m loss before the acquisition, but made a pre-tax profit of £91,000 on revenues of £58m in the year to 30 September, according to official financial filings. | The paper was facing a £30m loss before the acquisition, but made a pre-tax profit of £91,000 on revenues of £58m in the year to 30 September, according to official financial filings. |
| Ad revenues were £60m in the year to 30 June, a 2.7% fall compared to the overall national daily newspaper market drop of almost 7%, according to unofficial figures. | Ad revenues were £60m in the year to 30 June, a 2.7% fall compared to the overall national daily newspaper market drop of almost 7%, according to unofficial figures. |
| "Since it went free they have done a particularly good job," says Stephen Noble, head of publishing trading at media agency Mindshare. "[Former editor] Geordie Greig was undoubtedly a good addition at that time and changed the editorial tone of the paper. The Standard is attractive to a rich mix of clients that want to be seen in the quality arena, some who don't want a national buy and others that want a heavy weighting for London and the south-east." | "Since it went free they have done a particularly good job," says Stephen Noble, head of publishing trading at media agency Mindshare. "[Former editor] Geordie Greig was undoubtedly a good addition at that time and changed the editorial tone of the paper. The Standard is attractive to a rich mix of clients that want to be seen in the quality arena, some who don't want a national buy and others that want a heavy weighting for London and the south-east." |
| As sales of the Independent titles, which made a trading loss of £16.6m in the year to 30 September, continue to dwindle, so the danger that further cost-cutting could do irreparable damage grows. | As sales of the Independent titles, which made a trading loss of £16.6m in the year to 30 September, continue to dwindle, so the danger that further cost-cutting could do irreparable damage grows. |
| The titles are close to a paid for circulation of just 50,000 apiece, and advertising revenue at the Independent in the year to 30 June has fallen 20% to £20m, according to unofficial Nielsen figures. | The titles are close to a paid for circulation of just 50,000 apiece, and advertising revenue at the Independent in the year to 30 June has fallen 20% to £20m, according to unofficial Nielsen figures. |
| "The Indy has historically always had lower circulation than its rivals but has held its own, but I don't really know what it stands for now," says one senior newspaper executive. "Look at the circulation decline, it is not pretty, and that means cover price income is in trouble. That also puts the ad revenue associated with the scale of the newspapers under pressure. I'm surprised it is still alive and they have managed to keep it going, and I'm not alone in that. Most other newspapers facing that position would have shut. Having said that, it gives them a valuable foothold in the national quality newspaper marketplace." | "The Indy has historically always had lower circulation than its rivals but has held its own, but I don't really know what it stands for now," says one senior newspaper executive. "Look at the circulation decline, it is not pretty, and that means cover price income is in trouble. That also puts the ad revenue associated with the scale of the newspapers under pressure. I'm surprised it is still alive and they have managed to keep it going, and I'm not alone in that. Most other newspapers facing that position would have shut. Having said that, it gives them a valuable foothold in the national quality newspaper marketplace." |
| The relentless drive to get the titles to break-even will see a trading loss of about £10m this year and Andy Mullins, the managing director of the portfolio of titles, says he has a weapon in the 20p i that his rivals don't have. | The relentless drive to get the titles to break-even will see a trading loss of about £10m this year and Andy Mullins, the managing director of the portfolio of titles, says he has a weapon in the 20p i that his rivals don't have. |
| The i's circulation has grown impressively since it launched in October 2010, at a time when all other national titles are fighting long term sales decline. Couple that with the Indy as a cross-sell to advertisers and Mullins argues there is enough scale to remain a major force. | The i's circulation has grown impressively since it launched in October 2010, at a time when all other national titles are fighting long term sales decline. Couple that with the Indy as a cross-sell to advertisers and Mullins argues there is enough scale to remain a major force. |
| "People have been talking about when and not if the Independent will close for years," says Mullins. "The i plays a vital strategic role within the Independent Print Limited portfolio. It acts as a rubber ring around the Independent. The 300,000 copies it adds every day give retail distribution scale and advertising negotiation muscle. The i has made the Indy sustainable." | "People have been talking about when and not if the Independent will close for years," says Mullins. "The i plays a vital strategic role within the Independent Print Limited portfolio. It acts as a rubber ring around the Independent. The 300,000 copies it adds every day give retail distribution scale and advertising negotiation muscle. The i has made the Indy sustainable." |
| As the architect of the i, Mullins would say that; however the title also appears to have won over media buyers. Advertising revenue was £18m last year, up over 22% in a declining market, according to unofficial figures. | As the architect of the i, Mullins would say that; however the title also appears to have won over media buyers. Advertising revenue was £18m last year, up over 22% in a declining market, according to unofficial figures. |
| "I was sceptical at launch because I questioned whether there was a gap in the market," says Noble. "However, the i team have found their niche, and the editorial style alongside a minimal cover price has meant that the paid-for base of the paper has grown well. They have captured a part of the market not being serviced by other newspapers." | "I was sceptical at launch because I questioned whether there was a gap in the market," says Noble. "However, the i team have found their niche, and the editorial style alongside a minimal cover price has meant that the paid-for base of the paper has grown well. They have captured a part of the market not being serviced by other newspapers." |
| The publisher is taking another big gamble with London Live, touted as the biggest UK TV launch since Channel 5 in 1997, which is set to start broadcasting next year. | The publisher is taking another big gamble with London Live, touted as the biggest UK TV launch since Channel 5 in 1997, which is set to start broadcasting next year. |
| The local TV channel has a blueprint to break even by year four, but the Lebedevs will have to once again dig deep into their pockets before seeing any return. | The local TV channel has a blueprint to break even by year four, but the Lebedevs will have to once again dig deep into their pockets before seeing any return. |
| Set up as a separate company, called ES TV, it involves a commitment of at least £20m a year (£15m on programming and £5m marketing) before hefty additional running costs have been added. | Set up as a separate company, called ES TV, it involves a commitment of at least £20m a year (£15m on programming and £5m marketing) before hefty additional running costs have been added. |
| On the business plan submitted to Ofcom, Evgeny is named as "responsible for all funding requirements" – official funding details are redacted. His father rather bullishly forecast that in a best-case scenario, with a fair wind driving the whole group's business plans, the publisher/broadcaster could make more than £12m in profit by 2017. | On the business plan submitted to Ofcom, Evgeny is named as "responsible for all funding requirements" – official funding details are redacted. His father rather bullishly forecast that in a best-case scenario, with a fair wind driving the whole group's business plans, the publisher/broadcaster could make more than £12m in profit by 2017. |
| Evgeny has sensibly rowed back from such a bold prediction, instead aiming for break-even or a more limited profit, although he may have to pass through the picket lines to see that target realised. | Evgeny has sensibly rowed back from such a bold prediction, instead aiming for break-even or a more limited profit, although he may have to pass through the picket lines to see that target realised. |
| The numbers | The numbers |
| Evening Standard | Evening Standard |
| Revenues: £58.2m | Revenues: £58.2m |
| Pre-tax profits: £91,000 | Pre-tax profits: £91,000 |
| Independent titles | Independent titles |
| Revenues: £58.4m | Revenues: £58.4m |
| Trading loss: £16.6m | Trading loss: £16.6m |
| Pre-tax loss: £19m | Pre-tax loss: £19m |
| Figures for year ended 30 September | Figures for year ended 30 September |
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