Lebedev eyes a buy as revenue crashes at Independent

In 1981, Rupert Murdoch paid the equivalent of £34m in today's money to buy the Times and the Sunday Times. By contrast, the Barclay brothers
shelled out £665m in 2004 to buy the Daily Telegraph, the Sunday Telegraph and the Spectator.
In a market often devoid of rhyme or reason, two questions loom large: how badly does Independent News & Media want to rid itself of the Independent and the Independent on Sunday? And how much are these newspapers worth to Alexander Lebedev?
After months of on-off negotiations between INM and the former KGB officer, who remains a resident of Moscow, negotiations appear to be approaching a climax. Last week, INM asked staff to accept cuts to their relatively generous redundancy entitlements. This was a high-risk gambit that would only make sense if a deal was close to being concluded.
If the origins of this deal have been tortuous, the final outcome could end up looking dramatically lopsided – even by the outlandish financial standards of national newspapers. In cash terms, Lebedev is likely to achieve his aim of becoming a national newspaper proprietor for something like the so-called "nominal" sum that won him control of the London Evening Standard in early 2009.
It is probable that he will make more of the Independent's 300-odd staff redundant, and take on the Independent's multimillion pound contract to rent office space and share back-office services at the Daily Mail HQ in Kensington, west London.
Revenue collapse
Concern about the Independent's advertising revenues and circulation base, allied with the lingering effects of the credit crunch and fears of structural decline, suggest that Lebedev will pay a nominal sum to become the proprietor of a national newspaper.
During 2009, according to INM's own data, advertising revenues at the Independent and the Independent on Sunday collapsed by around 30% year on year. The comparison with a market leader such as the Daily Mail, which experienced a decline of only 11%, isn't flattering.
The Independent's advertising problem stems from circulation weakness. "They have a real problem of scale," says McCabe. "At these levels of circulation, you start to drop off the radar screen at advertising agencies. The Independent's circulation is now the size of a big regional newspaper."
In 1980-81, Murdoch had to fend off some 50 competitors when he acquired Times Newspapers. The last time the Independent went on sale on the open market, in 1994, Tony O'Reilly and David Montgomery found themselves bidding against a dozen rivals.
Meanwhile, in the topsy-turvy world of Big Media at the start of the 21st century, it's telling that the really hard bargaining surrounding the sale of a national newspaper has everything to do with the cost of contracts, and little to do with the value of content. This discrepancy points toward a future that's progressively less reliant on ­print-based methods of production and distribution. In relative terms, the old ways have already started to look expensive.
One final thought: if Lebedev is toying with the idea of distributing the Independent for free, he may well be able, piquantly, to acquire the paper and its Sunday sister for the same price.

No comments:

Post a Comment