The London Evening Standard Saga – If It Wasn’t True You Wouldn’t Believe It, And Maybe You Still Don’t

Philip M. Stone October 14, 2009 Follow on Twitter

What’s going on in London these days in the PM newspaper market is worthy of a Stephen King horror novel – there are demons all over the place – and even though it is all true if you didn’t know that you would say it just couldn’t have happened. But it did.

Here’s the novel’s synopsis. Once upon a time – let’s say about 50 years ago – London was a thriving PM newspaper market with The Star (that had made its name at the turn of the last century sensationalizing the Jack the Ripper murders,) TheEvening News and the Evening Standard. In 1960 The Star folded and in 1980 the Evening News was merged into the Evening Standard and it then had the entire London PM market to itself. At the Millennium its circulation had dropped but it was still a decent 450,000.

But since then the circulation arrow has not wavered from pointing straight down and come 2005 the owners, Associated Newspaper, came up with their magic trick to increase readership – from between 1230 – 1430 each day about 80,000 copies of a 46-page giveaway called Standard Lite would hit the streets. After 1430 Standard Lite was pulled and the full regular Standard at around 60 pages or more went on sale at 40 pence to catch commuters on their way home.

Now, watching this hybrid free/not free Standard scenario is none other than Rupert Murdoch. And he says to himself if Associated Newspapers can enter the free PM market in London then why shouldn’t he? So he does.  After a few months the town is buzzing that London will have a free new PM newspaper, Thelondonpaper.

Across town Associated newspapers hear about this and they meet in the war room to discuss how beat arch villain Murdoch? And they drew up their battle plan -- they would beat Murdoch to the punch, so to speak, and launch their own free newspaper, London Lite, and kill off Standard Lite, and to prove to everyone that you really get what you pay for, they actually increased the price of The Evening Standard by 25% -- to 50 pence.

And so it came to pass that News International announced that on September 4, 2006, Thelondonpaper would launch with a distribution of some 400,000, given out by around 700 hawkers from 1630 to 1930. All color at 48 pages, it was aimed at the 18-34-year-old. But Associated Newspapers trumped that by launching London Lite five days earlier, on August 30. War was declared. After a while Thelondonpaper increased its distribution to around 500,000 with the capital flooded with newsprint literally over the place – in the streets, on the buses, in the trains, but not very many in the recycle bins. Some borough councils had to threaten to withdraw distribution licenses to get the two companies to attack the trash problem by installing recycling bins for which they would have the responsibility to manage. 

Meanwhile back at the Evening Standard circulation sank more. Officially it was around 250,000 but that included about 100,000 free bulk sales to airlines, hotels and the like.

But did 900,000 copies of free newspapers actually get into reader hands? Enter into the fray retired Scotland Yard Detective Inspector Philip Swinburne, formerly with the fraud squad. His mission from Lord Rothermere’s Associated Newspapers, was to bring back the evidence that thelondonpaper’s distribution was not the 500,000 claimed, but in actual fact its vendors were, horror of horrors, dumping undistributed bundles of the paper at night, when all was quiet and no one was around, into large trash containers.

So with a camera crew in tow, we were treated to video of three thelondonpaper distributors in different parts of London handing out newspapers during the afternoon, but as night descended and the commuters had gone home and there were still bundles of papers left undistributed the camera crew caught each of those distributors hauling those papers to large out-of-the-way trash containers and unceremoniously dumping them. After they’re gone we were treated to the good detective inspector grabbing some of the newspapers out of each of the containers and holding them up so the camera can get its close-up that it is indeed that day’s thelondonpaper that is being retrieved. Is this not the stuff of novels?

Well, you had better believe that Associated Papers made hay with that evidence, especially since thelondonpaper recently had increased its advertising rates because it announced its distribution was up from the original 400,000 daily to 500,000. Up went the video onto YouTube and Associated Newspapers ran ads aimed at the advertising community, that bellowed, “Here’s the proof that supply doesn’t always equal demand. Thousands of copies of thelondonpaper are being dumped on a daily basis. This former fraud squad detective inspector witnessed them doing it in three separate locations on three separate occasions. Now, how much does thelondonpaper charge you for advertising? Detective Inspector Phil might call that daylight robbery.”

Murdoch’s News International called all of that “dirty tricks”. Can you imagine a Rupert Murdoch company claiming “dirty tricks” upon it by others? Can’t be so! And, oh yes, News International also said it had pictures of Associated’s vendors doing the same things although truth be told you could not tell from those photos who was dumping what. Anyway, News International said the three incidents were “isolated” and that it had fired those involved. It also pointed there really was no monetary advantage to the vendors dumping the newspapers because they were paid by the time they were working, not by how many papers they handed out.

News International took out its own trade ads, thanking The Evening Standard for alerting thelondonpaper about the 2,900 dumped papers and that the offending distributors have been fired. But then it went for the jugular. “As for the Evening Standard, we understand the desperation behind their crude propaganda. Their newspaper is bought by 29% fewer people than a year ago, which might explain why its parent company, Associated Newspapers, has launched a dirty tricks campaign to destroy competition in the London newspaper market.

“Their aim is to kill off thelondonpaper so they can close its London Lite and give the Evening Standard back its old monopoly. Associated have a long history of dirty tricks whenever their London monopoly is challenged. This time such tactics won’t work.” If only resolving everything would be that simple!

And so it went --  for three years both Associated Newspapers and News International both basically burned money with their free ventures – it’s estimated that each were losing some £15 million a year. But none of this was helping The Evening Standard, said to be losing around £20 million a year. Associated needed to make some decisions, and the surprising one it made in January was to get rid of the Standard for a cursory £1 to Russian billionaire Alexander Lebedev, who in his younger days was a KGB guy at the London embassy and who confesses these days he got a lot of the information he sent to his bosses from The Evening Standard.

The deal gave Lebedev 75.1% of the paper with Associated keeping the rest, and Associated would continue printing the paper under contract. Since then Lebedev has been trying out various business plans – sell the paper for 10 pence instead of 50 pence as just one example. But then Rupert Murdoch did the unexpected – completely out of  character News International announced at the end of August the closing of Thelondonpaper. Murdoch had suddenly got religion that told him free was bad (especially when you’re losing that kind of money each year) and by golly he was now into readers paying for everything. A free newspaper no longer fit the corporate culture.

So then Associated found itself with the only free  PM newspaper and a 24.9% stake in the paid-for Standard. That must have caused some muttering in the board room! Associated said it would take time to determine how much advertising from Thelondonpaper would make its way over to London Lite, especially given the current economy and just how much could be squeezed from advertisers because there was now a lack of competition in the free market.

And then Lebedev dropped his bomb. He said that from this week The Evening Standard would become a free newspaper. He was dropping the 50 pence newsstand price charge and he looking to increase distribution from 250,000 to around 600,000.

Now say what you like about The Standard but this is a quality compact newspaper. Plenty of journalists to write the stories one expects from a paid-for newspaper and Lebedev says going free will not change those journalistic standards. In fact he may not have had too much of a choice. While the official figures say he was still on around 250,000 circulation the thinking is that the actual fully-paid 50 pence an issue figure was little more than just over 100,000.

Do the math. He’s going to lose around £40,000 - £50,000 a day in circulation revenue (he had to pay commissions to the hawkers, mostly located outside Underground (subway) stations, so, for the sake of argument it works out to close to £1 million a month in lost circulation income.

Can that money and much more be made up via the free model with advertising picking up the slack given the increased distribution and the quality of the paper?  It’s a situation media executives will study closely.  In its letter to readers on Monday, the first day of being free, editor Geordie Greig wrote, “Today is a historic day for the London Evening Standard as we become the first quality newspaper to go free. In this pioneering move we will be giving away 600,000 copies to Londoners….We pledge to remain a paper of quality, a paper that values hard news and distinguished comment and analysis. …We are excited by this new 21st century way of bringing you tomorrow’s news today.”

Meanwhile, what must the executives at Associated be thinking? They got rid of their beloved Standard because they thought they were in a deadly fight with Murdoch only for Murdoch to give up that ghost nine months later. Then they find the newspaper they sold for £1 (but with around £20 million in annual losses) is going to compete against their own London Lite in the free market and there can be no question which is of superior quality. It’s enough to make grown men cry with the last scene of our novel being the neighborhood pub with those Associated executives crying in their Guinness, or maybe it’s the corporate boardroom where they cry into their VSOP cognac.

Now, if you were a publisher and a novelist offered you that synopsis would you buy?

See also in ftm Knowledge

UK Newspapers

The newspaper market in the UK is among the worlds most competitive. The publishers are colorful, editors daring, journalists talented and readers discerning. ftm follows the leaders, the readers, the freebies and the tabloids. 64 pages PDF (August 2009)

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