NI calls time on London freebie - industry feedback, timeline, what next for free newspapers

ANALYSIS - As thelondonpaper prepares to close, is there a dark horse lurking in the wings for Tube deal?

NI calls time on London freebie - industry feedback, timeline, what next for free newspapers
NI calls time on London freebie - industry feedback, timeline, what next for free newspapers

When News International announced last week that thelondonpaper's days were numbered, it came as a shock to industry observers, even to some senior management at NI.

However, the future of London freesheets may not be entirely bleak, with Express Newspapers signalling its intent to move into the sector.

Since its advent three years ago, thelondonpaper had been haemorrhaging money. According to accounts for the year to 30 June 2008, NI Free Newspapers posted a £12.96m loss, albeit not as severe as the previous year's deficit of £16.48m.

Last week's news caused newspaper executives to clam up - no one at NI, Daily Mail & General Trust, which publishes thelondonpaper's rival London Lite, or the London Evening Standard would speak to Media Week, but one rival to thelondonpaper acknowledged there was a "complete lockdown on talking about it".

Rumours are that NI and DMGT had reached a gentlemen's agreement: the former would bow out and be followed closely by London Lite. But an unnamed executive at DMGT insisted the two had not had discussions.

Claudine Collins, managing partner, MediaCom, said: "I assume London Lite is probably going the same way as thelondonpaper, because it's losing money.

"But there might be other reasons to keep it going other than financial - it might be to do with Metro's morning franchise."

Meanwhile, Express Newspapers could lodge a bid for the contract to distribute newspapers on the Tube network - the contract, held by Metro, expires next March - according to Stan Myerson, group joint managing director of Express Newspapers and Northern & Shell.

"We are going to give serious consideration to launching a freesheet ourselves," Myerson said, adding that his business has a potential Eastern European investor onboard. "We would do it as a stand-alone, London-centric product - we've produced dummies and discussed it with senior agency people. We could react quickly."

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What will happen next?

For thelondonpaper's staff?
The consensus is that the relatively small commercial team of about eight - the main sales team also sells ads for other NI titles, including The Sun, so will not be affected - will mostly be absorbed into other areas of NI. But there will, inevitably, be redundancies affecting the newspaper's 60 staff.

For the London Lite?
Most believe it will shortly go the same way as thelondonpaper, on the basis it was only launched as a spoiler and is now a case of "mission accomplished". But there is speculation it may remain and even formulate a dual strategy with the London Evening Standard, part-owned by Lite owner DMGT.

What does this mean for the London Evening Standard?
It's good news: commuters who have become used to reading on the Tube may now buy the Standard to sustain their habit. But observers warn it must think seriously about its pricing strategy, as many prospective readers will find the transition from free to paid-for hard to digest.

Will NI still bid for the morning Tube contract?
Murdoch's comments that NI would start charging for web content would indicate that NI's flirtation with free is over. However, some observers believe he may have something up his sleeve, such as a "lite" version of The Times.

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Views from the media agencies...

Paul Thomas, investment director, Mindshare
The free model can work in a stronger market. I believe the London Lite will carry on for the moment. I can see potentially Associated trying to link in distribution in both the evening and morning. Maybe it will change the product and create a Metro Morning and Metro Evening. For the Standard, it's good news - one less competitor. 

Alan Brydon, head of press, MPG
Maybe I'm being a conspiracy theorist, but I can't believe NI would do it without some kind of gentlemen's agreement that the Lite will close as well. Has NI given up its free aspirations? I don't know, but there's an incongruity with a man who says you should charge for web content but gives away copies of a newspaper.

Pedro Avery, managing director, Arena BLM trading and engagement
One thing thelondonpaper did that was, in hindsight, commercial suicide was to axe its bespoke ad sales department and integrate it into NI's wider sales force. It meant it was relegated to number five in most press buyer conversations. Secondly, looking in from the outside, its cost base was too high.

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Milestones in the three-year history of thelondonpaper

June 2006
News International unveils plans to launch a new London freesheet, thelondonpaper

August 2006
Associated Newspapers reveals plans to launch London Lite and manages to get it to market ahead of thelondonpaper

September 2006
thelondonpaper begins distribution

October 2006
Network Rail awards thelondonpaper rights distribution contract for Network Rail's mainline stations in London

August 2007
Associated and NI agree to install 35 recycling bins each to tackle waste from the hundreds of thousands of free papers discarded each day

April 2008
thelondonpaper revealed to have lost £16.48m in its first 10 months of publication

January 2009
Daily Mail & General Trust sells 75.1% in the Evening Standard to Russian billionaire Alexander Lebedev. DMGT insists it will continue printing London Lite

May 2009
Accounts for the year to 30 June show thelondonpaper remained loss-making in its second year of operation, although the loss narrowed markedly from the previous year, to £12.96m

August 2009
NI announces plans to close thelondonpaper on 18 September

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