LONDON (Reuters) - Russian billionaire and ex-KGB agent Alexander Lebedev is buying a majority interest in London’s struggling Evening Standard newspaper for a nominal sum, current owner Daily Mail & General Trust (DMGOa.L) said.
A new company, Evening Standard Ltd, will be set up to own the Evening Standard with DMGT retaining a minority stake of 24.9 percent, DMGT said in a statement on Wednesday.
Lebedev — who owns stakes in Russian banks, energy companies and airline Aeroflot (AFLT.MM) as well as Russia’s main opposition newspaper — said last week he was interested in influential British newspapers.
The Evening Standard, first launched as the “Standard” in 1827, is the first such leading British title to pass into foreign hands as the industry is battered by a steep fall in advertising revenues driven by the wider economic downturn.
The afternoon and evening tabloid, which is aimed at commuters, has also been fighting off tough competition from an array of free newspapers handed out at London stations.
“We are strong supporters of a free and independent press and we greatly admire the Evening Standard as an iconic publication with its pedigree of fine journalism and commentary,” Lebedev said in the statement.
Lebedev, whose KGB duties brought him to London as economics attache in the 1980s, will be chairman of Evening Standard Ltd, and the transaction is expected to close next month.
He has also expressed an interest in Britain’s Independent newspaper INME.L, which is moving into to DMGT’s London offices to cut costs after axing 90 editorial jobs.
Evening Standard Ltd will set up a committee to safeguard editorial independence, DGMT said. It added that it would not have a seat on the board or any involvement in the newspaper’s editorial policy.
“The investment planned by Lebedev secures the future of the paper,” DMGT chief executive Martin Morgan said. “DMGT will benefit from the reduction in losses and will continue to invest in the development of our newspapers and other businesses.”
Shares in DMGT were down 2.1 percent to 255 pence after the widely expected announcement, broadly in line with the European media index .SXMP.
The move will not only free DMGT of a loss-making title but is also seen as a signal of more openness to portfolio changes in general at the group, which includes professional publisher Euromoney (ERM.L) and an Australian radio network.
DMGT said in November it planned cost savings as it expected no improvement and a possible deterioration in its advertising markets for the next financial year.
On Wednesday, the company said it would continue to provide services including printing and distribution to the Evening Standard for an initial period, with the possibility of extending these by agreement.
Lazard & Co advised DMGT.
Editing by Dan Lalor, Mike Nesbit and Hans Peters