Can The Evening Standard Survive The Fight That Is Supposed To Save It – It’s Hello London Lite, Goodbye Standard Lite As Associated Newspapers Takes On Murdoch’s Attack Of Its London PM Franchise

Philip M. Stone August 21, 2006

Both sides have very deep pockets. Both sides have shown in the past how ruthless they can be. Is the London PM market really worth the financial blood that is going to spill? Obviously Associated Newspapers and News International think to the victor will go great rewards. The battle begins very soon.

Associated Newspapers’Evening Standard has had the London PM market to itself for 26 years – a bit of an anomaly given the London AM market has 10 national newspapers in cutthroat competition plus the free Metro. But the Standard has not fared as well as it should given that market exclusivity.

Six years ago its sales were around 450,000; today they have sunk to about 300,000 copies daily, down 20% from July, 2005, alone. That in spite of the launch of Standard Lite, an 80,000 distribution 48-page giveaway given out between 1130 – 1430 that was supposed to inspire readers to buy the full 80-page Standard later in the day on the way home. The Standard has savagely cut costs over recent years, but it still loses money.

Rupert Murdoch smells opportunity with such a scenario. Associated Newspapers understand they are going to be on the receiving end of a full frontal attack and they are manning the ramparts to beat it back.

What really shook the market to its core a couple of years back was when London’s mayor, Ken Livingstone, who has had many a run-in with the Standard, decided what the city really needed was a real free PM daily, and not a cut-down free version of the Standard. Associated Newspapers also owns the Metro franchise and had all of those vendor boxes at Underground (subway) stations throughout London that were used just in the morning and were empty the rest of the day. What better way, Livingstone reasoned, to distribute a new free PM newspaper than to use those same boxes even if the PM free newspaper publisher was not Associated Newspapers.

Associated obviously didn’t think that was such a great idea – provide the very distribution method to compete with its paid-for PM paper – but the mayor started a campaign that benefited from a ruling last year from the UK’s antitrust authority in the Office of Fair Trading that subway and rail stations should open themselves up to  further newspaper distribution contracts. That set the stage for Associated to agree the boxes could be used by a PM paper, not necessarily its own. Publishers were invited to tender offers to use those subway boxes and at the same time Network Rail decided its stations could be used for the same purpose and it, too, sent out tenders.

News International, Associated Newspapers, Express Newspapers, and Guardian Newspapers were said to have made bids, but the results that were to have been announced by now have been delayed for unspecified reasons.

But in steps Rupert Murdoch with a spoiler. Even though News International was thought to have made bids for the subway/railway distribution, his people basically decided at least a year ago that they wanted in on the free afternoon market no matter what. They were not going to let that chance live or die on whether their tender bids were successful. Murdoch decided to go it alone if necessary by taking on 700 distributors to hand out the thelondonpaper all across town between 1630 and 1930 – when people are going home.

Launch is said to be on September 4. The paper is said to have some 70 staff but is also trying to encourage recent graduate journalism students to provide reviews and the like for little or no pay. Murdoch is said to have taken an active role in how the newspaper actually looks, sending dummies back to be made over several times in the past few months.

Those who have seen the final dummy which is being hawked to advertising agencies gush that it is a very colorful, good looking product – more of a magazine than a newspaper. It is said to have next to no hard news – it is mostly fluff, an easy 15-minute read on the way home, with advertising on the front and back pages. And since Murdoch is so much into the Internet these days it is only natural that on launch day its web site, thelondonsite.com, goes live, too.

Faced with all of this what was Associated to do? Print more Standard Lites? Turn the Standard into a freebie? Word on the street was that Associated executives have been scheming since July, when they first heard of Murdoch’s plans, and now the word is out on how they will counter.

It’s goodbye Standard Lite and hello London Lite, a brand new free newspaper that probably launches the same day as thelondonpaper. The Associated strategy seems to be to compete with Murdoch on the free newspaper franchise that will concentrate on a lot of fluff – entertainment news and the like – and let the Standard maintain its hard news profile and remain above the fray.

Indeed there are said to be plans to increase the price of the Standard by 10p to 50p which executives hope will provide another £7 million revenue that they will spend on marketing, but also send a message to readers and advertisers alike that you get what you pay for.

Both free newspapers are said to have circulation targets of around 400,000 – far more than the Standard’s paid circulation. Many media analysts believe that at the end of the day, both free newspapers could end up doing quite well, but all of this could be the death-knell for the Standard. Will people really pay to read hard news on the way home, or would they rather read about the films they can see on TV that night or at the movies? And if two free newspapers are thrust into your hands, would you actually pay for a third? Just how important are the demographics?

The obvious question, of course, is whether there is enough advertising to feed the financial thirst for three PM papers – possibly four if another publisher wins the subway/railway tender. Most newspaper groups have already been complaining that advertising is drifting away from newspapers to the Internet, so is this the right time to launch a war with new free newspapers?

Both free newspapers obviously will cut their advertising rates to the bone, but the key here could well be the package deals that will go on offer. Associated, for instance, could well package with its free Metro in the morning, or even with the Standard and its revamped thisislondon.com web site, or even its Daily Mail.  News International has its four national newspapers, and also its new magazines, and various web sites that it could throw into the advertising mill.

Associated’s  plan seems to be to keep the Standard above all of this. Try to maintain high advertising rates based on the fact its readership is somewhat affluent – why else would they pay for a newspaper – but it, too, could offer advertising packages.

Can the free newspapers prove to advertisers they are actually read and not just thrown away after being thrust into hands? Advertisers these days are very much into being shown they are getting value for money and readers really do look at their message.

If the free newspapers draw readers away from the Standard, rather than attracting brand new readers to a PM newspaper read, and if advertisers flock to the lower priced advertising of the free newspapers then the question will really be how long can the Standard survive.

The Standard loses money today. Associated’s Metro franchise makes money today – it is said to earn about £10 per reader for its various editions across the country.

No matter how one strategizes, this has to be a nervous time for the Standard. What happens in London may well decide for other locations how will go the battle of free vs. paid-for. By the end of the year we should have a fair idea of how this all plays out.

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