The rescue and revamp of a newspaper industry

By Richard Perez-Pena  /  NY TIMES NEWS SERVICE , NEW YORK

Thu, Apr 01, 2010 - Page 9

When Alexander Lebedev and his son, Evgeny, took over London’s Evening Standard 14 months ago, the media coverage focused on the father’s status as a former KGB agent and Russian oligarch, and on both men’s taste in beautiful women. Many news reports asked whether they would be an unhealthy influence on one of Britain’s major newspapers.

By last Thursday, when they struck a deal to buy another respected but failing British paper, the Independent, the question had become whether the Lebedevs had improbably emerged as among the best hopes for preserving serious journalism in Britain.

“I think it was too flattering for me,” Alexander Lebedev, 50, said wryly of the recent coverage, in an interview by telephone from Moscow, while on his way to meet a business partner, Mikhail Gorbachev, the former Soviet leader. “I hope I don’t get spoiled.”

Reports in Britain on the Independent deal once again mentioned his KGB past, his vast riches (US$2 billion, according to Forbes) and his political aspirations. But this time around, much of it also credited the Lebedevs with keeping alive two money-losing daily papers that probably would have died without the new owners, and not interfering with the Standard’s news coverage.

“There was skepticism, but we have had as yet no evidence that Mr Lebedev believes in anything other than financing a serious free press,” said Tim Luckhurst, head of the journalism center at the University of Kent. “He talks very passionately about this, and it seems as if he means it.”

Last October, the Lebedevs changed the Evening Standard, which serves the London region, into a free paper without paring back its content — this, in a nation where free papers have tended to be breezy digests. It also nearly tripled its circulation, to more than 600,000. Aided by the deaths of two free London dailies last year, the Standard claims that it has gained far more in advertising revenue than it has lost in reader payments.

“We’ve gone from a paper that was losing almost £500,000 [US$745,000] a week to now half that or even less,” 29-year-old Evgeny Lebedev said.

As chairman of the Standard — he will hold the same title at the Independent — he is much more closely involved than his father in the paper’s operation.

Have the Lebedevs hit upon a new business model for a struggling industry — one that may pose a threat to their competitors?

Through the months of negotiations over the Independent, one of Britain’s national papers, the news media have speculated about whether it might also go free, or at least cut its £1 price. That could undercut the other serious national newspapers, particularly the Guardian, whose left-of-center editorial stance is the most similar to the Independent’s.

“One thing we do know is we can’t go forward in its present form,” Evgeny Lebedev said of the Independent, which lost £12.4 million last year. “There needs to be some sort of change in the business model.”

The Lebedevs say they have made no decisions on a new strategy. More striking, they say they care about how other papers would be affected — a far cry from the usual, cutthroat view of the press baron.

“If you’re trying to save a good paper, you don’t try to damage the others,” Alexander Lebedev said.

Experts doubt that a paper could become free across Britain without losing enormous sums of money, because the cost of distribution is so great.

“He has the distribution network in London, so he could turn the Independent in London only into a free newspaper, and continue to charge for it elsewhere,” said Roy Greenslade, a former editor at several major British papers, who writes media commentary for both the Guardian and the Standard.

The other papers “are quite worried about what he will do,” he said.

Whatever he does, Alexander Lebedev will continue to cut an unusual figure. He began reading British newspapers in the 1980s, as part of his KGB work gathering intelligence on the British economy. For several years, the agency stationed him in London.

He went into business after the Soviet Union disintegrated in the early 1990s and built an empire that includes banking, airlines, hotels and manufacturing. He said his business experience, dealing with corruption in Russia and other countries, sharpened his interest in fostering openness and investigative journalism.

“I frankly do not see how you deal with it unless you do it through media,” he said. “And even then, the government might or might not react.”

When other Russian tycoons were buying sports teams, Lebedev invested, along with Gorbachev, in Novaya Gazeta, a newspaper noted for investigative work critical of the government and powerful business interests. It is also known for its four journalists murdered in the last decade, including Anna Politkovskaya.

Alexander Lebedev still maintains his main home in Moscow, while his son is in London.

Some of the British news media questioned the older Lebedev’s independence from the Kremlin early this year, after the airline Aeroflot, which is primarily government-owned, agreed to buy back his stake in the company.

Alexander Lebedev has sought public office repeatedly and served for four years in the Russian parliament, the Duma — a record that, in the US, might be viewed as a conflict of interest. He has switched parties multiple times, and he and Gorbachev talked of forming a reformist party.

After he bought a 74.1 percent stake in the Standard, it hired a new editor, Geordie Greig, with a mission to enliven the paper. It conducted an ad campaign saying “Sorry for losing touch,” attacking head-on the perception that the paper was too dry and too negative about London.

Greig has made the front of the paper a little lighter-weight and more inviting, said Lorna Tilbian, a media analyst at the Numis investment bank, “but he hasn’t sacrificed the serious news.”

In Russia and in Britain, the Lebedevs have advocated a press that is not aligned with or controlled by any political or business faction, and under them, the Standard has moved away from its former pro-Conservative stance.

In addition, the vision for the Independent is “to be high-minded,” Evgeny Lebedev said, “and to avoid popular celebrity culture. That niche is more than filled.”