INM sells Independent newspaper to Russia's Lebedev
26 March 2010 7:31
(Reuters) - Independent News & Media agreed to pay Russian billionaire Alexander Lebedev 9.25 million pounds ($14 million) to take on the UK newspaper the Independent, ending over a year of uncertainty over the loss-making title.
Shares in INM rose 0.01 cents, or 12 percent, as the market welcomed a deal on Thursday that should enhance earnings for the Irish media group, while securing a future for the Independent and its sister paper, the Independent on Sunday.
Closing down the Independent would have cost INM some 30 million pounds, much of it in punitive payments for the early termination of a printing contract with British newspaper group Trinity Mirror. A new printing deal has now been agreed.
INM Chief Executive Gavin O'Reilly said the transaction would make an immediate positive contribution to earnings. He added that Ivan Fallon, CEO of INM UK, had retired from the group as a result of the disposal.
Lebedev, an ex-KGB agent who bought the London Evening Standard last year, said he was committed to investing in the two titles, which will be owned by Independent Print Limited, a company controlled by his family. He will pay 1 pound to INM.
He also said that he and ex-Soviet leader Mikhail Gorbachev planned to establish a not-for-profit media foundation that would finance global media projects for newspapers including Novaya Gazeta, a pro-democracy Russian newspaper they co-own.
The Independent, a campaigning, left-leaning newspaper, was launched in 1986 to challenge established titles the Daily Telegraph, the Times and the Guardian.
But it never became a mass-market favourite and suffered disproportionately in the recession that has hit all UK newspapers. It sells about 184,000 copies per day, the least of Britain's five quality national dailies.
The deal will raise speculation that Britain might gain its first free national quality newspaper, after Lebedev turned the Evening Standard into a freesheet last year.
The parties expect the deal to close in May, following employee consultation and regulatory approval.
Analysts said the agreement was very favourable for INM, allowing it to focus on its profitable markets."It's a very good deal," said Killian Murphy of Goodbody Stockbrokers in Dublin. "The group looks an awful lot stronger without it (the UK Independent). Its operations are now focused on the island of Ireland, South Africa and Australasia."
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