Quotes of the Day

When Alexander Lebedev, the new Russian owner of Britain's Independent newspaper, visited the offices of the rival Guardian last year, he was asked why he wanted to buy a struggling paper. The Independent sells only around 100,000 copies in the U.K. on a typical weekday, trailing London's four other quality dailies — the Daily Telegraph, Rupert Murdoch's Times of London, the Financial Times and the Guardian — and consistently loses about $15 million a year. Lebedev, whose first experience in London was as a KGB agent in the 1980s, offered a characteristically enigmatic response: "Well, either I am a Russian spy, or I am mad, or I believe you can make money out of newspapers."

Following on the heels of his purchase of London's Evening Standard last year, the announcement of the Independent deal Thursday, March 25, confirms that Lebedev is indeed building a budding media empire in London. But at this stage, his plans are still something of a mystery to rivals and commentators alike. The Independent's position is so weak that carrying on with its existing strategy — offering an internationalist, liberal alternative to the right-leaning Telegraph and the more centrist Times of London — would be commercial suicide. The already small readership of the Independent is declining faster than that of its rivals: sales fell 17% in 2009, compared with the 6% to 8% drop-offs for its competitors, according to data released in January by the Audit Bureau of Circulation.

The media landscape is changing by the day in London. Murdoch's News Corp. announced Friday, March 26, that it will start charging consumers £1 ($1.50) a day or £2 a week to access the websites of the Times of London and the Sunday Times. James Harding, editor of the Times of London, said the move was a "big risk but less of a risk than throwing our journalism away." Murdoch's Wall Street Journal has done relatively well charging for its online edition, with 407,000 paying subscribers in the six months ending Sept. 30.

At the Times of London, some insiders believe the Independent might go the other way and start giving the paper away for free — the strategy adopted by the Evening Standard after Lebedev purchased it. Rivals have estimated that the move could cost Lebedev about $45 million a year in sales revenue — but it could also boost advertising if it increases readership. In an interview with the Times of London in January, Lebedev was ambiguous: "Let's assume we make the Indy free. You'd affect seriously the business models of other newspapers, and frankly, that's a very important reason [not to do it]."

Among some journalists at the Guardian, the belief is that Lebedev will be more cautious and drop the price of the daily paper from £1 to 50 pence in order to undercut the competition. This strategy is certainly more realistic. Lebedev can afford to take the financial risk, having made a fortune through the $668 million sale of his stake in Aeroflot, the Russian airline, and other businesses in his native country earlier this year.

However, observers are unsure that either plan will deliver in the long run. "Going free doesn't make a lot of sense to me — it will provide a short-term publicity boost, and boost to readership, but it doesn't address any of the fundamental problems for newspapers. Print advertising is in decline, because advertisers increasingly believe it is less effective than digital," says George Brock, a professor of journalism at London's City University. Even the 50-pence-a-day model fails to convince Brock, who argues that a price cut works only as part of a long-term strategic plan. When the Times of London cut its prices in the early 1990s to undercut its rivals, the move made sense only as part of a "seven or eight"–year plan, he says. Circulation did increase, and eventually the newspaper was able to raise its prices again.

Meanwhile, the hunt is on for a household name to edit the Independent. Those who have been considered include Greg Dyke, the former director-general of the BBC, who hasn't worked in newspapers in 40 years; Jeremy Paxman, the host of the late-night television program Newsnight; and Rod Liddle, the outspoken former editor of BBC Radio 4's Today program, whose candidacy faltered recently amid a controversy over a blog he wrote blaming black men for crime in London. What the hunt for a famous name shows is that Lebedev does not plan to conduct business as usual. A celebrity editor will generate publicity and, it is expected, oversee a repositioning of the title toward the center ground currently held by the Times of London. But battling with Murdoch, and indeed vying with the rest of London's ultra-competitive Fleet Street, is not for the fainthearted.

Or, as Brock says: "He has to show this is more than about being invited for dinner at Buckingham Palace."

• Dan Sabbagh / London
• Alexander Lebedev, a former KGB agent, has purchased his second British paper, the down-on-the-heels Independent. Can he turn the paper into a moneymaker again?