Murdoch's London Paper closes its doors for now

NEWS International&rsquo;s decision to close the London Paper will come as a huge blow to its 60 staff, who will now enter a month-long consultation. They have worked hard to create a product which has been a massive success in many ways. Its revolutionary design, for example, has been critically acclaimed and the paper has done well to capture a younger audience that remains elusive for paid-for newspapers.<br /><br />Commercially, the picture is nowhere near as good. The London Paper has massive costs, booking a pre-tax loss of &pound;12.9m in the year to the end of June 2008 on revenues of &pound;14.1m. Since then, the advertising market has got considerably worse and analysts estimate that ad sales will be at least 25 per cent lower, pushing annual losses up to over &pound;16m if costs have remained broadly similar.<br /><br />Although these figures appear to speak for themselves, the news that the publication will probably print its last ever edition on 18 September came as a huge shock; even senior staff at the title were caught unawares. Rupert Murdoch, chief executive of the London Paper&rsquo;s ultimate parent company News Corp, rarely gives up this easily.<br /><br />When it was launched in 2006, the London Paper was meant to crush the Evening Standard, then owned by the Daily Mail and General Trust (DMGT). Murdoch was livid at having missed out on the morning London tube distribution contract, which went to DMGT&rsquo;s Metro and sought to exact revenge with the Standard&rsquo;s scalp.<br /><br />Unable to deal with its growing losses, DMGT sold the Standard to Russian tycoon Alexander Lebedev, but it is now certain to outlive the London Paper. No scalp there. And although the London Lite will almost certainly follow suit in shutting up shop, it can at least say it managed to see Murdoch off, a claim that very few can make.<br /><br />Insiders say that this order didn&rsquo;t come directly from the top. Rupert Murdoch is too busy with the Wall Street Journal to be focusing on the London title, and has left the decision to his son James &ndash; the heir apparent and chief executive of News Corp Europe and Asia. The decision also fits in with the anti-free noises coming from inside Wapping, with News International preparing to charge for access to its newspaper websites.<br /><br />But I suspect we haven&rsquo;t seen the end of the free newspaper wars. Murdoch Jr&rsquo;s statement yesterday contained an important caveat; he said the paper had struggled &ldquo;in a difficult free evening newspaper sector&rdquo;. He categorically doesn&rsquo;t rule out the free sector altogether, instead suggesting the &ldquo;evening&rdquo; part of the London Paper&rsquo;s business plan was the problem. After all, the Metro made &pound;8m a year in the good times.<br /><br />With DMGT&rsquo;s contract to distribute the Metro on the London Underground in the morning up for grabs next April, the London Paper could make a come back. Rupert might yet get his scalp.