Ex-KGB agent Alexander Lebedev pays £1 for Indy. Standard owner set to pour millions into ailing Independent newspapers

ALEXANDER LEBEDEV, the former KGB agent turned media mogul, will this week pay a token £1 to take control of The Independent — the same price as buying one copy of the paper from the newsstand. But he will pledge to invest millions in the loss-making title and the Independent on Sunday over five years.

The final hurdle to a sale is close to being overcome this weekend after Independent News & Media agreed to take part of the pain of a 10-year printing deal with rival publisher Trinity Mirror. Lebedev would commit only to five years and INM has now agreed to guarantee the rest. It would have cost £35m to get out of the contract.

Lebedev, who already owns London’s Evening Standard, has struck a separate five-year deal with INM to supply articles to its other newspapers in South Africa and Ireland.

Launched in 1986 and 1990 as free-thinking alternatives to the rest of Fleet Street, the Indy and Sindy lose more than £10m a year and have never made a sustained profit. Circulation peaked at 400,000 in 1989. Today the full-rate daily UK circulation is just 92,000, although with discounted bulk copies and foreign sales the total is 186,000.

A deal gives INM the exit that its shareholders have been demanding, for the cost of roughly one year’s losses. However, it will crystallise a small balance sheet hit as it writes down the titles’ remaining value on its books.

Lebedev is expected to slash the £1 cover price of the Indy to stimulate sales, piling pressure on its rival The Guardian.Another option would be to give it away, as he has done with the Standard — which he bought from the Daily Mail for £1 last year — to boost advertising income.

Gavin O’Reilly, INM’s chief executive, spent much of last year battling over the future of the publisher with telecoms tycoon and fellow shareholder Denis O’Brien. Both hands have been weakened since a restructuring left bondholders with a 48% stake.

Lebedev prepared for the Indy deal last week by meeting Gordon Brown at Downing Street. He also demanded that INM amend staff redundancy terms. The Office of Fair Trading invited comments on the proposal.

+ Financial details of the British arm of Reader’s Digest will this week be circulated to potential buyers by the publisher’s administrator, Moore Stephens. The publisher was placed in administration after the Pensions Regulator refused to approve a plan to plug its £125m pension deficit.