Analysts warned last night that there could be a "bloodbath" in the London newspaper market after the announcement that another free daily would muscle in on a crowded market next month.
Associated Newspapers said it would start a free afternoon paper, London Lite, in September and scrap its Standard Lite freesheet. The new title would go head-to-head with News International's forthcoming free paper, thelondonpaper, which launches on September 18. The two additions mean Londoners will be swimming in newsprint including Associated's Evening Standard, its free morning sister paper Metro and the business freesheet City AM.
"It's an absolute war and a potential bloodbath," said Jim Bilton, managing partner at independent media research firm Wessenden Marketing. "It all comes back down to ad revenues, as to whether they can prove that the copies they are distributing are being read. But is there enough ad revenue to support two free titles and perhaps another one?"
He was referring to the fact London could get yet another title following the decision by Transport for London to offer an exclusive licence for an afternoon free paper at tube stations. Network Rail is also auctioning a licence for afternoon papers. Analysts said the two new London afternoon papers may be designed to frighten off other bidders for the tube deal.
For now, London Lite will be handed out in the centre from noon each weekday by special teams and Evening Standard sellers. It will have an initial circulation of 350,000-400,000. The distribution details mirror those planned for thelondonpaper.
Media experts cautioned that with advertising shifting into other media, particularly online, it was a difficult climate in which to launch papers. Trinity Media, ITV, Associated's owner Daily Mail & General Trust and magazine and radio group Emap have all complained of a difficult advertising environment in recent weeks.
Edward Hill-Wood, media analyst at Morgan Stanley, said afternoon papers in particular faced a tricky future and that Associated's London Lite was clearly not designed to make money. "The launch of the Mail title is a purely defensive move to try and defend their morning Metro title and the Evening Standard."
Alex DeGroote, at City broker Panmure Gordon, said there was not enough advertising to go round, especially bad news for papers not making money from readers. "The economics of these launches don't add up. I am of the belief this is bad for everybody apart maybe from the consumer." Taking advertising share from the Evening Standard would mean Associated cannibalising its own revenue streams.
Paul Zwillenberg, at OC&C Strategy Consultants, suggested paid-for and free papers could co-exist if they catered for different readers. Free papers opened an audience for advertisers they had not been able to reach with paid-for papers.
