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February 11, 2016

Johnston Press confirms ‘late stage discussions’ to buy Lebedev’s i newspaper for £24m

By Dominic Ponsford and William Turvill

Johnston Press has confirmed it is in "late stage discussions" to buy the i newspaper for around £24m.

According to the regional publisher, The Independent's cut-price sister title recorded an unaudited operating profit of £5.2m in the year to September 2015.

In the year to September 2014, ESI Media said the Independent titles – The Independent, Independent on Sunday, i and websites – lost £4.6m. This was up from a £22.6m loss in the year to September 2011 – the first full year after the titles were bought by the Lebedev family.

The i newspaper, which costs 40p on weekdays and 50p on Saturdays, was launched in October 2010. According to ABC, it recorded an average circulation of 268,431 in December 2015. The Independent's average circulation in this period was 56,074 and The Independent on Sunday 92,914.

When bulk, give-away copies are taken out of the equation, the i's circulation was 200,679, The Independent's 40,718 and the Independent on Sunday's 43,053.

The national newspaper's owner, ESI Media, confirmed discussions in a statement this morning.

Chief executive Steve Auckland said: "I can confirm that we are in discussion with Johnston Press regarding the sale of i.

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"At this stage no decision has been made and we realise the uncertainty that this news will cause our employees and customers.

"Johnston Press are bound by strict PLC guidelines so unfortunately we can make no further comment at this time.

"ESI Media remains committed to our brands, building on our fast growing global footprint, whilst cementing our place as the most important destination for audiences in the capital."

Johnston Press confirmed in a statement "that it is in late stage discussions with Independent Print Limited ("IPL") for the potential acquisition of the business and certain assets of the i".? 

It said: "There can be no certainty that the discussions between the Company and IPL will lead to any definitive agreement concerning the possible acquisition or as to the final terms of any such agreement. Completion of the acquisition would be subject to the approval of shareholders of the Company.

"The consideration for the proposed acquisition is likely to be £24 million, to be provided from the Group's existing cash resources.  In the year ended 30 September 2015, the i had unaudited carve-out operating profit of £5.2 million."

Johnson Press said they acquisition would mean the company has:

Greater reach: The combination would create the UK's fourth largest print publisher with over 600,000 paid copies a day

Increased scale: Greater reach would improve the ability to gain a greater share of the national advertising market

Growing revenues: i has growing circulation revenues, and new opportunities arise from: a proposed digital product; new geographic markets; and from potential cross-selling of i's advertiser base and vice-versa

Accelerated digital transformation through: leveraging Johnston Press' digital expertise to fully realise the i brand across digital platforms; the extensive Johnston Press network enables cross-promotion to grow audiences at minimal cost; it is expected that the regionally-oriented digital display network 1XL will be enhanced by the addition of a national brand.

It is also expected that the acquisition would be cash generative and immediately earnings enhancing. 

Johnston Press chief executive Ashley Highfield told staff in an email this morning: "You may have seen press speculation about a possible acquisition. Because of legal restrictions I am unable to share information with you beyond an announcement we issued to the City this morning…  

"I will update you as soon as I'm able to and ask that, for the time being, please don't fuel the media speculation further."

The Guardian reports that the sale of i is "a move which multiple sources say will spell the end of the Independent and Independent on Sunday".

The i currently relies on The Independent for most of its content. The Independent is the fifth most popular UK national newspaper online, attracting 2.8m unique browsers per day according to ABC.

In June, announcing a reduction in Independent title losses to £4.6m, ESI Media said the "exceptional performancee is owed to a variety of factors, including:

"Sharp rise in revenues from the i-paper, following two successful price rises and supported with advertising campaigns that have helped maintain a circulation higher than The Guardian’s.

"Increased digital revenues from record-breaking growth in UK and global online traffic.

"Significant cost reductions focused on production, printing and back-office operations rather than editorial staff."

In an email to staff this morning, Independent editor Amol Rajan said he was "very conscious that this morning's news about Johnston Press will prompt a lot of questions and uncertainty".

He said: "I am very sorry to say, however, that for the time being we really are bound by strict rules on what we can and can't say about this potential deal.

"For that reason we are not in a position to address all staff this morning.

"I will obviously do all I can to keep everyone updated as soon as possible, within the guidelines of the law.

"Thank you very much indeed for your understanding in the meantime."

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