In a major setback to the media ambitions of the millionaire Barclay brothers, their Sunday Business newspaper yesterday agreed a rescue deal that will see it lose much of its staff and content.
Sunday Business announced that it had struck a three-year deal to merge some of its operations with the Press Association, the national news agency, in an attempt to cut costs. Many of the weekly business newspaper's staff will be sacked just before Christmas.
Media analysts said the move was reminiscent of the Barclays' treatment of their ill-fated newspaper, The European, which was reinvented briefly as a magazine before it was finally closed.
Andrew Neil, the former Sunday Times editor, runs the Barclays' newspaper publishing interests, which include The Scotsman.
After sinking £27m into Sunday Business and still seeing the publication deeply in the red, it is thought the Barclays lost patience. The newspaper tried to exploit the gap in the market for a Sunday version of the Financial Times but could never attract enough readers to cover its costs.
In recent weeks, the Barclays tried and failed to attract a buyer or a joint venture partner for Sunday Business, and approached the publishers of both the Daily Mail and The Daily Telegraph. The newspaper lost its high-profile editor, Jeff Randall, earlier this year, when he became the BBC's business editor.
Sunday Business, whose circulation peaked at about 60,000, will move out of its expensive offices in Holborn and into PA's headquarters in Victoria. The publication will use some of PA's editorial content, as well as its facilities to lay out and produce pages.
Financial editors described the arrangement as bizarre, as PA's own business coverage is small and it is unlikely to provide the paper with good Sunday-style exclusive stories.
The newspaper will cease production on 16 December and return as a "streamlined" 36-page product on 6 January. Large-scale job losses among its 75 staff are expected. The recently launched and heavily promoted Business and Pleasure magazine supplement will be axed, as will the newspaper's investment section.
Ian Hargreaves, professor of journalism studies at Cardiff University, said: "This looks like rather a desperate move. Sunday Business is fighting for its life. I wouldn't have thought this will make it a very compelling publication." Mr Hargreaves, a former editor of The Independent and the New Statesman, said it was difficult to think of any publishing successes for Mr Neil and the Barclays. The brothers made an unsuccessful bid for The Express last year. The strategy of cutting the cover price for The Scotsman has not resulted in any lasting circulation gains.
Mr Neil said: "I am sad to have to lose staff at all and particularly unhappy that we have to drop our excellent magazine. But in the current grim economic climate we had to find ways to cut our costs to bring them closer into line with revenues to secure continued financing." He said the deal with PA secured the future of Sunday Business and moved forward the day when the paper becomes profitable. The Barclays have agreed to provide a "modest" amount of further investment.