Murdoch revives his plan for free London newspaper

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Rupert Murdoch has revived his plans for a free London newspaper to rival Associated Newspapers' Metro.

News International, Mr Murdoch's company, had begun talks with Railtrack to take exclusive rights to distribute the new newspaper at mainline stations, according to sources at the infrastructure company.

The current contract between Metro and Railtrack expires at the end of March. Mr Murdoch is believed to be personally involved with the plans to wrest it from Associated, as is Les Hinton, News International's UK chairman.

The newspaper group is said to have offered £4m to Railtrack for the distribution rights, more than three times the sum paid by its rival, with Mr Murdoch apparently willing to invest more than £100m in the project. The new newspaper would compete not only with Metro, but with the paid-for Evening Standard, which is also owned by Associated Newspapers.

Neither Associated Newspapers nor News International were willing to comment on any plans yesterday. But a Railtrack spokesman, confirming that the contract was due for renewal, said: "Associated Newspapers have first refusal."

Metro has proved a considerable success for Associated since it was launched in 1999 and now has a circulation of 820,000. Nearly half are distributed on the London Underground, where 70 per cent of the readers are in the affluent ABC1 bracket highly prized by advertisers.

It is understood that the other Metro distribution contracts, notably with London Underground, are not due for renewal for some time, which may affect News International's plans.

A source close to Metro said: "When Metro first launched, News International did draw up dummies and got quite a long way down the route of competing with Metro. There was quite a strong feeling that they would put out a rival but, for whatever reason, they didn't go through with it then."

With all newspapers suffering from a severe downturn in advertising, such expansionist plans would cause surprise in the City. Yet News Corporation, Rupert Murdoch's media group, has been showing interest in the fast-growing free newspaper market. It has recently launched Mx, a 24-hour free paper in Melbourne, Australia, of the type now being mooted for London. Mx competes with an existing title produced by Fairfax Corporation.