We're free to add readers and cut costs, says 'Standard' boss

Andrew Mullins tells Matthew Bell that the London paper will flourish as a freesheet

When theLondonpaper announced its closure last month, senior managers at the Evening Standard immediately called a meeting. For months they had held secret discussions to debate whether, with circulation figures spiraling down, the Standard should ditch its 50p cover price and go free.

That was before Russian billionaire Alexander Lebedev bought a 75.1 per cent stake in the paper in January. Since the change of owner, and editor, now Geordie Greig (below right) there have been experiments with 10p copies and free distribution after 9am at mainline stations. But according to the managing director, Andrew Mullins (below left), it quickly became clear that a hybrid model was too complicated to sustain and going free was inevitable. With theLondonpaper out of the market, the time was right.

The effect of dropping the cover price on 12 October will be immediately and painfully felt, with a loss of £15m in annual revenue from full-price cover sales. "Yes, you lose circulation revenue immediately – it's a big risk. " says Mullins, who looks relaxed and tanned when we meet hours after Friday's announcement.

"The funding requirement in the immediate short term is quite excessive. In the short term we will still need a brave and bold proprietor while we re-engineer the businesss until the revenue comes through."

Sacrificing the cover price in the hope of getting more advertising during a recession is certainly ambitious. But as Mullins explains, the Standard's circulation figures had been dwindling even before the freesheets were launched in 2006, a trend that going free will immediately reverse. Circulation is expected to triple overnight, so if the Standard only increases its rate card slightly, it will be offering advertisers an overall cheaper cost-per-thousand rate.

Dropping the cover-price is only the first stage in a radical overhaul of the newspaper's business model which is likely to see it produce only one edition a day. Until recently, there were three editions, the first of which was off stone at 9am. Last October, this was reduced to two editions, the first, News Extra, and the second, the West End final, both going slightly later. Although Mullins insists nothing has been decided, it's clear he believes this is an area where further savings can be made.

"We're going to see if we can migrate to maybe 100 per cent West End Finals. If we have one solid print run and just change slips as headlines change that'll help us." The savings would go right through the paper. "Even in editorial there's a huge cost of people having to come in by taxi in the morning because they're coming in before public transport is running."

The Standard's distribution system will also be overhauled, with significantly fewer points dishing out more copies. These will be concentrated in central London, and carefully chosen commuter areas such as Canary Wharf and Liverpool Street. Even in central London, there will be fewer outlets. "Yes, some people will have to divert. But there are some quite cute distribution deals which are under wraps at the moment," said Mullins.

The changes have had a mixed reaction among the Standard's journalists, some of whom fear a loss of clout for the 180-year-old title. It may also be a worry for advertising agencies targeting the paper's coveted AB1 audience of 35 to 54 year olds, mostly moneyed metropolitan professionals. Not so, says Mullins, who is optimistic about advertising. "We will continue to reach an AB1 audience but we will also be reaching out to a younger audience, whom advertisers are keen to target."

The freesheet move raises questions over the future of the free London Lite, which currently pays £1m a year to use the Standard's copy. Lite management were this weekend downplaying the suggestion the Standard would become a rival, although there were hints that the papers are now squaring up to each other for the first time.

"The Standard is a paid-for newspaper that has gone free because they can't sell it," said Steve Auckland, the managing director of Associated Newspapers' freesheet division. "It's very different to the Lite, which is a purpose-built freesheet. Whether our readers are going to want to read Brian Sewell and all the quality content of the Standard remains to be seen. For us, it's business as usual."

Before the sale of the Standard, the Lite was its sister paper at Associated. But there is nothing sisterly about Auckland's view of the Standard's strategy: "Advertisers are not going to be willing to take on a higher rate card in this market. There's quite a lot of work for them to do before they can pull this off."