Clive Milner: Ready for battle on the capital's streets

With 'thelondonpaper' - launched today - News International plans to shake up a market in a way that hasn't been seen for years. Ian Burrell meets the man in charge

Two hundred and two years have passed since the London Dock Company hired Daniel Asher Alexander to design a series of austere and virtually impregnable brick buildings to house the rum, cotton and rare drugs, such as iodine, that mariners were bringing home from overseas.

As the architect who designed Dartmoor prison, Alexander knew a bit about containment, which was handy, as the building's owners were intent on keeping out light-fingered Londoners who might make off with its exotic goods. Just past its bicentenary, the first of these Pennington Street warehouses has been reborn with a purpose completely at odds with the building's original role, because from here a product has been designed to be taken out on the streets and thrust into the hands of the capital's young citizens. For free.

This is the home of thelondonpaper, Rupert Murdoch's first foray into the British newspaper market since he acquired Today in 1987, before closing it eight years later.

thelondonpaper launches today as News International's long-awaited entry into the capital's free-newspaper sector, posing a considerable threat to the established paid-for title, the Evening Standard, and its publisher, Associated Newspapers, which last week launched its own afternoon free, London Lite, alongside its successful morning free Metro.

In an open-plan office, marketing, advertising and production staff scuttle among thelondonpaper's reporters and subs in what is, effectively, the newsroom. There are no departmental barriers here.

This former rum storehouse in Wapping, east London, has considerable journalistic pedigree. It was the home of The Sunday Times under the editorship of Andrew Neil and during the early years of his successor, John Witherow. News International's managing director, Clive Milner, stands in front of what was Neil's old office (now occupied, with Rupert's blessing, by an East End charity), taking in the unfolding scene.

Milner is one of Murdoch's most senior and trusted lieutenants. He rarely gives interviews, but these are extraordinary circumstances. "We have put time and money and resource into planning this. It's been well thought through and will be well executed," he says. "It's really important to us. We don't do anything half-hearted and we always plan for success."

At the end of the newsroom, a purple sun-brolly is flying the colours of News International's new publication. "Metro is blue and the red tops are red. There are very few chart colours left. Purple is not male and it's not female. It's neutral," says Milner, ignoring the fact that the Mayor of London, Ken Livingstone, fights his electoral battles beneath this imperial hue. And London Lite has also gone with a blackcurrant branding, so it must have something going for it.

thelondonpaper will have a staff of 70, of whom some 40 will be journalists. Just as important will be its purple-liveried army of merchandisers, who will be deployed across central London from this afternoon, jostling for elbow space with purple-uniformed London Lite dealers. It promises to be a battle-royal and Milner, who is 49, has been planning it for a year. He knows he has plenty of muscle at his disposal.

"That's Rupert's office," he says, wafting his hand at a sixth-floor room in Wapping's main building. Murdoch is in Los Angeles, but his portrait hangs outside in the vestibule, alongside framed photographs of Tony Blair and Ted Heath, both reading The Sun.

Milner's office is along the corridor from Murdoch's. "We've been planning for over a year and I think we've employed best practice here," he says. "It's not just a question of who's doing what in London. Free newspapers are a worldwide phenomenon and growing very, very fast. Paris has three titles, Madrid has five and Barcelona has four. What emerges is that, despite the way the industry talks about newspapers - paid-for newspapers - the free model is growing and is succeeding in attracting a young reader."

Milner is at a table in his office. Framed front pages of The Times and The Sunday Times are on the wall behind him, and a large pile of data is before him. It is the pile that justifies thelondonpaper advertising campaign - aimed at the advertising industry - showing a woman in a purple suit with a card saying: "We Know Where You Walk".

"There's Soho," says Milner, fingering his data. "Five Tubes, 32 bus-stops, eight car-parks, 35 key office buildings that deliver the right profile, 32 retailers that have got the right audience, six media agencies that will hopefully buy our product, 14 postboxes, and there are 25 Evening Standard sellers in there. We will have many, many more merchandisers."

Postboxes? "The Post Office, all those years ago, also mapped to find out high-traffic areas," says Milner. "Postboxes are not randomly placed."

This is geomapping, and it's a technique that NI honed after talking to the Scandinavian publishing company Shipsted, which Milner rates as the most sophisticated in the global free-newspaper industry. "We've spent a significant amount of money. Every single zone we occupy we have had geomapped. We have looked at every road, every office, we have looked at footfall, flows of people by time of day, by type of person. We know in any given area when our audience moves, how they move and in what numbers and when we need to put people in place to capture them."

Those "people" have been hired by "professional merchandising companies" and will be out on the streets today in their purple T-shirts and fleeces. In time, they may be handing out more than newspapers. "It gives us the capability in the short- and middle-term to work with clients who want a merchandising opportunity over and above an advertising one," says Milner. "So you could visualise, going forward, that you are trying to put new product into the market, which involves a good degree of trial and we can help them deliver that on the ground with our newspaper distributors."

And that goes to the core of what thelondonpaper is about. Because, although it has an editorial identity of attempting to provide young affluent Londoners with an "urban survival guide" that celebrates the opportunities of the capital and avoids the travel-chaos and crimewave stories that are staple fare for the Evening Standard, it is essentially a vehicle for advertisers.

"What we are doing with this paper is we are presenting the [advertising] marketplace with a very open-minded approach and I think that has already been very well received," says Milner. "Certainly we want to be as creative and collegiate with the best ideas from the marketplace to help people with those solutions."

He picks up a dummy of the newspaper to show how it will offer advertising spaces that would induce much wincing among the traditionalists on any newspaper back-bench. "We've got very innovative sites... back page, front page, we are doing this and this...," he says, leafing through the dummy to show out a layout that does not allow editorial content to dominate.

thelondonpaper will be produced with editorial costs kept to a minimum. "It uses technology very well, it has multi-tasking in its journalistic output and it's extremely efficient," says Milner. "You have people both writing and creating pages and a very user-friendly editorial technology that allows you to do that."

It is an approach that other newspaper businesses, indeed other media organisations, will be watching with interest. "There isn't a newspaper management in the UK that isn't focusing on its costs. Some of those costs are inescapable, raw materials those sorts of things [but] there's other costs around head-counts. It's also about how you do things and the technology with which you do it," he says.

"What you are talking about here is a completely different way of operating from the national [newspaper] models. This is done with a defined resource. This is not about something that, as you become successful, you spend greater and greater sums of money on journalism and buy-ups and so forth. It's a very well-defined model in terms of being able to produce a paper which is of a high standard and has a great look and feel and is delivered to that model - because ultimately you've only got one revenue stream, called advertising."

Milner, who is thoughtful and soft-spoken, joined Times Newspapers as a sales executive in 1981 and has been with News International (NI) for the past 25 years. He was the commercial director of the News of the World and later director of advertising and then managing director for News Group, overseeing The Sun, the News of the World and Today. In 1999 he became MD of Times Newspapers and five years later was made group MD for News International as a whole. Last year his responsibility was extended from the company's newspapers to include its online interests.

With such a strong commercial background - and an editor, Stefano Hatfield, who is a former editor of the ad-industry magazine Campaign - he can see the money-making possibilities for newspapers, if the thelondonpaper model approach to advertising succeeds.

"I think sometimes the paid-fors have been seen by the advertising business as slightly inflexible, and maybe it's a legacy thing there, it's always church and state between the editorial and commercial departments. I think now you are certainly seeing at NI that we are doing a lot of deals which are not just conventional advertising deals, they are more about advertising solutions for clients, which encompasses both advertising but also conferences for bespoke products, target-reader communications, online solutions, microsites, these things are being created now by us and others. It's becoming a bigger and bigger component of what we do. I think it's too simplistic to say the paid-for guys have missed a trick [but] there is now more creativity, more dynamism in what is being offered to clients than ever before."

Lest NI's paid-for editors (Rebekah Wade, Andy Coulson, John Witherow and Robert Thomson) should be concerned, Milner is careful to add the caveat that, "you can never get to a point where commercial interests hold the journalistic pen".

thelondonpaper is something different from NI's other offerings, he emphasises, and part of a wider diversification policy of the company. "Strategically we've moved to become a portfolio player. The creation of News International Magazines [run by Milner's wife, Camilla Rhodes] and News International Free Newspapers Ltd is a manifestation of that. We are now vigorously growing our multi-platform capability for all of our products - I think people can see what's going on in Times Online and Sun Online, which are growing extremely quickly, faster than the market."

Milner claims that thelondonpaper, while taking advantage of NI production facilities, will rarely cross-promote with its sister titles. He also dismisses the idea that the (apparently politically unaligned) free paper will be adversely affected by its association with The Sun. "It's the same issue as around The Times being a stablemate of The Sun," he says.

He is adamant that this is the right time to launch a London free. Not only is investment increasing in the capital ahead of the 2012 Olympics, but the success of Associated's Metro in the mornings has shown an appetite for free papers among young readers. That, and the Evening Standard's sales being down 20 per cent year-on-year to 300,000, represents a great opportunity, he thinks. "The Evening Standard is really at an historical low, both in terms of its circulation and also in terms of its profitability, or lack of profit. If you lay the Evening Standard's revenues on top of Metro's costs you have an extremely good business. The Evening Standard has a legacy issue, which is that it has enormous cost and an enormous number of journalists to create a London newspaper."

To maintain its circulation, the Standard has expanded its footprint to Oxford and Brighton, but now only sells 85,000 paid-for copies in London's zone one during the 4.30pm-7.30pm window in which thelondonpaper will operate, says Milner.

The success of this venture, he maintains, is not dependent on securing licences to distribute via bins in London underground or mainline railway stations.

"We don't need it but if it's there at the right price and if importantly we are able to get it right in terms of the logistics ... it's a valuable component," he says. "A bin has to [have] ease of access so people can pick a paper up without having to cross three streams of fast-moving commuters."

Milner rejects claims that a paper taken from a merchandiser represents less of a conscious act than one deliberately picked out of a bin.

Last Wednesday, Associated fired the opening shot of the battle by launching London Lite. Predictably, Milner claims to be unimpressed. "It's a reworking of the Evening Standard and some of the stuff out of their Friday magazine," he says. "I'm not sure if this is an interim period where they are trying to establish their own staff but right now they're re-working Standard material almost exclusively."

His voice alters slightly, however, when he mentions one thing that does seem to concern him: the prospect of real dirty tricks. "Associated are in a position where the OFT have classed them as the dominant media in London. They are on notice that they have to act in a responsible way as the dominant player. Any anti-competitive activity will be looked at closely by us and others," he says, referring to any attempts to slash advertising rates or to prevent thelondonpaper's merchandisers from operating.

"We are a new business entering the London market. We are a small player - despite NI's size - versus Associated's portfolio of Metro, the Evening Standard and now London Lite."

It does seem strange hearing one of Mr Murdoch's senior executives talking about the company being bullied. But then Milner turns steely, warning that, whatever way this war is prosecuted, there is one certain loser: the 179-year-old Evening Standard. "If I was an employee of the Evening Standard I would be looking for career advice quite quickly. Evening Standard vendors have to be concerned as well. The whole infrastructure that has been around for many, many years, where people have made an awful lot of money, that is just about to be dismantled."