Evening Standard takes Lebedev loans to keep afloat

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Russian-born media tycoon Evgeny Lebedev has provided additional loans to the Evening Standard, with the lossmaking London newspaper warning over its future without the financial support from its largest shareholder.

In delayed results posted to Companies House this week, the Evening Standard said that shareholders had agreed loans to the company of £14mn in the 2022 financial year, and a further £15mn since, while they have also promised to provide further funding if needed.

The company said that its operations would need to be funded through the finance provided by its shareholders, of which Lebedev is the largest. With his father Alexander, a former banker and ex-KGB agent, Lebedev bought the Evening Standard in 2009 for just £1.

The newspaper suffered a pre-tax loss of close to £16.4mn in the 12 months to the end of October 2022, according to the new results, steeper than the £14.4mn loss recorded in the previous year.

The company blamed rising costs, the effect of Covid-19 lockdowns and the cost of living crisis for the impact on advertising revenues. The free newspaper makes more than 90 per cent of its revenues from advertising.

A company spokesperson said: “While both our print and digital revenues grew in 2022, the Evening Standard has not been immune to the cost pressures and broader economic trends impacting media brands worldwide.”

Evgeny Lebedev is also a co-owner of the Independent, another British newspaper, which is made a small operating profit of £1.9mn for the year to October 2022, down from £5.5mn previously.

Calculations by the FT based on documents at Companies House suggest that even before the latest set of losses the Lebedevs had sustained losses far in excess of £100mn since 2009 on their UK media investments — even after accounting for the profits from selling off the i newspaper and stakes in both the Evening Standard and Independent.

The Standard was a relentless champion of Boris Johnson when he ran for London mayor and when he campaigned successfully to become Tory leader in 2019. 

A year later Johnson made Lebedev a crossbench peer, despite the House of Lords Appointments Commission (Holac) warning that the security services had concerns about the entrepreneur’s “familial links”.

In March Lebedev tweeted his support for the advice to be published, saying: “I have nothing to hide.” “Openness and transparency are pillars of our democratic system, so I welcome the call for security advice about me provided to Holac to be released.”

The Canadian government last year placed Alexander Lebedev under sanctions in the wake of the Russian invasion of Ukraine.

The Evening Standard said that given shareholder support, the company would have adequate resources to continue, but without this the company’s ability to continue as a going concern would be in doubt. The company now owes £82.6mn to its shareholders, according to company filings.

Auditors at Deloitte said in the filing that the company requires “continuous financial support” from its shareholders but that there is “uncertainty as to the ability of the shareholders to provide” this support.

Rival media executives have questioned whether Lebedev would seek to sell part or all of his newspaper holdings in recent months.

The newspaper is controlled by Lebedev Holdings, of which Evgeny Lebedev is the majority shareholder. In separate accounts filed this week, Lebedev Holdings reported a loss of £13.4mn, up from £10.7mn the year before. This group also requires additional funding from Lebedev to keep it operating — the filing states that he and other shareholders have indicated a willingness to do so.

The Evening Standard said that it is working with consultants to reduce its heavy reliance on advertising as well as create a more digitally focused newsroom.

It said that since the end of the financial year, its digital revenues had performed poorly, with a downturn in the advertising market exacerbated by stagnation in its readership. As a result, the newspaper said it would relaunch its digital platform to try to improve results this year. 

The spokesperson said: “We have invested in a refreshed strategy that leverages the development of a digital-centric newsroom, and the launch and growth of events and exhibitions to further diversify our revenue base.”