When the final issue of Associated Newspapers’ London Lite hits the streets in a month, the British capital’s three-year afternoon free sheet war will end. London Lite — which launched in August 2006, 10 days ahead of its bitter rival, the London Paper — will die, having outlasted News International’s free newspaper by just 10 weeks. Estimated bill for both companies — £70m. These two are giants of British media — Associated owns the popular and profitable Daily Mail and Mail on Sunday, News International publishes the Times, Sunday Times and Sun and is part of the Murdoch family empire which includes Sky television. After the bitter war comes the intriguing peace.

Already the rumour mill is churning. Was the demise of the London Paper in September the first stage in a deal to give News International a slice of Associated’s lucrative morning free sheet, Metro, when the contract for morning distribution at tube stations comes up for renewal next year? Was the axing of London Lite, which starts a 30-day consultation for staff today, the second step?

After all, there is a template. Back in 2001, the Guardian Media Group partnered with Associated to print Metro in Manchester, while Trinity Mirror joined forces with Associated in a similar arrangement in Liverpool and Cardiff in 2006. These deals came after bloody regional battles thrust Metro into competition with local papers, which retaliated with their own rival free editions.

And the peace was certainly workable, especially as Metro is still, according to a source, in the black even in the middle of the worst advertising downturn in living memory. So could similar deals be done in London? After all, Lord Rothermere, owner of Associated, reportedly attempted a truce with James Murdoch, who oversees News International, in 2008 but was rebuffed.

Last week, News International, which was aware of the rumours about a free sheet deal and Metro carve-up, would not comment on or off the record. Associated also declined to comment.

But behind the scenes Associated sources play down the speculation, with one insisting it would breach competition rules. Another adds: “Metro is an incredibly strong brand and there is no reason why we would do a deal.”

Vanessa Clifford, head of press at the media and marketing agency Mindshare, says that News International wouldn’t be interested, “having gone through the bother of shutting down the one thing it could have used when the tube contract comes up. The £8m that Metro made at its height is not a lot of money in the grand scheme of things for a company like News International.”

News International executives are said to be uncharacteristically nervous about perceptions surrounding the decision to axe the London Paper. “It goes against the grain of what Rupert [Murdoch] does, which is support newspapers,” says a source there. The overwhelming consensus at Wapping is that it was simply a cold financial decision for a paper that was racking up losses and was going nowhere. Many at the company feel that James Murdoch had lost interest in free newspapers. — © Guardian Newspapers Limited, 2009

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