'A punch in the stomach' – the Russian coup at the Standard

Once London had 14 paid-for evening newspapers. This weekend the future of the last survivor hangs in the balance as negotiations continue between Lord Rothermere and Russian billionaire Alexander Lebedev over the sale of the Evening Standard. Reports of the deal emerged on Wednesday night, infuriating senior executives at Daily Mail and General Trust, the current owner of the Standard, and temporarily stalling talks. But negotiations had resumed before the weekend and an announcement is expected tomorrow that Lebedev, a former KGB agent, will pay £1 for a share of just over 75 per cent of the title.

The sale of that controlling stake is believed to be mutually beneficial. It will allow Lebedev to force through decisions on, say, how to structure the debt he will be taking on, while DMGT will retain some say in the future of the title but, in owning less than 25 per cent, it can remove the title from the group balance sheet.

The newspaper industry is entering one of the toughest years in its history and the Standard already runs at an operating loss of around £25m a year. Until recently, Lord Rothermere had been keen to hold on to the paper, having worked as its managing director before inheriting its parent company in 1998. But insiders say that has now changed. "There's a sense his enthusiasm for the Standard has waned in the past few months," says a source. "Now he just wants to get shot of it."

The sale came as a shock to most staff. Members of the backbench – the core of a newsroom, where senior editors sit – swarmed round TVs as the news broke. This was the first confirmation that a deal was imminent. "It felt like being punched in the stomach," says one insider.

The question underlying the sale is whether the model of the Standard – an upmarket, twice-daily, paid-for evening paper with extensive City, arts and sports coverage – is still workable. David Wynne-Morgan, a media analyst, thinks not. "I don't think there is a commercial future for the paper. Veronica Wadley has done an outstanding job as editor; if it's as good as it is and it still isn't working then I can't see it ever making money."

Don Berry, a former associate editor of the Standard, is more hopeful: "There are so many highly educated and highly paid people commuting across London, but only 150,000 copies are sold every day. You would have thought there was a market for a serious, cultured and well-informed publication of some sort. You can charge a lot of money for advertising if you have the right readers. Taking it really upmarket is the only thing that hasn't been tried – I can't think of anything else."

A deal has yet to be signed and there remains much to be worked out. The Standard is well integrated into the slick operation of Associated Newspapers, and extricating it throws up hard questions. The obligations of the pension scheme will be one; the future of the free paper London Lite, which depends on the Standard for much of its content, is another. A closer association with sister operations Metro and Mail Online now seems likely.

How the story of the sale emerged is itself worthy of attention. "The suspicion is the story did not come out by accident," says a Standard insider. Lebedev is a friend of PR guru Matthew Freud, who is married to Rupert Murdoch's daughter, Elisabeth. But it was the Media Guardian that broke the story after a tip-off from someone close to the deal. In its excitement, there was someconfusion on Media Guardian, with Roy Greenslade, the website's chief commentator, saying "we know little about Lebedev". He later retracted that, conceding that of all the Russians in London, Lebedev is one of the better known.

One detail of the story makes absolute sense – that Tatler editor Geordie Greig is to take on a senior role at the Standard as either editor or editor-in-chief. Greig is a close friend of Lebedev, with whom he sits on the board of the Raisa Gorbachev Foundation, a charity in memory of Mikhail Gorbachev's wife.

But Nicholas Coleridge, chairman of Condé Nast, publisher of Tatler, remained tight lipped: "It is early days, considering the Standard hasn't been sold and Geordie hasn't been offered the job let alone resigned from us."

Whatever happens, it is heartening to hear Lebedev say he sees the Standard as "a good way to waste money". A pursuit of profit rarely sits comfortably with good journalism. "This is going to be something that gives him influence," says Wynne-Morgan.

For some staff at the Standard, the arrival of Lebedev and his cheque book is a ray of hope. "If you accept the Mail has now decided to get rid of us," says an insider, "it's fantastic we've got a buyer. The other option we faced was closure, and nobody wanted that."