Amol Rajan, BBC Media Editor writes:
The Evening Standard will post a loss of £10m for the year ending in September 2017, a reversal in fortunes for London's paper that poses a big headache for its owner, Evgeny Lebedev.
The Standard's loss - £9.98m - comes after a recorded profit of £2.2m in the previous year, representing a £12m swing into the red.
The causes of the sharp financial deterioration reflect both long-term, structural changes in the newspaper industry - above all the downward pressure on print display advertising - and specific issues arising in that financial year.
Those exceptional circumstances include a London food festival which was, commercially at least, and allowing for sub-optimal weather, an expensive failure.
The weakness of sterling pushed paper costs up for all newspapers. And the slowdown in London's property market always augurs ill for the Standard, whose Homes & Property supplement is a key driver of revenue.
The Standard also took on costs as a result of the closure in 2016 of its sister title at ESI Media, The Independent, where I was editor of the print edition until it closed in March 2016.
The Standard recently denied allegations that it had sold favourable news coverage to big advertisers.
The losses will inevitably alarm George Osborne, the former chancellor who became editor of the London paper last May.
As the architect of austerity in the Coalition years, he has foes. And as a surprise appointment to the role of editor with virtually no journalistic experience, critics will point to his tenure as an explanation of the losses.
However, pinning the losses on him would betray a certain naivety about the business model of the paper, and timings. Osborne took the editor's chair more than half way through the financial year to which the results pertain.
Moreover, as a free paper the Standard is almost wholly reliant on advertising revenue. It has no cover price. The days when editorial changes could really drive big circulation and cover price growth are long gone - even for those papers that charge readers. For a free paper with fixed distribution, editorial changes don't easily correspond to commercial benefit.
Even if the "nibs" (news in briefs) were full of Pulitzer Prize-winning pieces, it would have limited effect on how many people take the Standard.
The deeper question is whether - in an environment where all ad-funded media businesses, from websites to TV companies, are under huge strain because of the flight of cash to a few big digital beasts - the Standard's business model is viable.
The path to profitability will probably take several years. On the cost side, there's not much room for manoeuvre, as budgets are already tight. One option might be to cut distribution.
On the revenue side, the plan will be the same as at most newspapers: keep print stable and grow digital. And if you can drive revenues through events, membership schemes, and your audience data, all of that is a bonus.
Faith in the future
For the Standard, two acts of faith are required here. The first is that despite the huge pressure on print display advertising, overall revenues from that source do not decline. So far the Standard has managed that, holding revenues steady by growing its share of the national newspaper ad market - despite being a free London newspaper.
On the digital side, while traffic is sharply up and revenues are growing, they are doing so from a small base, and sustaining digital growth could require serious investment that will worsen the P&L in the short term.
Staff can take some reassurance from the fact there is profitability elsewhere in ESI Media.
Not at London Live, the TV station, however, which reduced losses to £2.95m. There is little prospect of it ever flourishing commercially. The local TV market will probably be consolidated - pending regulatory approval - and the question is who fancies the task.
At The Independent, profits have almost doubled to £3.26m. Throughout my near decade at the title, it struggled financially; so to be profitable, growing, and read by nearly five million unique browsers around the world daily is an unfamiliar experience for the publication.
The Independent is looking at launching some kind of premium service, to complement its current offering, this year.
Last year, Lebedev sold a 30% stake in The Independent to Mohamed Abuljadayel, a Saudi investor.
Full disclosure: I worked for Lebedev for six years. I didn't speak to him for this article.
There is no doubt Lebedev is fully committed to ownership of the Standard, which he made free after acquiring it. The free model initially secured a turnaround in fortunes. The paper had forecast losses in the tens of millions, but within a few years was profitable.
The task for Lebedev's team is to apply the lessons of The Independent's digital growth to the Standard. Whether the lessons carry across is debatable.
Much of the Standard's content is London-focused, though it has celebrity pictures with viral potential, and counts around 40% of its audience as overseas. Osborne has international ambitions for the paper, which could give it journalism that can generate a following in key international markets. But that will cost.
Across all media, consolidation is rampant. It is the trend which unites Disney, Fox, Sky, Comcast, AT&T, Time Warner, CBS, Viacom and the Daily Mirror and Daily Express. The UK has plenty of national titles for the size of its population, adding a further reason for consolidation.
Common sense suggests some kind of union between the Standard and Metro, which is part of Lord Rothermere's Daily Mail group (DMGT), could be financially beneficial.
Both are free-to-consumer, ad-funded titles, housed in the same building; and though Osborne would consider his paper more upmarket than Metro, the savings from a joint editorial and commercial operation would be near-immediate, not least in back-office staff, IT and floor space.
For now, however, such a deal is off the table, and it will soon be clear how Lord Rothermere - who sold most of the Standard to Lebedev in 2009 and recently diluted what remained of his stake in it, from 24.9% to 10% - intends to integrate Metro into his company following the departure of Paul Dacre as editor of the Daily Mail.
Few people these days own newspapers because they want to accrue wealth. But print titles still need to be commercially viable. Profitability is the best guarantee of independence. The Standard can be profitable again - but there's no guarantee, and it will be a long slog.