London's Evening Standard, backed by the family of Russian oligarch Alexander Lebedev, won a London television franchise on Monday, beating four other bidders with a package offering live news from the paper's West London offices.
Britain's telecoms regulator is offering 21 licences for local digital TV stations, most covering single cities. The London franchise, which offers an audience of up to four million people, is potentially the most lucrative.
Evgeny Lebedev, Alexander's son and the chairman of the Evening Standard, tweeted that he was determined the group's winning bid would "change London for good."
His father's links with London date back to his days as a KGB officer based in the city in the late eighties. He made a fortune in banking after returning to Russia, where he owns assets ranging from newspapers to airline stakes.
Mr. Lebedev bought the Evening Standard in 2009 with Evgeny, who oversees the family's British newspaper assets.
Andrew Mullins, managing director of the Evening Standard and Independent titles, said it was going to be "incredibly tough" to make money from local TV, where audiences are a fraction of those obtained by national channels.
But he said the company's news gathering and commercial operations gave it a better chance than others.
"It will take three to four years to turn a positive contribution," he said in an interview on Monday.
"But within the position of our other brands it could be significant, because the Standard is making a very small profit at the moment and the Independent is losing money."
The Evening Standard, a free title picked up by Londoners as they head home, will promote the service through TV listings, articles and possibly advertising tie-ins.
ESTV (Evening Standard Television) would have a campaigning and topical tone with a lot of viewer engagement, said Mr. Mullins.
"Clearly local TV cannot have huge budgets and big names behind it. It has got to be very frugal and sensible about how it spends its money," he said.
Advertising could be packaged with its print titles and digital products, he said. "We think that's the most lucrative thing, for people who want to reach Londoners and engage with Londoners."
After delays to the franchise award, Mr. Mullens said the channel would not realistically begin before early 2104.
It expects to be launch initially over the Internet and then by digital broadcasting, with a slot on the Freeview free-to-air platform. It also aims to broadcast on the Virgin cable network and Sky satellite TV platform, as well as mobile devices.
Alexander Lebedev was charged in September with hooliganism after he threw punches during a Russian TV chat show in 2011. He has said a forthcoming trial is a political witch hunt.