News International is understood to be preparing to invest as much as £100m in the venture and is currently in negotiations with Railtrack to distribute the paper at railway stations, according to a report in the Sunday Telegraph.
The Railtrack contract is currently held by Metro, but that is due to expire in March and News International is thought to be offering around £4m to secure the contract, far more than that being paid by Associated.
Like Robert Maxwell's London Daily News in the 1980s, the plan is to publish the paper twice daily, with an initial print run of 240,000 in the morning, aimed at Metro readers, and a second 400,000 run in the afternoon, aimed at the capital's paid-for evening paper audience.
It is likely to ignite a bitter war between the two. Maxwell's bid to take on the Evening Standard was thwarted by Associated, which retaliated with a cut-price Evening News. Maxwell lost £50m before he pulled the plug on the London Daily News.
Murdoch has deeper pockets than Maxwell, but what he will not be able to do is win the Metro's key London Underground contract. Associated has signed a long-term contract with the Underground for Metro to be distributed there.
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