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Johnston Press in talks to buy Independent's budget sister title

* Johnston says in late-stage talks

* Says price for Independent's i newspaper likely to be 24 mln stg

* Deal would create Britain's fourth-largest print publisher (Adds detail, analyst comment, share price)

By Rahul B and Esha Vaish

Feb 11 (Reuters) - Britain's Johnston Press (Berlin: JPR1.BE - news) is in advanced talks to buy Britain's "i" newspaper from its Russian owners in a deal that could cast doubt over the future of sister paper The Independent at a time of falling circulation for print media.

Johnston, publisher of The Scotsman newspaper, said on Thursday that it is in late-stage discussions with Independent Print Ltd over a 24 million pound ($35 million) deal for the budget tabloid that currently shares content with its stablemate.

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The newspaper industry has been hammered in recent years as advertisers have followed readers to online platforms, forcing print publishers such as Trinity Mirror (LSE: TNI.L - news) and Daily Mail and General Trust to cut costs drastically.

Reporting its fifth consecutive decline in full-year revenue, Edinburgh-based Johnston said in January that it would consider selling brands it does not consider part of its long-term future. The company publishes more than 200 titles.

Alex DeGroote, an analyst at stockbroking firm Peel Hunt, described the proposed acquisition as a very bold strategic move by Johnston because it appears to contradict the company's push towards digital growth, adding that it would also raise questions over The Independent's future as a standalone title.

"It's in a tricky place now ... there must be some shared journalism between the Independent and i," DeGroote said. "(and) it seems clear that Johnston is not interested in both titles."

TARGETING ADVERTISING UPLIFT

The deal would create the UK's fourth-largest print publisher, Johnston said, with circulation of more than 600,000 paid copies a day and a bigger share of the national advertising market.

The company said that it expects i's growing circulation revenue to present new opportunities, with a proposed digital product also an option. Johnston expects the acquisition to add to its earnings immediately.

Launched in 2010, i sold 274,000 daily copies on average in November, according to circulation auditors ABC (KOSDAQ: FED642.KQ - news) . That is nearly five times as many copies as the Independent, which sells for four times as much per copy as the 40 pence charged by its sister title.

The success of i has prompted rival publishers to consider launching similar cut-price newspapers to appeal to readers who for decades have been losing the habit of paying for established titles.

The Independent's average daily circulation fell to only 56,000 in November from a peak of more than 400,000 in 1989.

Independent Print is controlled by the family of Russian oligarch Alexander Lebedev, whose ESI Media confirmed by email that it is in talks with Johnston regarding the sale of i, but that no decision had been made.

The Telegraph first reported on Wednesday that talks were taking place. (http://bit.ly/1Pmd644)

Johnston's shares were down nearly 1 percent at 39.50 pence at 1250 GMT. ($1 = 0.6916 pounds) (Additional reporting by Paul Sandle in London; Editing by David Goodman and Robin Paxton)