Metro International SA, the international newspaper group, announced Thursday it has reached a franchise agreement with Gazeta Metro in Moscow, Trading Markets reported.

Metro International and ESN Group, a Russian investment company, have established a joint venture, which has acquired a stake in Gazeta Metro, the most read free title in Moscow.

Launched in 1997, Gazeta Metro is a partnership between Sistema Group, the Moscow city government, and Moscow Metropolitan, the Moscow subway owner and operator. The publication is distributed in the subway, and has 400,000 daily readers, making it the third most read paper in Moscow, according to Trading Markets.

With the new joint venture, Metro International gets an effective equity interest of 0.81 percent in Gazeta Metro. Other shareholders of this paper include Moscow Metropolitan and the Moscow city government, Trading Markets reported.

Metro International holds an option to acquire additional shares in Gazeta Metro. ESN Group, through a coupled option, has the right to acquire an equity stake in Metro St. Petersburg, a Metro International franchisee since 2005.

Gazeta Metro will be rebranded in 2009 to be in line with the Metro International's global brand image, and will work closely with Metro St. Petersburg, including content sharing and advertising sales packages.

According to ZenithOptimedia, Russia's gross newspaper advertising market increased to US$11 billion in 2007, up 19.1 percent year-over-year, Trading Markets reported.