Observer editor's exit prompts Fleet Street rumours

The editor of The Observer used a champagne meeting with staff to announce he was leaving the paper.

Roger Alton told staff he was quitting during a meeting to celebrate a rise in the Sunday paper's readership figures.

But instead Alton, 59, announced he was leaving at the end of the year, saying: "I am not the man to take the paper forward."

His departure has not come as a complete surprise, as there had been talk of a falling-out between the famously foulmouthed but charismatic editor and senior figures at The Observer's sister paper The Guardian.

The Observer has been fiercely independent of the editorial stance taken by The Guardian, particularly with regards to the war in Iraq. Meanwhile, The Guardian has criticised The Observer's coverage of the MMR vaccine.

There are plans to overhaul the newspapers' operation, with both titles set to move to new offices in King's Cross next year and a bid to turn The Observer into more of a multimedia operation.

But despite Mr Alton's recent insistence that he would leave "sooner or later", insiders said nobody expected an announcement this week.

One insider told the Standard: "Everyone was invited up to his offices to celebrate the ABC [readership] figures... Roger then said, 'The Observer has a great future ahead of it, it will a be wonderfully exciting time, but I think probably I'm not the man to lead the paper through the transition'."

One media pundit described the saga as a "tale of Shakespearean jealousy and power". Mr Alton had seen considerable success revamping the title, moving it to the new Berliner-size format and launching award-winning magazine supplements.

Latest readership showed The Observer performed better than any other quality newspaper, with sales of 472,252 - up by 6.7 per cent on the previous month and 3.1 per cent on the year and the title won Newspaper of the Year at this year's British Press Awards.

Nevertheless, The Observer continues to lose money, a fact which is said to have given Mr Alton's rivals, including, reportedly, The Guardian editor Alan Rusbridger, justification to move against him. The move to make the two titles more integrated would have both saved money and stemmed Mr Alton's power.

Mr Alton joined The Observer from The Guardian, where he spent more than 20 years in roles including features editor and assistant editor. He will be succeeded by his deputy John Mulholland, who, insiders claim, will have to defer to Mr Rusbridger.

Today The Scott Trust, which owns The Guardian and The Observer, said Mr Alton had presided over a "period of sustained circulation and innovation".

The big question now is what Mr Alton will do next. Some say Mr Alton, who is 60 in December, is not finished with newspapers yet and that he has been courted to edit various Fleet Street titles.