Kristine Lowe

Metro International: fast becoming the McDonald's of newspaper companies?

Metro International divests Italian operation but enters into franchise agreement to maintain global advertisment reach.

I was going to call his post "Metro International shrinks further", but felt depressed about the prospect of writing yet another gloomy post on newspapers when it struck me that isn't  Metro International just taking one more step towards becoming the McDonald's of media companies? With new franchise agreements in place in the US, Portugal and Ecuador this year, other places last year, the world's largest publisher of free dailies seems to be moving steadily towards a franchise model akin to McDonald's: global brand, local franchises bearing the financial risks.

With the Italian deal, Metro has successfully divested another unprofitable market, as Piet Bakker's excellent blog rightly predicted would soon be announced earlier this week - which might help improve the company's somewhat gloomy financial results. I still think those numbers are far from fantastic, as indicated here, even though Metro's CEO, Per Mikael Jensen did his best to convince me they were during our talk after the company presented its 2nd quarter (Q2) and half year results 20 July.

"A 12 per cent decline in net revenues is a great result! It's a pretty good result compared to a lot of other media companies," he told me, adding that it was down from minus 16-17 per cent in Q1. Of course, Q2 is usually a better quarter than Q1 for media companies, but the main reason for his exuberance was how a substantial amount of the costs dragging down the result (read the key figures here) was restructuring costs:

"We lost 20 million Euros in 2008, but 11 of those were in the US and Spain. When you close down those operations you have to take the cost, but these are one-off costs: they will not come back. This is why we are reasonably optimistic about the future," he said, and pointed out that at least Metro paid people the money they were owed: "We closed down Spain in a mature way, paid all or dues." Yes, that thick sarcasme is all about Nyhedsavisen, and those "crazy Icelandic guys" as Jensen dubbed them, but that's perhaps a topic for another post (parts of the interview with the Metro boss is available in Norwegian here).

However, I was going to write about Metro International and McDonald's. Mind you, not about McJournalism or the McDonaldization of news, in this case I'm much more interested in the business model. Of course, McDonald's does operate some of its own restaurants, especially in the UK. I don't know if these are the most profitable restaurants or are in markets the company knows intimately, but Metro's strategy has certainly been to hold on to core markets where they've managed to turn over a profit and reduce financial losses and risk by entering into franchise agreements and/or joint ventures in so-called non-core markets.  

Now, McDonald's is so often used to describe everything that's wrong in this world that comparing Metro to it makes it sound like I'm slagging the freesheet publisher off, but one thing you can't take away from McDonald's is its global reach and popularity. The guarantee of getting the same diet, though often with local options on the menue, everywhere has proved to have worldwide appeal. Also, it's the kind of low-cost brand which should prosper in the current downturn as more healthy options becomes too expensive for some - which, if the comparison holds true, at least sounds like good news for Metro's shareholders...

Update 01.08: Michael Jennings pointed out on Twitter yesterday that this comparison is far from perfect, I obviously know the media business better than the fast food business. Apparently McDonald's owns the real estate on which most of its franchised restaurants sit, then the franchisee uses their business model to increase property value.

Norwegian press saves money by abandoning all attempts at serious reporting on April Fool's Day

'The financial crisis is forcing media to implement unusual cost cutting measures,' the female leader for the country's journalist union has admitted to The Norwegian Office of Enlightenment after the blog's investigations revealed all yesterday's Norwegian newspaper stories to be April Fool's Day's spoofs (via Sonitus) (in Norwegian).

 "This year, all Norwegian newspapers have joined forces to support this model to save our jobs. These are turbulent times and many fear for their jobs, especially the former horse riding news boys who were retrained as ink stirrers, retrained again as printers, reschooled to be scanners, then retrained as culture editors and now preparing to reschool yet again to become Twitter surveillors," the union boss, quoted under a bogus name, says in what must be my favourite April Fool's Day story this year.

At this stage I should probably admit, that in all my single-mindedness, I was planning to use 1. April to speculate about Metro International's mystery bidder and report that the real reason for Peter Chernin's fallout with Rupert Murdoch was how the latter's insatiable appetite for print led him to court the world's largest freesheet publisher, or that the desperate times on Iceland led the archrivals Jon Asgeir Johannesson and Björgolfur Gudmundsson to join forces, team up with the latter's old Russian business associates, and submit a proposal to buy Metro from 1 krone (roughly 10 pence) under which conditions the new company would take over all liabilities and move the headquarters to St Petersburg where Jon Asgeir had sought exile and Putin had vowed to protect him from his debtors granted Metro would expose the anti-Russian bias of Western Press. The Icelandic deal would mean Frettabladid would become Metro Iceland, and Jon Asgeir was also rumoured to look into launching a new range of Russian supermarkets called Бонус.

Or, or, or...but lost between meetings, the lack of superimposed deadlines and an inability to make up my mind about which scenario to put forward, which might have been good seeing how all of the scenarios I had in my mind would only be bordering on funny if you were intimately familiar with this particular part of the media industry, it never happened.

So, big fail on my account there, which brings me back to the Norwegian Office of Enlightenment's spoof (somehow that name reminds me of the Enlightened Tobacco Company which once produced Death and Death Light, the slower death, cigarettes): great stuff (any awkwardness in the translation is down to me and lack of time as I'm preparing for ... another meeting:-) )

Axel Springer pulls out of race for Rzeczpospolita

No Polish partnership between Mecom and Axel Springer.

After months of speculations the German newspaper giant was vying for both Rzeczpospolita and Mecom Poland, it emerged yesterday that Axel Springer had not submitted a bid for the Polish state's 49 pc stake in Rzeczpospolita - where Mecom is the majority owner.

Czech publisher Respekt Media, who along with Springer was reported to be one of four bidders provided access to undertake due diligence tests, also abstained from submitting a bid, which means only two companies, United Business Entertainment (Zjednoczone Przedsiebiorstwa Rozrywkowe) and Platforma Mediowa Point Group, are still competing for the stake. The Polish Treasury is expected to announce its decision next week according to tvn24.pl (and Google Translate). A source at Axel Springer told Reuters the German group now had no interest in Rzeczpospolita.

Predictably, running a media company together with the Polish government has been a rather troublesome affair for Mecom, as it was for the previous owner Orkla Media. Among other things the former Communist state has accused the company, run by David Montgomery who was renowned for his brutal cost-cutting regime while at The Mirror, of not delivering good enough financial results. As Mecom's recent agreements to sell its German and Western Norwegian divisions are not enough in their own right to solve the  company's covenant issues, many have wagered that its Polish arm, made up of Media Regionale and the 51pc stake in Rzeczpospolita, will go next.

However, despite Montgomery pledging long term commitment to what's left of its Norwegian arm, Edda Media, when talking to employee representatives in Oslo early this month, industry sources keep telling us Mecom is actively pursuing further sales in Norway. Now, not long ago, when Norwegian media was abuzz with speculations about A-pressen or others acquiring Edda, a newswire reporter asserted all leaks media had received during this... eh... courtship had been from the prospective buyers, and, obviously, all parties have their agendas. In short, for those who emailed me asking about that Oslo meeting: I suggested upfront, based on previous such meetings, it would be interesting and confrontational - I was wrong about confrontational, both sides denied it had been, but it was certainly interesting....

Update 21-03/09, 11:50 CET: do check Krzysztof Urbanowicz' post which contains additional information and analysis, here with Google Translate if your Polish is as bad as mine.

Ex-Mecom bosses condemn Norwegian sale, while the divested operations vow not to become Redneck papers

"This is yet another sad chapter in Mecom's short and tragic history as a media owner in Norway and other countries," Kjell Johnsen, the former CEO of Mecom's Norwegian division, Edda Media, told Dagens Naeringsliv.

Johnsen breaks his silence
His comments in the wake of yesterday's disposal of Edda's North-Western operations, is a departure from his usual reluctance to comment on his former employer's dealings, a reluctance he has maintained since leaving Mecom in protest against David Montgomery in 2007.

However, speaking to Dagens Naeringsliv, he asserted that buying media operations in Norway and other countries at the top of the business cycle, paying a premium price with borrowed money, as Mecom has done, was a recipe for disaster.

Disappointed ex-CEO
"It is sad to see Edda Media being dismantled," Jan Moberg, who resigned just after Mecom's German deal at the start of this year, told the paper. Moberg was relieved of his administrative duties as CEO of Edda Media in October 2008 "in order to focus on new ownership solutions" for Edda, and it was rumoured it was his opposition to breaking up the Norwegian media group that spurred his resignation.

Moberg and Montgomery in happier times (photo copyrighted to and courtesy of Martin H. Jensen), edits by me

From Mecom's point of view, yesterday's deal with Polaris Media should help the ailing media group meet its debt covenant test this month, and also puts an end to speculations that Norwegian media group A-pressen was poised to take over Mecom's entire Norwegian division, which is the most profitable divison in the pan-European company.

No moustaches
Meanwhile, my favourite take on yesterday's news was Sunnmørsposten's management vehemently denying that being acquired by Polaris would turn the paper into a "Trønder" newspaper - which I, for lack of a better word, has translated to "Redneck newspaper" (have a look at this photo of a typical "Trønder" and see if you think my translation fits the bill).

Polaris, which submitted an indcative bid for Mecom's North-Western divison as early as 29 September 2008, has its power centre in Trondheim in "middle Norway" (still far north if you look at the map, much further north than I've ever been).

The region is associated with a typical "redneck" look, a prominent part of which is a moustache. Hence, Sunnmørsposten's fabulous illustration photo of yesterday, indicating that Polaris' takeover won't lead to moustaches coming into fashion among its management. For pictures of Mecom-boss David Montgomery visiting the North-Western newspapers he's now agreed to sell, check the links in the last paragraph here.

As a quick search doesn't turn up any photos on Flickr of a typical "Trønder" with a Creative Commons lincense, here's a moustache man from deneyterrio:

Now, as soon as the news of Mecom's latest divestment hit the wires yesterday, I got an email from a long-time reader who suggested I take a look at the story, "When you're ready with the snowstorm" (alluding to my dateline).

Well, it's still snowing heavily where I am, and I'm afraid I had my head down in another project yesterday, hence the delay, but since I've followed this company so closely for such a long time I can always add more context and colour than the wires...;-)

On Mecom's board room revolt, the German deal and new disposals

Didn't I just say there were no boring days with this company? Two days after that comment six of the company's directors resign after a failed coup to oust Mecom-boss David Montgomery.

It's good to see Rob back in the comment section copying me in on the news, he's copied me in on some really interesting links in the past, but on this account I must admit I just failed to address the drama due to lack of time. Now, my colleague Martin provides some really interesting background on the boardroom mutiny attempt and how it came about here (in Norwegian).

According to the sources Martin talked to, the failure to sell Edda Media, Mecom's Norwegian division this summer, before the price offers were reduced, was one of several concerns which led up to the the boardroom revolt.

Now I'll be the first to admit there are internal dynamics at play here that I'm not qualified to opine on, but as one who's followed the company closely I do think selling Mecom's German arm rather than the Norwegian one is a good move.

If I were to put on my business developer/analyst hat I'd say it's the best bet on the future Mecom could make: due in part to the macroeconomic outlook for Germany vs. Norway, but also because how far ahead the Norwegian newspapers are in terms of online develoment - a fact that Montgomery himself was keen to point out to me.

As the most profitable division in Mecom Edda Media might have fetched a better price if sold last summer - to take one of the courtiers: A-pressen reduced it's offer with roughly one billion NOK since then - but we can only speculate if that was due to the worsening financial outlook, completing the due diligence tests or both.

However, the Norwegian business generates a good cashflow and is much better poised to deal with the downturn and to be a player in the future media landscape than the German which would have needed a lot of investment in order to embrace all the advantages online (and there is no getting around doing that if newspapers want to stay competitive the current market).    

Also, the fact that Mecom failed to make more of its German business - e.g. by making Netzeitung its online operation and taking advantage of the expertise of this site, the first standalone news site in the country, as Olav Anders has pointed out on several occasions - suggests to me that Mecom's German management was not up to the job.

Mind you, this conclusion is also supported by some of Joseph Depenbrock's statements - such as this one about not needing the trust of his employees  (see esp. this link) - and my many talks with employee and union reps. These will always have their own agenda, but it was kind of telling when an employee representative sugggested to me that Depenbrock might have achieved better results if he'd emphasised the benefits of a more effective organisation and of new online possibilities rather than cost-cuts and negative aspects.  

As for what disposal Mecom should make next, more disposals are needed to reduce the debt level, I'm wondering if the company's stake in Rzeczpospolita is not more trouble than it is worth. The Polish state has been discontent with how the British media group has run the ship, especially with not turning over a better profit (oh, the ironies here) and Truls Velgaard, Mecom's Polish CEO threatened with legal action based on this conflict - though local union reps have told me they think this is a political conflict and that they were happy with Velgaard as a boss.

So it will be interesting to see what happens when the Polish state announces what it wants to do with its stake in the company that owns Rzeczpospolita later this week. Several parties have announced their interest. Mecom has also been in talks to divest some of its Dutch operations, and then there's of course Polaris Media's bid for Edda Media's papers in Western Norway, worth roughly 600m NOK, to keep an eye on.

If you're following this story, I'd love to hear what you think about recent developments and the road ahead (however, I'm in London 'til Wednesday morning, and if I'm slow to reply it's because my internet access will be limited while here).  

Top Mecom executive resigns after German deal

Just as Mecom finally put up the official statement about its German disposal yesterday, news broke that the man in charge of finding a new ownership solution for its Norwegian division, Edda Media, had resigned.

There are no boring days with this company: as someone who's followed Mecom from its early days I can tell you it's been a colourful tale from day one, a fact I guess Europe's media hacks should be grateful for - though they've often failed to take advantage of it.

No sooner was the German deal done and dusted, when it was announced Jan Moberg, who was relieved of his administrative duties as CEO of Edda Media "in order to focus on new ownership solutions" for Edda in October 2008, was to step down. Union representatives blamed friction between Moberg and Truls Velgaard, the CEO of Mecom Poland, who was brought in to take over running Edda, and said the former had been a good manager who would be sorely missed. Media site Kampanje claimed there had been disagreement between Mecom-boss David Montgomery and Moberg about selling parts of Edda Media, but Moberg declined to comment.


Jan Moberg (left) and David Montgomery (photo copyrighted to, and courtesy of, Martin H. Jensen, edits by me. I believe it was snapped after this most intriguing debate)

The British media company's Norwegian division has attracted indicative bids from rival newspaper companies A-pressen and Berner Gruppen, as well as one for its news operations in Western Norway from Polaris Media, but employee representatives have said they think the German deal makes it less likely the local newspaper group, the best performing among the Mecom divisions, will be sold.


Montgomery pictured here reading Edda newspaper Drammens Tidende (DT), where both Moberg and yours truly have served as editorial columnists - both before Mecom acquired it, but not at the same time (copyrights: same as above photo).

Moberg does not have a new job lined up, but the media executive has a parallel career as a playwright. He is best known to Norwegian children as the author of "The Christmas Scoundrel" (not to be confused with Scrooge, though both do their best to put a damper on the festive season), and if working for Mecom has been as colourful as the saga of its rapid expansion, and now contraction, has appeared to the outsider, perhaps we can look forward to a few inspired new plays in the years to come?

 

DuMont Schauberg to the rescue of German Mecom employees

"Mecom is poised to sell its German newspapers for €165 million (£148 million)... If the talks conclude as anticipated, an announcement could come as soon as today, reports The Times."

Well, yes, that would be the announcement everyone who's following the company closely has been waiting for all day. Update on the negotiations delaying the deal here (10 Jan, in German), on the final price here (12 Jan). Updates added 13 Jan 09:00 CET.

In the meantime, why not indulge in a bit of background for amusement: we can of course only speculate at this stage whether or not it is exactly the white knight Berliner Zeitung employees had in mind when they advertised for a new publisher to save them from Mecom last summer, but at least M. DuMont Schauberg (MDS), Germany's fourth largest newspaper publisher, the country's third largest if the deal goes through, is of the right nationality.

The strong synergies between MDS' Frankfurter Rundschau and Berliner Zeitung, the most prestigious of the assests MDS will acquire when it takes over Mecom's German division, might result in job losses and make the deal taste somewhat bitter-sweet to some of those being acquired, but under current circumstances, I think it's a good deal for all parties (I'll return with more on why, apart from the obvious benefits, later).

As the deal currently stands, no redundancies are on the table, but further down the road it might be an attractive opportunity for MDS to "consolidate" its operations into bigger, more cost-effective units.

A price tag of 165m Euro for Hamburger Morgenpost and Berliner Verlag would have come close to equalling what Mecom paid for the latter company three years ago, 152 Euro is even less. Still, in the current bear market, where it's hard to raise money and several market insiders were starting to wonder if Mecom's suitors had not decided to pull out and wait for David Montgomery's investment vehicle to go bankrupt so they could pick up the pieces for a bargain, it's not too bad and, with a few more new disposals, it should help buy Mecom the time it needs to get its house in order.  

In an ironic twist, the current editor-in-chief of Frankfurter Rundschau is Uwe Vorkötter, who two years ago left the job as editor-in-chief of Berliner Zeitung in protest over Montgomery's and Mecom's cost saving measueres. According to a colleague on the scene, German newspapers, including Taz, speculate that Vorkötter will get a key role in the merged company.

Meanwhile, employee representatives in Mecom's Norway division, Edda Media, have said they're disappointed by the recent turn of events, as it makes it less likely that the British media group will sell it's Norwegian arm any time soon, and it is rumoured Mecom journalists in Germany are holding their breaths in case it should be decided in the last minute that Hamburger Morgenpost won't be part of the deal.

Mecom: no quick fix for Edda Media divestment

Mecom's management is aiming for a resolution for Edda Media before Christmas or New Year, according to employee representatives who spoke with Mecom-boss David Montgomery in Amsterdam today.

"We have received an update: it did not contribute to clarify the situation. Various alternatives are being explored further with the aim of reaching a conclusion before Christmas or New Year," an employee representative told Journalisten.no, expressing doubts that we'd see a resolution before 2009. Apart from selling Edda Media, other options that have been/are being explored: selling Mecom's stake in Rzeczpospolita to Alex Springer; selling a newspaper and a few printing operations in The Netherlands and inviting Mecom investors to invest more money.

Mecom: no news is bad news

All quiet from the Mecom camp, should there not be an RNS due today to clarify the situation??

The sentiment is taken from this share discussion for Mecom Grp (MEC.L) where commenters, presumbaly shareholders, are getting desperate for an update from Mecom on what's happening. So 'desperate' they turned to Google-translating Norwegian news articles, such as Journalisten's, yesterday, to find out what happened at yesterday's board meeting.

As I mentioned in the last update on my post from yesterday: it seems not much happened in regard to Edda Media, and Truls Velgaard, the current day-to-day boss of the Norwegian newspaper group, who attended the boardmeeting, later told employee reps that no decision was made about Edda's ownership structure. If you haven't followed the bidding process for Edda and that wording sounds less than straightforward, it's not: Mecom has actively explored ways of entering into a bigger parnertship or coalition in Norway, thereby increasing its assets, either in cash or holdings, while still retaining a stake in its Norwegian operation.

Update 15:54 CET: Employee representatives in Edda Media hope to get some answers from the management in a scheduled meeting in Amsterdam tomorrow, though Edda's future is not on the agenda. There's frustration among employee and union reps, some of whom desperately wanted a new owner for Christmas.

One commenter on the aforementioned chat board asked why Norwegian employees were so eager to leave Mecom. The short answer is that they were never eager to join. In some respects, this whole situation is a re-run of the drawn out process leading up to Orkla selling to Mecom in 2006: ironically, apart from Orkla, even the players are the same - A-pressen and Dagbladet's owners (Berner Gruppen) are the strongest prospective buyers now and were Mecom's strongest competitors back then.

Mecom expected to decide on sale of Norwegian division today

It is believed Mecom, the pan-European newspaper company led by former Mirror-boss David Montgomery, will conclude the drawn out bidding process for its Norwegian arm, Edda Media, in a board meeting today.

Rumours that moves were afoot to try to bring Edda Media, the Norwegian arm of Orkla Media, acquired by Mecom in 2006, back on Norwegian hands, have circulated in the country's media all year. In the last few weeks, it has become evident that the courting phase is drawing to an end, and Mecom's board may decide to enter into more formal sales negotiations with one of the interested parties. As reported a colleague of mine at Journalisten.no, A-pressen, the local newspaper group owned by Norway's Labour Union and Telenor, will conclude its due diligence process today, and Mecom's board is also expected to meet in London today.

Of the parties still vying for Edda, A-pressen is said to have offered roughly 2,3 - 2,5bn NOK for the entire group, Berner Gruppen, owners of Norwegian tabloid Dagbladet, a bit less, and Polaris Media about 600m NOK for Edda's North-western division. All parties are reported to have had access to a data room at Mecom's Norwegian lawyer, Thommessen, to scrutinize the financial health of the group mainly comprised of local and regional papers.

It has also been speculated that Polaris Media may team up with Berner Gruppen to submit a joint bid. Now, I guess an apology is due: I know many Mecom journalists and other Mecom followers read my blog as it has been, to my best knowledge, the only English news source consistently covering the company since the spring of 2006. However, I've refrained from blogging about it for some time, as it seemed pointless to repeat all the rumours circulating in Norwegian press this year.

And while we are on the issue of rumours: it has been put forward that the Alex Springer group may want to buy Mecom as a whole, a rumour vehemently denied by a spokesperson for the German group; and, alternatively, that they are keen to buy Mecom's stake in Rzeczpospolita, a rumour not so vehemently denied, but Truls Velgaard, the British company's Polish CEO who's recently taken over the day-to-day running of Edda Media, told me this was just loose speculations:

"There are no corresponding process in Poland to that taking place in Norway; Poland is not specifically defined as a sales object. The bidding process is furthest advances and most concrete in Norway. Mecom will consider selling certain other parts of its business, but not entire country divisions," he said.

In either case, divesting its Norwegian division may provide a welcome influx of cash for the highly geared pan-European media group, which has seen its share price plummet on the back of the financial crisis.

However, should Mecom decide to sell Edda to A-pressen, we can look forward to several new chapters in this colourful newspaper saga, as Norwegian media cross-ownership laws will demand high-level political negotiations for the acquisition to be approved.

Update 15:44 CET: its seems Mecom's board meeting is dragging out (link in Norwegian), the board is said to be discussing both the budget for 2009 and possible divestments, and could last until after LSE stops trading for the day.

Update 21:30 CET: looks like Norwegian journalists, both those employed by Edda and writing about the company, were waiting in vain for big news from London today: Velgaard, who attended today's board meeting, told employee representatives no decision on Edda was reached.

Montgomery may have to prepare for more talks with Norway's culture minister, Trond Giske (pictured here pouring the coffee) if Mecom's board opts for A-pressen's Edda bid.

(Photo courtesy of, and copyrighted to, my colleague Martin H. Jensen, who has allowed me to use it here for a beer)

Behind the spin of Mecom’s half-year results

Even former Mirror boss David Montgomery, who has a reputation as a ferocious cost-cutter, admits his new pan-European newspaper group Mecom cannot cost-cut its way out of a recession.

Shares in the company tumbled on the London Stock Exchange last week after the newspaper group failed to impress the market with its interim half-year results...

...As widely reported, this does of course mean employees at the company, already disgruntled about redundancies on the table, will have to prepare for an even tighter ship in times ahead. But there is more to this story, much more (we've been writing about that 'sharp and ready axe' for more than two years now, it would be rather sad if there was nothing more to report).... Full story over at journalism.co.uk

Montgomery: "No concrete bid" for Mecom's Norwegian arm

Mecom-boss David Montgomery has denied a concrete offer for Edda Media has been put forward, and said the British company's board has no intention of selling the Norwegian newspaper group.

The former Mirror-boss turned European media mogul was visiting his newspapers in north-west Norway at the start of the week and Tuesday told Sunnmörsposten, that Edda Media is currently not for sale.

 

Two weeks ago, reports by Reuters, Guardian and FT that Mecom had received an offer for its Norwegian business had Norwegian media hacks scratching their heads and speculating wildly. Rumours that moves were afoot to bring Edda back on Norwegian hands had been circulating for quite some time, both in the newspaper columns and on the grapevine, but news of a concrete offer took the country's media industry by surprise. 

 

Speaking to Sunnmörsposten, Montgomery said Mecom had been approached by parties interested in acquiring its Norwegian assets. 'However, no concrete bid has been made, and this would have had to be reported to the London Stock Exchange before it could be confirmed,' he told the newspaper. He said the rumours of a possible Edda-sale came about after Mecom and the Edda management were looking into a flotation earlier this year, an option that is no longer being considered.

 

While in Norway, the Mecom-boss paid visits to Sunnmörsposten, Aandalsnes Avis and Romsdals Budstikke, all of which made a lot of Montgomery's comments about how some of the scenery he saw reminded him of his native Northern-Ireland, but was even more spectacular (check the links to the newspapers for pictures from the visit). 

SchiMetro International, Metro Minutos and all that jazz

"Did the Norwegians celebrate 17 May by closing the Swedish fool's project Punkt SE? Well, at least the announcement of the closure came on the first working day after Norway's national day, even though the decision had been on the table for a few weeks," wrote Rolf van der Brink in Dagens Media (my translation) in one of several harsh reactions to yesterday's news that Schibsted was buying into Metro International's Swedish freesheet operation and closing its own free paper there, Punkt SE, with immediate effect.

The announcement came as no surprise to the region's media commentators, I've certainly covered the rumours of a courtship between the two media giants on several occasions - like here. What came as more of a surprise was that Schibsted's and Metro's new partnership will be so limited, many investors were hoping for a full-scale wedding, which of course begs the question: what next?

Neither of the two parties refused to rule out that this could be the first, tentative beginning of a full-fledged relationship - that we could see the two freesheet publishers strike similar deals in the other markets where they are head-to-head such as France and Spain. But both parties also emphasised that no such deals were currently on the table.

"We are now entering a freesheet 2.0" phase," said Metro's CEO, Per Mikael Jensen when I interviewed him about the freesheet giant's ongoing strategic review recently, and indicated that this phase would be characterised by consolidation and online expansion (parts of that interview is here). In an interview with Journalisten.dk (in Danish) yesterday, Jensen again promised that new deals were forthcoming.

The world seen from Metro's headquarters, to my best
knowledge the last newspaper company in Fleet Street

Martin Jönsson sums up the situation, and the stakes involved, eloquently for Svenska Dagbladet (freely translated):

In an analysis of the deal, Citigroup concludes that the analysts got what they wanted – at least half way – and that the effect will be remarkably positive. But ideally they would like Metro and Schibsted to go all the way and merge the two companies.

Will it happen?... The business relationship between the two media giants has been about as complex as the average episode of the hospital soap Grey's Anatomy. They have flirted and dated for years, and they have had affairs with others (like Metro's advertisement partnership with GP/Stampen) and lived a hard single life (Punkt SE)... only now was the timing right for a more serious relationship.

The explanation is, slightly cynically put, that they are both equally desperate... Metro... still needs a more stable foundation in order to grab a bigger share of the national advertisement market and expand online. Schibsted, on the other hand, had to find a quick way to end the escalating losses at Punkt SE without loosing its presence in the Swedish freesheet market entirely

But free has certainly been pricy for the Norwegian newspaper giant, writes Daniel Sandström in Sydsvenskan, and there's probably not much comfort in looking back of the kind of battle cries the company's admirals so confidently spouted when Punkt SE launched in 2006....

Fined for flirting with Gates

Without doubt my favourite headline last week, but the story behind it was probably not a big hit in the headquarters of Fast Search and Transfer who was served a hefty fine of roughly £100,000 (NOK 1.110.220 kroner) for not informing Oslo Stock Exchange (OSE) about Microsoft's bid for the company.

According to OSE, Fast should have disclosed that it was being courted by the IT-Giant by 7 November 2007 at the latest, when the sales negotiations were formalised with a Non-Disclosure Agreement (NDA).

However, that Microsoft was in the process of acquiring Fast, clearly price sensitive information according to OSE, was not made public until 8 January 2008. Hence the fine, and the headline – which strictly speaking I guess should have been "Fined for flirting with Ballmer." After the acquisition of Fast was completed on Friday, Microsoft's CEO paid a secret visit to Oslo on Saturday to reassure Fast's employees about their future roles in the company. He was greeted by Digi.no and Anders Brenna, who recorded the visit for posterity here.

Detail from picture by Anders Brenna.

Of course, the headline isn't all that great from a SEO-point of view, but that's another matter...

Südwestdeutsche Medien Holding wins bid for Germany's bestselling broadsheet

Südwestdeutsche Medien Holding (SWMH) has secured an additional 62,5 per cent stake in Süddeutscher Verlag, the Stuttgart group that publishes Süddeutsche Zeitung, Germany's largest daily broadsheet. The group, which is Germany's third largest publisher of daily newspapers, already controls 18,73 per cent of the shares in the company (via Spiegel/Reuters).

The acquisition, due to be completed 29 February 2008, puts an end to months of speculations about the German publisher's future: pan-European media company Mecom and private equity firms Apax, 3i and Providence were all rumoured to have lined up bids (The Australian via Iann). It is also a setback for Mecom-boss Montgomery's ambitions to become the third largest newspaper publisher in Germany.

Mecom's Wegener acquisition a done deal

Mecom has declared its offer for Dutch newspaper group Wegener unconditional after the Dutch competition authorities (NMa) yesterday approved the acquisition, subject to certain conditions. Mecom had amassed 86,6 per cent of the shares at the end of the tender period 19 October, with Government of Owners (GO) still refusing to sell its 13,4 per cent stake in Wegener. However, Mecom-boss David Montgomery has decided not to declare a subsequent tender period.

The acquisition will make Mecom a larger newspaper business than Britain's Trinity Mirror and Norway's Schibsted.

TV4 buys political blog of journalist ousted in hacking scandal

Sweden's biggest commercial TV-channel is acquiring politikerbloggen.se for 1m SEK (about £75,000) (via Dagens Media).

The blog was set up by Niklas Svensson after he was ousted from Swedish tabloid Expressen in the aftermath last year's 'hacking-scandal'. Svensson lost his job when it was revealed he had failed to inform his superiors of how a source had given him log-in details for the governing party's intranet, log-in details Svensson insisted he'd never used for a story. He was later fined for data trespass by a Swedish court.

But, the former political reporter immediately set up politikerbloggen.se, and went on to blog his way back on the national agenda with many a great political scoop. Back when the blog launched, it reminded me a bit about the UK's Guido Fawkes, but it has now grown into what looks like a fully-fledged news, or rather niche news, site. The site even attracts good advertisement money according to Hans Kullin, who has more details on Politikerbloggen's scoops, ad revenue and visitors.

Not so fast, Mr Montgomery

Governance of Owners (GO) is attempting to throw a spanner in the works for former Mirror-boss David Montgomery's rapidly expanding newspaper empire (via NA24 Propaganda).

The British fund has adviced Dutch newspaper group Wegener, of which GO owns 13.3 pc, to reject Mecom's bid.

Wegener's improved financial outlook
In a statement GO said: "GO believes that this offer does not reflect the true value of Wegener and leaves Mecom with all the benefits from acquiring this improving, high-quality Dutch business...

Governance for Owners is not convinced that Mecom is the right partner for Wegener at this stage of its development. As a long term shareholder, we wish to encourage Wegener’s management to explore alternative growth options.”

Last month, just before Mecom made its formal bid, Wegener group published substantially improved financial results for the first six months of 2007. Net profit was EUR 23.8 million, compared with a net loss of EUR 4.6 million in the 2006 first half. Cash earnings, which consist of the net result before exceptional items and after deduction of the preference dividend to be paid, came to EUR 19.2 million, up from EUR 8.6 million in 2006.

The making of a media giant
In less than two years, Mecom has scooped up Orkla Media, Limburg Group, 75 pc of Berliner Verlag and 30 pc of Wegener group, amassing a pan-European portfolio consisting primarily of regional and local newspapers. Acquiring all the outstanding shares in Wegener would make Mecom a larger newspaper business than Britain's Trinity Mirror and Norway's Schibsted.

However, in every country Mecom has acquired newspapers, the company has been met with fear, apprehension and loud protests from the country's journalists, editors and politicians.

Fearful hacks and decision makers
Dutch journalists have told me how they fear Mecom's Dutch adventures will be a repeat of Apax's shortlived ownership of PCM, which left the formerly well-heeled company in a poor financial state. Norway's culture minister has told me, and anybody else who would listen, of his concerns that Mecom's high demands on company contributions could weaken the newspaper product, undermine media diversity, and ultimately threaten local democracy.

On the other hand, Montgomery himself has stated again and again that Mecom is in the business for the long haul, a prospect which didn't seem to go down too well with Norwegian journalists last time I saw him repeat it in front of a big group of them.

But outside the corridors of power...
Readers I have talked to haven't been anywhere near as worried about the the prospect of foreign newspaper ownership, some have even welcomed a change from business as usual, but I won't pretend to have conducted anywhere near a conclusive survey - it may even be that those I have talked to, mostly well educated and well travelled, are less than representative.

Still, to paraphrase Roy Greenslade's words in the wake of Murdoch's successful acquisition of Wall Street Journal, until now, it seems Montgomery has been able to "rely on the fact - and it is a fact that media folk find it difficult to comprehend - that almost all his critics are journalists, closely followed by politicians. The public, and that includes the business community, are neutral."

(Disclosure: NA24 Propaganda is one of my regular employers)

Mecom + Wegener: it's formal

Mecom, the investment vehicle of former Mirror boss David Montgomery, has finally submitted a formal bid for Dutch regional newspaper group Wegener.

The British media group announced its takeover plans early May, but the deadline for submitting a formal bid in accordance with Dutch law had to be extended thrice to allow time for the UK Listings Authority to approve the prospect.

Mecom offers €17,10 per share in cash, a price that values the Dutch group at €794m. Alternatively, Wegener shareholders can exchange one share for 14.287 shares in the share capital of Mecom Group plc. The tender period commences on 29 August 2007 at 09:00 hours, Amsterdam time, and ends on 4 October 2007 at 15:00 hours, Amsterdam time.

The combined group will create a leading pan-European regional newspaper publisher with combined pro-forma 2006 sales of €2.0bn and pro-forma 2006 EBITDA of €197.9m (via nu.nl)

No French luck for Mecom

The highest bid was not enough to persuade the Lagardère and Le Monde groups to sell their regional newspapers to Mecom.

Lagardère Group announced on Monday that it had sold its regional dailies in Southern France to Groupe Hersant Média for €160m. Le Monde Group is suspected to follow suit and sell les Journaux du Midi for €100m, reports Observatoiredesmedias.

Mecom had offered €300m for Le Monde and Lagardère's regional newspapers, but said at an early stage they expected the bid to be rejected.

"Rather than to use a part of the 40 additional millions to convince the employees to accept Mecom's offer, Lagardère chose the easiest way by yielding her titles to Groupe Hersant Média, the least alarming candidate, but also least prepared... This transaction confirms the original financial strategy of French media, which often prefer to be seen like extensions of family empires rather than centres of profit," writes Nicolas Kayser-Bril over at Observatoiredesmedias.

In his opinion, these newspapers need a serious revival plan to turn around meager financial results.

According to a press release, The Lagardère Group’s regional daily press arm in southern France generated revenues of €222m and recurring operating income of €3m in the year ended December 31, 2006.

'With the sale of La Provence, Nice Matin, Var Matin, Corse Matin and free daily Marseille Plus, Lagardère pulls out of newspapers alltogether. Threats of strikes at Nice Matin were meant to prevent the sale to Mecom,' reports Piet Bakker.

The blog buzz, like here, here and here, around the sales negotiations suggests there was massive oppostion to Mecom's bid, in part based on fear that David Montgomery's British Investment vechicle was only looking for short-term profit.