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.

A-pressen pulls out of 'Kreml-newspaper'

Last month Norwegian media group A-pressen was heavily criticised for indirectly supporting Putin via its involvement in Russia. Now it seems A-pressen - a group owned by the Labour Union, the partly state-owned Telenor and free speech charity Fritt Ord - will sell its 25 per cent stake in Russia's biggest-selling tabloid newspaper, Komsomolskaya Pravda, to, well, eh... a company it is rumoured will pass the shares on to a friend of Putin.

The Moscow Times reports that "analysts say the Kremlin is especially eager to bring major media outlets under its control ahead of presidential elections in 2008, when Putin is constitutionally required to step down after two terms in office."

Not that Komsomolskaya Pravda is renowned to take a critical stance against Putin under its current owners. Quite the contrary, which was why A-pressen got so much flack for its involvement with it in the first place.

More here from Kommersant, Undercurrent and NA24 (I am, by the way, currently working in-house for the latter, or its media section rather, hence the lack of daytime blogging here).

Mediabistro takeover

Here's another interesting acquisition, good thing I'm not the only one to be working through the holidays: Jupitermedia buys Mediabistro for $23m. Can't say I agree with the headline for this article though: 'Website for jobseekers sold'. Mediabistro is much more than that, a valuable network for freelancers prodviding resources, advice and training: a network that sprung out of Laurel's experience of how isolated the life of a freelancer can get. And yes, I'm a member and have found it quite useful over the years: not so much because of the parties and job listings, but because of other resources like training, advice on pitching different publications etc.

Mecom closer to securing Dutch deal

Meanwhile, and yes, have to stop this journalistic obsession with M&As soon, Mecom edged one step closer to acquiring Wegener yesterday, when the Dutch Financial Authorities granted the British newspaper group an exemption from the requirement to submit a formal bid within six weeks of announcing ït. The new extended deadline, 17 August, is expected to allow time for the UK listings authority to approve the prospect.

Update 17/08/2007: the deadline has been postponed to 28 August to allow more time for the UK Listings Authority to consider the prospect.

Montgomery sets his sights on France

Yet again, we hear tidings that former Mirror-boss, David Montgomery, continues his march across Euorpe. This time the tidings come from France, where his investment vehicle, Mecom, apparently is embroiled in a bidding war with the French Hersant Media Group (GHM) for a number of French regional papers owned by the Le Monde- and Lagardere groups.

I first saw this story surface in Le Figaro on Monday. The paper reported that Mecom was raising its bid while GHM remained confident that the French group had successfully negotiated a deal that would land the regional papers on its hands.

A Mecom source then told us that the British bid probably wouldn't go through and the regional papers would, most likely, remain on French hands, but today Hemscott had a story about a union source who said that Mecom's bid is better than GHM's.

I'm sure Mecom would love to add France to its expanding newspaper empire, but guess we have to trust them when they say their bid is unlikely to succeed.

More tidbits here and here (in French).

A new Polish Acquisition for Mecom?

Hot on the heels of the Wegener acquisition in Holland, it seems Montgomery is about to add yet another title to his rapidly expanding European media group, this time in Eastern Europe. I think this article says that Mecom is in negotiations to buy "Życia Warszawy", but that Truls Velgaard, Mecom's Norwegian boss in Poland, 'declines to comment on speculations'. I must admit that my Polish isn't up to much though, so go check it out for yourself. More from the Polish blogosphere here.

Mecom set to expand in Holland

The buzz around today's announcement of Mecom's takeover plans for Dutch regional newspaper group Wegener started ticking into my newsreader this morning via Dutch twitters, blogs and newspapers. Monty continues his march across Europe, wrote Charles Pretzlik in his FT business blog around noon.

It's a march that no doubt will leave prospective and existing employees with mixed feelings at best. Employees at recently acquired Mecom newspapers are particularly worried about increased profitability demands and the company's highly geared business model:

"We are most worried that Mecom's profitability demands will mean that we won't be able to develop the newspapers the way we have to in the face of today's competitive media landscape. Orkla was like Uncle Scrooge's money bin. Now we have been sold to a company financed by loans, which creates a much more unstable situation," Olav Skjegstad, an employee representative and board member of Mecom Europe, told me in a previous interview.

This does not seem to worry Mecom-boss Montgomery, who recently launched a £570m share issue to fund further acquisitions in continental Europe. When Montgomery was in Oslo for a debate at the annual conference of Norway's journalist union, less than two weeks back, he said: "We have £65m in debts. We're a very well funded company. In fact, we don't have enough debts at the moment."

More about the reactions among Dutch Journalists here (in Dutch). About the Dutch newspaper war and crowded freesheet segment here (in German).

Mecom's acquisition of Orkla Media prompts move to establish editorial freedom by law

Yesterday Norway's minister of culture, Trond Giske, proposed to establish the rights and duties of the editor (scroll down for full text) by law to protect editors, and their editorial freedom, from meddling proprietors. Giske cited a dramatic change in the nature of the country's media ownership as one of the triggers for introducing the proposed law, which could come into effect as early as 1 July.

He denied that Orkla selling its newspaper arm to British Mecom was the direct precedent for the new law, but Ann-Magrit Austenå, leader of Norway's journalist union (NJ), told Propaganda that the timing of the proposal was no coincidence: 'It has been on the political agenda since 1999. It is obvious that the sale of Orkla Media has contributed to speed up the process of getting a law in place.'

Back in July of course, Giske was voicing his concerns about Mecom all over the place . However, while issuing more or less subtle warnings of how he might be prompted to take action if David Montgomery's investment vehicle Mecom failed to live up to its 'civic responsibilities', Giske seemed unable to walk the talk.

"I’m not sure Giske has actually looked into his toolbox, but he does have useful tools at his disposal. Whether or not he decides to use them, and what effect they may have, is up to him," Johann Roppen, a senior lecturer in journalism who wrote his Phd thesis on Orkla Media, told me back then. Now it seems Giske has had some time to rummage through his tool box, and look what he's come up with...

Bonnier's been raiding across the pond again

In line with the company's professed desire for new international, especially American, acquisitions, the Swedish media giant scooped up another chunk of American magazines this week, this time from Time Inc, just in front of bidders such as U2 lead singer Bono, Active Interest Media and Intermedia Partners. But the deal has left some of the other bidders feeling unhappy about the proceedings, and an article in Portfolio Magazine suggests Time's sale to Bonnier might have been a done deal weeks ago:

“You could see six to eight weeks ago that Bonnier was the lead horse and we kept asking, ‘should we be in it?’” said one source Thursday. “And they kept saying it wasn’t and we should stay in it. But to have six people go through the expense and the time that its takes to complete the due diligence when you know that you’ve already picked someone is wrong”... “It was the most screwed up process I’ve ever seen,” said one bidder. “It was the worst offering memorandum I’ve ever seen. The information was incomplete. We basically had to go through and build the business model from the ground up to figure out Time Inc.’s costs, which I’m sure is what Bonnier did too. We had to go through the expense of getting lawyers and accounts and the banks to go through the multiples and it turned out to be unnecessary because they had already made up their minds.”

For Bonnier, the Time Inc deal follows neatly on the heels of purchasing half of World Publications last year. New acquisitions Time4Media and The Parenting Group are to be combined with World Publication, creating a publishing group with sales of $350 million and approximately 1,000 employees. Bonnier will be the majority owner in the new company, while Terry Snow, the founder of World Publications, will hold a minority interest.

Exit Orkla

So ends the saga of Orkla and Mecom. After attempting to get rid of its media arm for at least ten months, and attracting a lot of bad PR in the process, Orkla has sold the 19,97pc stake the company was forced to take in Mecom to finalise the sale of Orkla Media - cashing in a neat £25m profit. The deal leaves the troublesome child that once was Orkla Media on foreign hands entirely and marks a very timely exit for the Norwegian company. "I think they realised they would have attracted a lot of criticism for some of the unpopular decisions Mecom makes," Kjetil Haanes, an employee representative in what is now Mecom Europe, told NA24 Propaganda (in Norwegian).

Though Orkla has offloaded all its Mecom shares, Montgomery still has to repay a vendor loan note to the company.

What is the unrest among Mecom journalists really about?

A new world knocked on the door of Norwegian media in the shape of former Mirror boss David Montgomery, when his investment vehicle Mecom acquired Orkla Media, last year. Other Nordic companies had previously been involved on the owner side of various Norwegian media, but Montgomery was perceived as a different kind of animal all together.

Fundamentally, this is a story of globalisation and the democratisation of finance: what happens when a venture capitalist or a big corporation from abroad comes to a small country and make big acquisitions with borrowed money? It often creates fear and uncertainty about distance to the decision-making, the extent of restructuring called for with dramatically higher demands to profitability, and fear that the new owner will challenge established practices and force the acquired businesses to abide by foreign ideas and foreign principles. Three months after the acquisition was finalised this uncertainty lingers, and at the start of this week Mecom journalists from all over Europe came to Oslo to form an international network. I talked to Olav Skjegstad, an employee representative and board member of Mecom Europe, to find out more about why the network was set up:

"We expect very turbulent times ahead; new situations may develop as a result of new acquisitions and similar, and we need to be prepared for that. The network is no guerilla group, we want a correct relationship to our new owner, but we also feel the need to keep up to date on what's happening throughout the media group: what happens in one country might happen in others."

After examining the situation in the different countries during Monday's meeting, it was obvious that there is still great uneasiness surrounding the expected job cuts and how extensive they will be. Another employee representative, Carine Johansen, has previously voiced concern that the restructuring will diminish editorial quality and threaten journalistic freedom, and that the walls between marketing and the editorial department will come down. Norway has a strong tradition for separating the commercial side of newspapers from the editorial side, and quotes like these fill the former Orkla Media journalists with fear and apprehension:

Mr Montgomery... wants to sell products such as wine and financial services, as The Sunday Times and Daily Telegraph do... He warns, however, that newspaper journalists must change. "[They] face the biggest upheaval in media. You can't do nothing and stand still." Journalists and editors will increasingly be involved in the commercial process... (The Financial Times).

The publishers control distribution and consequently they have the names and addresses, emails, and telephone numbers of all of their customers," says Montgomery, though they have done "nothing at all to exploit the database". (The Telegraph)

It is clear that such moves towards greater commercialisation will sit uneasily with Norwegian newspapers, but when I asked Skjegstad about what his greatest fear was he said: "We are most worried that Mecom's profitability demands will mean that we won't be able to develop the newspapers the way we have to in the face of today's competitive media landscape. Orkla was like Uncle Scrooge's money bin. Now we have been sold to a company financed by loans, which creates a much more unstable situation. Besides, many important decisions are made in Mecom Plc, a stock company in London where we are not represented, and we don't have first hand access to these decisions."

Yahoo buys MyBlogLog

This time, it's for real... The internet portal has confirmed the purchase, but refused to disclose the price tag. However, Forbes quotes sources indicating a sum just above $10m.

Tellingly, this is how Bloggers Blog describes MyBlogLog: it "helps add social networking and community features to blogs. It also provides blog statistics". In my early blogging days I signed up with MyBlogLog for stats, but must admit I opted out of it partly because of the community emphasise. Don't get me wrong, communities are great, but everything is being communitised online these days, and there's a limit to how many communities you can spend effort on, building them takes time, especially when you work the kind of hours I do and am just in the blogging world for fun...

Update 19/1-07: Here's a great breakdown of the deal from Om Malik (via Adam Tinworth)

2006: Mergers, acquisitions and plain war

The Scandinavian media landscape changed irrevocably in 2006: Orkla sold its media arm to a British company built on borrowed money, the region's media giants were busy consolidating and expanding internationally, and Swedes and Danes were bombarded with freesheets from left, right and centre

In what has been dubbed 'The darkest day in Norwegian media history', former Mirror boss David Montgomery bought Orkla Media, but had to borrow money from Orkla to finalise the deal - aggravating Orkla journalists already aggravated that Orkla had decided to sell to a foreigner. To add insult to injury, it was later revealed that Orkla Media executives had received generous bonuses to stay onboard throughout the sales process.

In Sweden, Modern Times Group (MTG) scooped up close to a dozen TV-channels in eastern Europe, but paused its expansion eastwards to acquire Norway's biggest commercial radio company P4. The Swedes do of course have a historic preference for eastern dominions, and Hans Holger-Albrectht, MTG's CEO said: "Norway is also east for us, it depends on where you stand." Bonnier strengthened its positions in the east as well, but in two raiding trips across the Atlantic it also acquired Weldon Owen Publishing and half of World Publications. After a few years of consolidating its Nordic position, the Swedish media giant signalled it was hungry for more international acquisitions, especially in the US.

Merger mania
Norwegian media group Schibsted moved out of TV, but consolidated its leading position online. Kjell Aamot, Schibsted's CEO, was crowned the king of internet in Sweden, and, following favourable mention in The Economist, Schibsted's successful online transition – its biggest Norwegian online paper had a staggering 42 per cent profit margin in 2005 - was put on the curriculum at Harvard University. The company outmanouvered Montgomery by forging a gigantic merger, dubbed an acquisition by Mecom, between Schibsted's Aftenposten and southern Norway's three biggest regional papers. The merger, which has yet to be granted regulatory approval, prompted Mecom to sell its shares in the profitable big regionals, a move Dagbladet's editor-at-large, John Arne Markussen, predicted will weaken Mecom's ability to defend its local positions in the long run.

Meanwhile, Baugur-controlled Dagsbrun, who lost the battle for Orkla Media, challenged Montgomery and others to freesheet war in Denmark. The Icelandic company sent shivers down the spine of Danish media proprietors when it announced plans to launch its quality, door-to-door distributed free newspaper, highly successful on Iceland, internationally – with Denmark as the first stop. It provoked a freesheet war on an unprecedented scale, and prompted Danish trade journal Journalisten to send a representative to Iceland to investigate the actual finances of a conglomorate whose intricate company structure makes such things somewhat opaque.

Montgomery won the race to bring the first new freesheet to Danish doorsteps, and Icelandic Nyhedavisen got off to a late and bad start, hampered with technical problems and shambolic distribution, but at the end of 2006 it was not looking too good for Montgomery's Dato. Mecom-owned Berlingske Officin already has one well-established traffic distributed freesheet with a distinct profile, Urban, why then sink money into a door-to-door distributed one which had the worst readership figures of all the major freesheets in recent polls? One new freebie has already thrown in the towel, which leaves five, in addition to Nord Jyske's two regional ones. My bet is that Dato will be the next to go, at least that would make most sense if logic has anything to do with it.

Hmm, did I forget anything? Many smaller M&As I'm sure, and of course, Schibsted and Bonnier challenged MetroXpress' freesheet domination in Sweden...

What Mohammed and Montgomery can tell us about our brave new (media) world

2006 was a year of big ethical challenges and high-strung financial deals, or "The year of Mohammed and Montgomery" as Norwegian trade journal Journalisten so aptly headlined its summary of Norway's media year.

The year started with Norwegian and Danish flags and embassies set ablaze in the Middle East, following the publication of the infamous Mohammed cartoons, and ended with loud protests about former Mirror boss David Montgomery wielding the axe in his new won European media empire – both potent symbols of a rapidly changing (media) world.

The Mohammed-crisis
"There are no time zones anymore," said Christopher Willcox, the then US deputy assistant secretary of defense for public affairs, while describing the challenges in fighting the propaganda war in Iraq, during a seminar I attended in May 2003. Internet, he complained, has made "segregating messages for different groups very difficult".

The cartoon war showed us that there is no national media anymore: as networks of communities spawn the globe, and groups of all interests and persuasions use internet to communicate across borders and distances, every news story in every language has a potential global audience and can spark global reactions and alliances.

The Orkla-Mecom debacle
So does national media ownership really matter in this new global reality? David Montgomery, and his British investment vehicle Mecom's, successful bid for Orkla Media certainly had politcians and journalists in Norway, Denmark, Germany and elsewhere up in arms. "These newspapers are not only businesses but democratic institutions vital to local political debate, a weakening of these newspapers would be critical ," Norway's culture minister, Trond Giske, told me in an interview, and repeated his 'strong preference for a Norwegian buyer' all through the sales process.

The Orkla-Mecom debacle was a typical example of the tension between the local and the global: it could have been Ganette's acquistion of local newspapers in the UK or MacDonalds buying a local restaurant chain in India – at core it was the same story, same reactions, just different countries and different industries. Mecom's acquistion of Orkla Media was also symbolic of the democratisation of finance: could a "fly" like Mecom have found the financial backing to "swallow an elephant" like Orkla Media 30 years ago? The company's highly geared business model continues to be a cause of great concern among the employees of former Orkla Media.

Highlights from the Scandinavian media year 2006

If the year behind us is anything to go by, the Scandinavian media market will be an interesting one to watch also in the year to come. 2006 was so packed with media wars, controversies, upheaval and startling revelations that it almost beggared belief.

On a serious note, it was the year of Mohammed and Montgomery, a year the regions' media map was redrawn, and the year of the great freesheet invasion. Among the lighter, but still thought-provoking, stories that caught my attention: All is fair in love and newspaper war, Watch out for the virtual freemasons and Move to scrap TV-license after ministers fail to pay up.

As the year progressed, so did these stories, and some I simply never found the time to blog, so most of these blog posts are new, though I sometimes link back to old stuff to explain. Two previously blogged stories that were symptomatic of the year: 'hack fired for accessing the governing party's intranet blogs his way back' and 'tabloid contests that a blogger brought down Sweden's trade minister: it had the scoop a day before it published it'

Evidence suggest sex, crime and violence, celebrity and scandal generate the biggest hits online (via Martin Stabe), and Norwegian media magazine Kampanje's top 20 list for 2006 seems to confirm this, but for this blog it's only partially true. Yes, my top story of the year was probably the media company that graded prostitutes, it travelled all over the media world and blogosphere (read the real story behind how the story surfaced here), and generated big hits, especially from Washington Post and this blog I can't even figure out the letters in, but stories on the Mecom-Orkla debacle, especially this and this, and the Norwegian journalist who faked interviews with the rich and the famous also generated a lot of traffic (the latter even earned me a rather dubious thank you note from Microsoft for blogging it in a language its spin maestros could read).

On a more philosophical note, after a year abuzz with so much change an upheaval I guess it's hard not to notice how different the world looks, but the following quote from Norwegian journalist Paul Leveraas is still worth pondering for most news professionals, including a self-empoyed one such as myself: "We stand in the stream of events, while busy chasing deadlines the world changes and we are too busy to notice the change." (I must have copied this down in my early blogging days, cause I don't have a direct url for it).

Google acquires Jotspot

Hot on the heels of Google's acquisition of You Tube, wiki software company Jotspot has become the latest addition to the Google empire.

Here's Jotspot co-founder Joe Kraus announcing the deal on Google blog.

"It’s obvious to anyone following developments in the Web 2.0 arena that Google is building a suite of collaborative office tools, and as much as Google’s moves are viewed as potential competition for Microsoft Office, I think Google is focused on building office tools that are very different from those found in Microsoft Office because the common thread linking them all is collaboration," writes Stewart Mader in his write-up of a podcast he did with Kraus about the deal. Kraus told Mader that Google was attracted to JotSpot because the JotSpot wiki fits in well with its current lineup (Gmail, Google Calendar, Google Docs and Spreadsheets, Google Apps for Your Domain).

The initial information about this deal dropped into my email box because I have two JotSpot accounts (one I set up to find out what the software was about, and one I set up for a client of mine to enable me to collaborate more effectively with colleagues in other countries).

Update 1/11: here's Reuters on the acquisition.

TV is dead, long live the Internet

It's a tempting conclusion to draw after a week that saw Norway's leading media group sell its stake in the country's biggest commercial TV-station, TV2, and one of Scandinavia's most successful internet entrepeneurs launch plans for a new online TV-channel.

Of course it's not that simple, and Schibsted's managing director has berated Norway's strict cross-ownership laws for making it impossible for the company, who is the country's biggest media group, to pursue a majority stake in TV2. Still, the deal signals a clear strategy shift, and even though company spokesmen have denied Schibsted is looking to sell its Swedish TV-assets as well, Kjell Aamodt, Schibsted's CEO, has indicated that the company is more focused on transmitting live pictures via platforms other than TV. "We don't talk about a TV-strategy anymore, we talk about a live pictures strategy. We are in the process of positioning ourselves both within web- and IP- TV," he told E24. Schibsted sold its 33,3 stake in TV2 to the Danish Egmont group and Norwegian newspaper group A-pressen, the latter incidentally owned by the Labour Union and Telenor (whose majority owner is the Norwegian state).

In a separate move, the Danish Skype-founder and millionaire Janus Friis this week unveiled his plans to launch his third major international project: an online TV-channel expected to go live by New Year (link in Danish via Berlingske, requires subscription). If the Skype-success is anything to go by, this will be an interesting one to watch...

Update 30/10: Anders Gerdin, editor-in-chief of Schibsted-owned Aftonbladet, indicates that Schibsted may sell its minority stake in Swedish TV4: 'It's pointless to have a minority post in a TV-channel,' he is quoted saying to DN (no direct link available).

Update 6/11: Schibsted sells its shares in TV4 to Nordic Broadcasting, of which Bonnier and Proventus each own half.

To merge or not, part II

How convenient that I didn't start writing about this proposed merger before it hit the final stages: if I had I'd be on part xxx. The only firm decision reached yesterday was that Adresseavisa, as expected, opted out of the merger. The other parties will continue the negotiations. In doing so, Bergens Tidene (BT) is acting against the will of Mecom, the papers' biggest shareholder (28,5pc), who would see their majority position in BT reduced to a very minor position in the proposed media company 'Media Norge'.

It was Schibsted's demand for majority control in the new company that made Adresseavisa reject the propsal. Björn Wiggen, Mecom's CEO' has branded it an acquisition rather than a merger and said: "this is an acquisition of the regional papers masterminded by Schibsted". Lars Ander, a Swedish shareholder with a 20pc stake in BT who ensured BT did not reject the merger proposal at this stage, told DN: "One shouldn't forget that Schibsted is damn good at what it does, and has done an amazing job with Svenska Dagbladet and Aftonbladet. And the company gives total editorial freedom, even if Schibsted is a crocodile and a crocodile has a small brain."

One sentence can make a big story

David Montgomery will buy The Mirror with financial backing from Orkla. That is, if we are to take today’s stories in Norwegian media to their logical conclusion and predict a future outcome. And it all started with a throwaway sentence by James Robinson in last week’s Observer

Norwegian media is rife with speculations today that Orkla may back Montgomery’s Mecom if the company were to make a bid for Trinity Mirror, or parts of it such as The Mirror. On Wednesday (you know, The Observer can be a big paper to plow through and it does take a while for it to reach our distant shores) DN ran a story on how The Observer had said it was likely that Monty would make a bid for Trinity Mirror, or parts of it, and said English commentators believe this is Monty’s long term goal (though the article DN referred to was entitled “Candover eyes Mirror” and only mentioned Montgomery in the last sentence).

The Mecom-Orkla-Mirror theory gained further momentum when Dag J. Opedal, Orkla’s CEO, told DN that Orkla would be a “supportive shareholder” in Mecom Europe, after Opedal had presented Orkla’s solid second quarter earnings yesterday. He said Orkla “has faith in Mecom’s growth and development plans”, but refused to comment on future investments.

Not too convincing yet this Mecom-Orkla-Mirror theory, is it? Let’s do a small reality check. Okay, Orkla does have easy access to ‘cheap money’ and that Montgomery covets The Mirror is well known. However, if Montgomery wants to develop Orkla Media the way he says Mecom plans to, there are more pressing, and costly, decisions to be made elsewhere – and Orkla has indicated strongly that they want to reduce their involvement in, or even get out of, the media industry in order to focus on products such as energy and raw materials.

Looking at the newspaper portfolio that Montgomery now has agreed to buy, there are several challenges that will need to be solved as soon as possible, and they all require financial investment:

In addition to the newspapers that Orkla Media own fully, they hold various stakes in other newspapers. Several of these have expressed a wish to buy Montgomery out, and others are working towards a merger that would reduce Montgomery's stakes and influence further – which contradicts Mecom's expressed desire to obtain majority control. To prevent its influence from dwindling, Mecom's only option would be to buy more shares. Besides, Orkla Media's newspapers face the same challenge as all other newspaper across the world: the expensive transition from paper to digital and how to incorporate social media such as blogs, podcasts, vodcast and what have you.

A logical next move for Mecom would be entering into some kind of joint venture with Dagbladet, which I guess is as close as you could get to a Norwegian version of The Mirror, as Dagbladet itself has speculated might happen. If Mecom could pull that off, it would complement Orkla Media fantastically, add expertise on new media which Mecom lacks - and it would be a move Orkla Media employees, who are still hostile to Mecom's takeover, would applaud. Norwegian and Danish Orkla Media employees have run a very loud PR-campaign against Mecom, and Norwegian and Polish employees have said they refuse to take the hit for the bad financial state of Orkla Media's Danish holdings – with an average 3 per cent profit margin and a looming newspaper war it's going to require a lot of investment, and perhaps bloodshed, to bring the Danish newspapers up to the 15 per cent profit margin Montgomery has said he aims for for all Mecom newspapers.

So there are lots of issues, and some of them rather costly, to address before Montgomery can even think about buying Trinity Mirror, or parts of it. With an expected price tag more than double of what Mecom have to pay for Orkla Media, is it realistic that Mecom, who had to borrow money from Orkla to complete the Orkla Media deal, can find money to buy Trinity Mirror as well as meet the challenges presented by its Orkla Media portfolio? The AIM market is a good place to raise money for developing a company such as Mecom, but an acquisition the size of Trinity Mirror for a company built on borrowed money? I'm very doubtful that even Montgomery could work such wonders. Neither is he helped by the current state of the world economy, reeling from threats of war and terrorism.

Mecom Europe: the challenges ahead

The papers have been signed, and little can prevent Montgomery from finalising the acquisition of Scandinavia's fifth largest media company. Still, it won't be an easy ride, and the latest addition to Mecom Europe might prove a troublesome child indeed.

Expensive credit
Mecom agreed to buy Orkla Media for £647m, of which £93m will be a vendor loan note provided by Orkla. The loan is to be repaid in two years, and is subject to an interest rate 5 per cent above the market (LIBOR) rate. Orkla Media’s employees would much rather have preferred a Norwegian owner to a foreigner, and the fact that Orkla was willing to extend a loan to Mecom, rather than seek other solutions, has infuriated many.

Ready to go down fighting
Yesterday’s reactions showed that Orkla Media’s employees are far from ready to abandon their loud PR campaign against Mecom, despite admitting the battle of who would be their future owner has been lost. Though Montgomery went from being invoked as a tyrant to being described as a “nice piano-playing man from Northern Ireland” after he held his first press conference in Oslo, fears about Mecom’s financial strength are stronger than ever. Kjetil Haanes, Orkla Media’s main employee representative, summed up many of these fears when he told Norwegian media: “This has been a terribly sad day. A key Norwegian media company, which has existed for 23 years, is being sold to a tiny British company with money troubles. Mecom doesn’t even have enough money to buy Orkla Media – in which case they will not have the money to develop the company further.” Immediately after the deal was announced Haanes said he would seek independent advice on how to best negotiate redundancy packages.

Add to this great political dismay to see a huge chunk of Norway’s regional and local newspapers sold to a foreigner; a looming Danish newspaper war; the urgent need to boost digital operations and the inherent vulnerabilities in a business model as highly geared as Mecom’s… the challenges are plentiful...