The Icelandic soap opera continues

 In December 2008, angry protesters branded both Geir Haarde, Iceland’s then prime minister, and David  Oddsson, then head of the country’s central bank, as «Iceland’s bin Laden» - blaming them in equal parts for the country’s complete financial meltdown (see my photos below).

Now, the former could face criminal charges for the global financial meltdown, while the latter is one of two joint editors of Iceland’s newspaper of record, Morgunbladid.

How surreal is that?

According to The Daily Mail earlier this week:

Pall Hreinsson, the supreme court judge appointed to head the Special Investigation Commission that issued a government-commissioned report detailing the litany of mistakes made in the lead-up to the bank meltdown, singled out seven former officials including Mr Haarde and central bank chief David Oddsson for particular criticism.

No other officials besides Mr Haarde were referred for prosecution to the court.

Now, I was just going to dip into this story briefly.

I was fascinated by how things had turned out when I read the news about Haarde this week since I covered the Icelandic freesheet market extensively from 2006 – 2009/10 (media cross ownership being a particularly colourful story in the country, closely linked to the financial meltdown), and reported extensively from the dire situation in Icelandic media following the financial meltdown.  

But the twists and turns of this story are just too incredible.





I noticed that Olafur Stephensen, who was editor of Morgunbladid, considered to be the newspaper closest the conservative Independence party which Haarde and Oddsson both represent, had now become editor of Frettabladid. That is, Frettabladid the legendary freesheet so closely linked to Baugur. Just how close those links once were becomes obvious for all when reading this story on why Frettabladid’s former editor, Jon Kaldal, was fired.

For the record, I should say that I conducted long interviews with both Kaldal, then editor of Frettabladid, and Stephensen, then editor of Morgunbladid, when I was in Reykjavik working on my story on the crisis in Icelandic media in December 2008.

Both cast an interesting light on the many events leading up to the crisis.

At the time, Stephensen had not received his monthly salary and could only pray someone would rescue Morgunbladid so his salary would be paid before Christmas. 

But it is perhaps no wonder that the country’s newspaper economy, with its close links to major companies and banks, was struggling at the time seeing that the entire country was on the verge of financial collapse. 

(Media cross interests and cross ownership on Iceland was so extensive at the time that it still makes my head spin, but an Icelandic tabloid editor I spoke to explained it in clear terms thus: ” You know, the sugar daddy behind DV and Fréttablaðið was Baugur, but the sugar daddy behind Morgunbladid was Björgólfur Guðmundsson? … Now everyone is on his or her own because our sugar daddies are dead” )

According to Gylfi Magnússon, a University of Iceland economist who gave witness to the Landsdómur trial of former Icelandic Prime Minister Geir H. Haarde on Friday, the Central Bank of Iceland effectively went bankrupt in October 2008 when its board decided to loan Kaupþing Bank EUR 500 million in an effort to save the latter.

He explained that although the Central Bank said at the time that the loan represented only a fifth of its foreign capital reserves, in reality most of that money was not readily accessible.

Gylfi was drafted in to the minority government from February 2009, after Geir Haarde resigned, as an un-elected expert commerce and trade minister (Icenews has more on this latter story)

Okay, I’ll stop there. I could easily see myself moving temporarily to Reykjavik to write a book on all this, but I expect those books already have or are being written.

Kjell Aamot: Johnston Press' new, controversial non-executive director

Could we see Schibsted mount a take-over attempt of Johnston Press following yesterday's announcement of the latter company appointing the former media group's ex-CEO, Kjell Aamot, as a non-executive director?

Nah, I can't really see that happening, but it's an interesting appointment. I was approached by more than one UK journalist about Mr Aamot after the appointment was announced yesterday since a quick Google search led them to my post on his resignation last spring.

He had then held the position as CEO of Schibsted ASA since the group was formed in 1989, and has been given a lot of the credit for the group's famed online success – not at least due to early online investments and a willingness to stick with those investments even in turbulent financial times when other media companies scaled back or even abandoned risky new projects.

As CEO of Schibsted Mr Aamot was known to be a visionary, but he also courted controversy on more than one occasion, especially when he was reported to have predicted the imminent death print newspapers (link in Norwegian). He later said he was talking about paid for newspapers, not print newspapers as such as he still had a lot of faith in free newspapers (Schibsted owns several market leading freesheets). Still, employee representatives in several at Schibsted's Norwegian paid for newspapers were livid and accused him of prematurely issuing an obituary for print.

He also highlighted one of the biggest paradoxes in Schibsted's business model by saying that in the future journalism will be paid for by car sales (link in Norwegian). As the company's revenues increasingly are generated from its online classifieds business we could see a situation where the journalism business is fully subsidised by standalone online classifieds operations (flippantly, you could say the company owns Norway's version of eBay, except it's not free. It also owns similar classifieds businesses in other European countries).

All in all, a very interesting appointment indeed. Mr Aamot will certainly bring a lot valuable experiences and insights from his 20 years running a media company that earns good money online, a feat which seems to be the exception rather than the norm these days.

With his many years of international experience he should also be well versed in the many cultural challenges that is bound to appear between the very direct, no-nonsense Norwegians and the rather... eh.. circumloquacious Brits...

More profitable Metro prepares new online strategy

Well, let's not exaggerate the profit, freesheet giant Metro International is back in the black with a modest profit for Q2, but is still in the red for the first half of 2010 (key headlines here).

However, the world's biggest publisher of free dailies has seen a steady improvement of its financial results for three consecutive quarters and the end of freesheets seems further off than many predicted in 2009 and 2008.

No doubt, the consolidation in the freesheet market, Metro's own divestments and closures as well as an end to costly freesheet wars, most notably in key markets such as Denmark and Sweden, has benefited Metro's bottom line. "We're getting to be a bit more of a boring company, more predictable," said Anders Kronborg, the company's CFO, when I talked to him about Metro's Q1 results in April.

If you look at the company's share price curve for the first half of 2010 there's not much evidence of that so far, but now that it has moved its headquarters back from London to the city where it all started, back in 1995, perhaps some of that Swedish steadiness and predictability, which also may be described as boring in some contexts, will rub off.

At least Metro is using the relocation as a chance to build a new team and re-evaluate its online operations, Metro-boss Per Mikael Jensen told me yesterday. He said the organisation is planning to reveal a new online strategy come August/ September. PaidContent in particular has focused a lot on the company's lacklustre online results.

When confronted with this, Jensen pointed out that this was not in any way unique for Metro. "Point me to a media company that's been successful online apart from the likes of Schibsted, there are not many who have been successful making money online," he said and added that Metro does run profitable online operations in countries like Canada, Mexico, Denmark and Sweden. Now, in the latter country Schibsted took a 35 per cent stake in Metro's operation when it folded its own freesheet, Punkt SE, in 2008. Perhaps some of Schibsted's reputed online savviness will rub off too.

In the meantime, there's Q3 to grapple with. Jensen said Metro is on track to a full year operating profit for 2010, but admitted the third quarter is usually the company's weakest. "If we could remove Q3 from our results we would be happy to, but it is estimated into our full year forecasts. Actually, in Metro we have T-shirts with 'I hate Q3' written on the back," he said.

Notes from the changing media landscape

On Metro, Foursquare, the future of freesheets, Facebook-journalism and creative disruption.

Okay, so the headline of this post is pretty much the subtitle of this blog, but I often come across posts on interesting developments that I have limited time to blog about and know I easily will forget if I just tweet about them or save them to Delicious (I'm on Publish2 too, but Delicious is where most of my peers are, and old habits die hard). Also, I don't want to turn this blog into just a collection of links, but it's much easier to refind and return to stuff I mention here than on Delicious. In fact, one aspect I find very useful about blogging is, as I've previously described, that it works almost as a backup of my brain. So here's a few of the many interesting blog posts I've been thinking about recently.

Metro + Foursquare: following Monday's announcement of the new partnership between Metro Canada and the location-based social network Foursquare, the two most interesting posts that flashed past me was ReadWriteWeb's The Era of Location-as-Platform Has Arrived and Mark Briggs' A Foursquare First: teaming with a news org. In the latter post, both the suggestion on how open APIs eventually will take over and the one on how mobile news services will become location specific make sense to me. See also: Foursquare for local business marketing (latter link added 12:18 CET)

Free dailies 2010: the age of the happy monopolist: "Free newspapers were one of the big stories of the noughties, and came to symbolise the primacy of ‘free’ and the imminent demise of paid-for papers." Interesting analysis from Piet Bakker, who charts the rise and fall of freesheets and outlines what conditions they thrive in.

Creative Disruption: What could Kodak have done differently? (via Adam's blog): there are, as Adam mentions, many lessons for newspaper publishers here - even in 2010.

Dan Blank: How I used Facebook to unearth a town's history (via Adam on Twitter): For short, I referred to this as Facebook-journalism in the intro, but that is probably not quite accurate. Still, what kept playing in my mind when I read this amazing story was how we could use similar techniques to create better crowd-sourced hyperlocal journalism.

When I mention hyperlocal journalism though, I also think of how I recently saw hyperlocal journalism defined as "what we did when we actually had time to go out and talk to people in our communities (or something similar, I can't remember where I read it just now).

Just looking at my own family history, the local stories I've learned about through talking to random people I've met - especially when just after I graduated I spent a few months working in a pub - I know there are so many amazing stories that go unreported and that many people are very curious, passionate and interested in local history, which Dan Blank's experiences really show. In this own words:

"I want to share a story about how Facebook is allowing me to experience my past in new and incredible ways. Here is the premise:

  • I drove through my hometown (Howell, New Jersey) snapping pictures of every store, house, and landmark I could on the main road.
  • I uploaded 165 photos to Facebook, and shared it for anyone to see. 
  • So far, these photos have received more than 700 comments, adding stories, context, history and reactions. A variety of generations responded, some who remembered it in the 1950s and 1960s.

"What makes this remarkable is that I grew up in a faceless American suburb - full of cheap strip malls and tract housing. Almost everyone was a transplant from somewhere else, with waves of people settling there from New York, including my parents who moved from Queens... (do check out full post here)"

Lord Rothermere rejected freesheet partnership with Schibsted

While new CEO of pan-European media group Schibsted, Rolv Erik Ryssdal, is hard at work trying to charm the analysts of the world’s financial centres, its now retired CEO, Kjell Aamot, is giving the odd talk closer to home and sharing some fascinating tidbits while he’s at it.

At a recent Norwegian media conference he talked of a partnership he offered Lord Rothermere, the proprietor of Daily Mail and General Trust Plc (DMGT), while sharing a cab with him a few years ago.

- I asked him if he wanted to team up with us to launch a freesheet in France. He declined and said he had no faith in freesheets. If he were to start a freesheet it would be to protect newspapers such as The Evening Standard. In the same cab was a representative for a French media company. He called me later and asked if Schibsted was interested in a partnership, Aamot, told Kampanje.

That was the start of what is now the rather successful freesheet 20 Minutes, which I believe is jockeying with Metro’s French edition for the position as France’s most read newspaper. Aamot said he remembered the conversation with Lord Rothermere vividly in light of how Evening Standard was sold to former KGB-agent Alexander Lebedev earlier this year and last month was turned into a freesheet…

Freesheet predicted Obama's peace prize

The decision to award this year's Nobel Peace Price to Barack Obama took the world by surprise, but it turns ut at least one newspaper was ahead of the game.

Based on the artists booked for the Nobel Peace Price cermony in Oslo 12 December, Metro Sweden, the daily freesheet, predicted the winner to be none other than the American President. The headline in Friday's print edition read: "The artists at the party reveals Barack Obama gets the peace price" (my translation), and the article asserted that come 11:00 CET 9 October Obama would be named this year's winner as all the artistst booked in for the celebration had some form of assocation with Obama (via


Evening Standard not the first "quality free"

News of The Evening Standard going free has been a major trending topic these last few days - both among London's Twitterati and in the Twingly channel I've set up on journalism & media (in beta, password-protected but see screengrab below).

We may speculate whether or not taking it free is a wise decision, but we're not entirely without case stories to compare it to. Standard-owener Alexander Lebedev and his editor, Geordie Greig, are apparently convinced that they can make a virtue of being the first "quality free": they may be that in the UK market, but Baugur-funded Dagsbrun ran "quality freesheets" for years on Iceland and in Denmark, the company's short-lived US-based free, "Boston Now", may also have fallen under that umbrella. I'm most familiar with the readership figures of their Danish start-up, Nyhedsavisen - a start-up which ended well, not in tears, both its competitors and its journalists, and I talked to both, seemed to drink to its demise albeit for different reasons, but at least in a humbling defeat.

The Icelandic-initiated Danish freesheet was at times the most read newspaper in all of Denmark, and its content, which was designed to compete with paid-for quality dailies rather than other freesheets, seemed to be a hit with well-educated women - often the big spenders in a family. At least I recall making a note of how it had a larger per centage of female and well-educated readers than other freesheets, whereas the Danish freesheets in general led to a larger percentage of young people, who wouldn't normally read papers, reading newspapers. I'm only quoting from memory but I'm sure I've written articles on this - though I fear it was for a print-only magazine.

Also, there are major differences between Nyhedavisen and The Evening Standard, the former was started from scratch in August 2006 whereas the latter has long traditions and a well-established audience, but Nyhedsavisen's readership figures certainly suggest there is a market for quality frees even among more affluent groups. Free daily Frettabladid, which Nyhedsavisen was modelled on, is still Iceland's most read newspaper as far as I know, but its business model is based on door-to-door distribution - a fact many felt was a major reason for the model's demise in Denmark. Earlier this year, Wired's Chris Anderson described it as a tale of free gone terribly wrong after Jon Lund asserted it was this model of "double free" which made Nyhedsavisen an unsustainable project in the end (both blog posts worth reading in full).     

Update 05.10.2009: see also Piet Bakker's post questioning the assertion that ES is the first "converted quality".


Another Icelandic Media Baron Bites the Dust

Björgólfur Gudmundsson is not only a bank chief in hot water,as The Telegraph describes him today: with his bankruptcy an era in Icelandic media history comes to an end.

Now that both Jon Asgeir Johannessen's investment vehicle Baugur and Björgólfur, also the former owner of West Ham FC, have been declared bankrupt, Iceland's media moguls are officially dead. Between them they used to control most of the tiny island's media, including leading newspapers such as Fréttablaðið, Morgunbladid and DV.

"You know, the sugar daddy behind DV and Fréttablaðið was Baugur, but the sugar daddy behind Morgunbladid was Björgólfur Guðmundsson? Every media here has its problem. We had Jon Asgeir, they have Björgólfur," said Reynir Traustason, Editor-in-chief of DV, when I interviewed him during my reporting trip to Iceland in December last year.

"Our sugar daddies are all dead", he asserted, describing Icelandic media as "alcoholics on detox" (my feature on Ragnarok for Icelandic media ran as the lead story in Journalisten's December issue, and my story on the role online media played in the "fleece revolution for can be found here). I also chronicled the Icelandic newspaper saga for IFRA Magazine last year, as the story is quite amazing.

When I interviewed Metro International's CEO Per Mikael Jensen about the company's Q2 results recently, I solicited questions on Twitter, and when I asked him if there ia a future for free newspapers in the economic downturn, given advertising is in decline - a question submitted by fellow freelance journalist Gwladys Fouché - he said those freesheet closures people referred to "that's those Icelandic guys". A bit rich given how Metro shocked the market by closing its entire Spanish operation in January, but you got to love how he phrased it:

"Remember the crazy guys from Iceland? There was a time there where all of them wanted to buy a football team or a newspaper,
" he said and remarked how Metro at least closed down Spain in a mature way (more on that here).


I'm reminded of these sculptures along the road to Keflavik Airport, some of which seemed to be close to falling down, but I have no idea what they actually represent (snapped from behind the bus window)

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:-) )

Another newspaper bites the dust

Edda Media-owned Sarpsborgsavisa will cease publication 28 May, it was decided yesterday.

The freesheet is the third newspaper in the county of Östfold to see its owners pull the plug within less than seven days. Only last Tuesday, Norwegian newspaper group A-pressen announced it would close local newspaper Moss Dagblad and local freesheet Halden Dagblad with almost immediate effect.

Meanwhile, it is expected Mecom, Edda Media's mother company, will get yet another covenant test extension today - this one to the end of April. The media group headed by former Mirror boss David Montgomery has been struggling to to get its debt back within agreed limits for some time now (last time I checked the lending agreements dictated a debt to EBITDA ratio of 3.25 and 3.75). The sale of Mecom Germany was completed yesterday, but this tidbit from Platforma Mediowa Point Group, one of the two companies who bid for the the Polish state's 49 pc stake in Presspublica, does not bode too well for the price Mecom can obtain from its majority stake in the company.

Freesheets may be in the frontline trenches of this war, but it's only the tip of the iceberg

Yes, freesheets are challenged, but that's down to the collapse in the print classifieds market, and Mecom is hardly the best example of a company brought down by its frees.

In an article yesterday, The Financial Times (FT) suggested the freesheet model could be the first victim of the current newspaper crisis. Now, I'm not sure if I should have a go at FT or Trinity Mirror CEO Sly Bailey here, but this article elegantly skirts around the newspaper industry's bigger, structural problem, and some of its facts are at best misleading.

Freesheets hardly at the heart of Mecom's problems
"...Companies with the most serious threats to their existence have a strong element of free newspapers in their portfolio," the FT article says - and cites Mecom as its first example. This smacks of lazy reporting. The key problem for the pan-European newspaper group headed by former Mirror boss David Montgomery is high gearing or leverage. In short: scooping up too much, too fast at the top end of the economic cycle, using borrowed money to facilitate its acquisition spree. That, combined with operating in a sector which is both cyclically and structurally challenged, makes it the perfect example of the kind of company whose shares are receiving the worst hammering in the current downturn.

Of course the downturn in the advertisement market is hitting Mecom like all other newspaper companies, but I'm not convinced Mecom is the best example of a company brought down by its frees. If you're not familiar how much of its business is made up of freesheets, here's a quick run down:

Mecom's freesheet portfolio
In Denmark, Mecom rushed out a new short-lived freesheet, Dato, at the start of the Danish freesheet war in 2006 - but as this closed in 2007, it shouldn't affect Mecom's 2008 financial results - and still has the loss making youth-oriented free Urban in its portfolio, which recently reduced its circulation to 203,000, but has merged all its content production. In Norway, the British based company has a small network of non-daily frees in Oslo; in Poland, it has Moje Miasto running on a similar model to the Norwegian frees - which leaves The Netherlands, where free newspapers comprises the biggest part of the British based company's operation. Every week its Dutch divison publishes about 8.6 million copies of free door-to-door distributed papers in addition to seven paid for titles.

However, in contrast to UK newspapers, Mecom also has remarkably high subscription rates for most of its paid for papers which must be of some comfort amid all the current advertisement gloom. From what the British company has indicated about its 2008 earnings so far, it seems Mecom is worst affected by the advertisement decline, not in The Netherlands but in Denmark and hardly at all in Poland (I'm omitting Mecom Germany here as it's not big on frees and practically sold - just need the shareholders to approve the sales agreement).

A more disturbing case
Now, it is true that companies with a strong element of free are struggling - it will certainly be interesting to see how Metro International, the world's biggest publisher of freesheets will fare in the times ahead - but rather than Mecom, I would have used Norwegian-based Schibsted as an example here.

Not only because, in contrast to Mecom, it's a market leading freesheet publisher in several big markets, such as Spain, France and Sweden (the latter in partnership with Metro) and, to a lesser extent, Eastern Europe, but because it illustrates the larger, structural problem at work so much better. In a way, Schibsted is also a much more disconcerting example.

It's freesheets, especially in places like Spain where the property market is in a dire state, are being hammered, but that's also happening to Aftenposten, Norway's newspaper of record, a daily paid for national newspaper which traditionally has relied heavily on print classifieds.

That I believe, is the bigger problem qua business models here, at least in my part of the world: we're seeing the market for print classifieds emigrate online and not necessarily to online newspapers. In contrast, Schibsted's other national Norwegian print newspaper, Verdens Gang (VG), which gets its ad revenues from brand advertisement rather than classifieds, has not, at least until new year, done as bad as Aftenposten (though if we're talking circulation decline, the relationship is reverse).

So yes, frees may be head of the queue, or "in the frontline trenches of the war," as Baily says to FT, but national and big regional dailies relying heavily on print classifieds make a good number two. And that's still only part of the story, I'll return to why I think Schibsted is such a disconcerting example in a separate post a bit later.

Welcome to the year of the castrated bull

Before the clock strikes midnight, let me take a moment to contemplate how we are now exactly one month into the year of the castrated bull - and how there's rarely been a year more aptly named than this.

If you're not following my logic, I'm talking about how we entered the Chinese Year of the Ox on 26 January, and, as an ox is simply a castrated bull, and a bull in financial jargon is used to describe  (often overtly) optimistic investors who play hard and take big risks, what better metaphore to describe the year so far.  


This is of course a post I should have written a month ago, and by now I'd thought this metaphore would be all over the place - but my quick google search indicates it isn't so. The closest thing I can find is this piece in The Economist on how China's economy economy is like a castrated bull.

A herd of castrated bulls

Now, I should have had a look at what Lexis Nexis might throw up, but as it's not at my disposal... Why only China? How about Iceland, dubbed the Nordic hedge fund masquerading as a country? How about the countries in Eastern Europe and elswhere tethering on the brink of catastrophe induced by the collapse of their credit bubbles?

How about households all over the Western world staggering under the burden of the credit crunch and debts turned bad? How about companies, not at least in the media industry, who until recently went on massive spending sprees and invested recklessly in expansions and extravagant, some would say meglomaniac, business ideas? How about all those bullish investors, small and big, who banked on the good times continuing forver?

Like a house of cards
From my own beat, Baugur is a name that easily springs to mind. Not to mention the Baugur-funded Nyhedsavisen, or as I wrote last August:

"The very idea of starting a newspaper, a freesheet nonetheless, in a time when experts are overbidding each other to predict the death of newspapers and the demise of advertisement-funded business models - such as Dagsbrun did, backed by Baugur... in 2006 - reeks of hubris. From the beginning and to this very day, when Nyhedsavisen is the most read newspaper in the country, Danish media has been waiting for the construction to fall apart like a house of cards. Enter American venture capitalist Tim Draper and his self-composed tune, The Riskmaster, with this enticing refrain: "He is the Riskmaster, Lives fast drives faster, Skates on the edge of disaster, He is the Riskmaster".

Well, as regular readers know: despite his bullish outlook, in the end Nyhedsavisen was apparently too risky a project even for Draper, the partnership that was to save the freesheet never happened, and the newspaper went bankrupt just a month after that post was written.

In fact, the story of Baugur and its many spin-offs reads like a classic tale of hubris and nemesis. Now, for some reason I associate the concept of nemesis, or divine retribution, with unjust punishment meted out by capricious gods to stop humans or other creatures, like Promotheus, for striving to be more (educated, enlightened etc) - for things that I've always considered man's greates virtues - but then, I have a feeling my grip on Greek mythology is not what it used to be.

However, the bigger theme that runs through everything I've described so far is one that rhymes all too well with the concept of hubris and nemesis: there is, with so many of the businesses and fancy schemes collapsing around us, a strong sense of a staggering fall, a very humiliating defeat - grand plans gone ever so wrong, revealed to be a house of cards or worse.

It's the abject and bitter humiliation that goes with realising you've been living a lie: you've completely overestimated your ability to handle the debts you've amassed; your bank sold you a ponzi scheme and you failed, against your better judgement, to read the small print; you discover your partner is a jerk and it turns out everybody else knew it, you'd just failed to see the writing on the wall.


The opposite of the bull in financial jargon is the pessimistic bear - analysts will tell you financial markets are cyclical and move in and out of bull and bear phases - but, metaphorically speaking, I think the sentiment of humiliating punishement, summed up in the symbol of the castrated bull, describes 2009 better: castrated the bull is chastised, domesticated, tamed - and perhaps displayed for public amusement as in the picture here - but there's no turning a bull into a bear.

Metro International closes Spanish operation

Bligh me, Metro International has just announced that it's closing down its Spanish operation with immediate effect!

Actually, to be precise, the announcement ticked into my mail account three hours ago, but I only happended to check it now. Is there something I have missed? I must admit that I've been spending this month writing by the seaside and haven't followed the news as closely as I use to, but I didn't see that one coming.

Only, oh... I forget, probably when Metro presented their last quarterly results, Per Mikael Jensen, the company's CEO hinted strongly that a merger was on its way in Spain when I interviewed him, certainly they've been successful creating such partnerships in several of the other markets they operate in, but seems they've been unable to negotiate one in Spain. Next week's results should be interesting.

According to the press release:
Metro International S.A. ("Metro International"), the world's largest international newspaper, announces that it is discontinuing the activities of its fully owned operation in Spain, Metro News S.L. ("Metro Spain"), which publishes the free daily newspaper Metro in seven Spanish cities. Thursday 29th January 2008 was the last day of publication for Metro. Prior to the closure of our Spanish operations, Metro was the fifth most read daily newspaper in Spain with more than 1.8 million daily readers

Per Mikael Jensen, CEO and President of Metro International said: "Despite dedicated efforts from our Spanish management team and staff, it is with deep regret that we have taken the difficult decision to close down our operations in Spain. Even though Metro in Spain has been losing less money than its Spanish free competitors, the worsening Spanish economic down turn, which during the beginning of 2009 has resulted in a collapsing advertising market, has now resulted in unsustainable losses.

"The stiff competition coupled with a forecasted continued weakening advertising market for Spain, makes the closure of our operations the only rational decision at this time. A continued investment in Spain cannot be justified at this point and we are therefore focusing our resources on growth areas where we can create long term shareholder value."

Frettabladid back in the hands of Baugur-led consortium

Icelandic freesheet merger called off as the country's media battle debt inflation.

Now, this is not news to those of you who read, but I got a bit too busy at the end of last year and ran out of time to do a follow up on this story  for my blog, so here goes:  Jón Asgeir Jóhannesson, the controversial chairman of Icelandic investment group Baugur, recently raised 6,4bn Icelandic Kroner (ISEK), to buy out the media arm of 365media, the company behind Frettabladid.


In October, news broke that the door-to-door freesheet, which is Iceland's most read newspaper, was to merge with Posthusid Arvakri, the company responsible for Iceland's biggest paid-for paper Morgunbladid. This deal was later abandoned due to the latter part's reluctance to take on the added risk of the increased debts of the merged group, said Ari Edwald, CEO of 365media.

Iceland is currently battling a banking crisis and monetary crisis of extraordinary proportions. The three main banks, accounting for about 85 per cent of the banking system collapsed in less than one week and the krona fell like a stone. 60 til 80 per cent of all companies in Iceland are said to be technically broke, and leveraged companies have seen their debts inflated.

"We got more than a billion ISEK more in debts only in October. We had to find a way to refinance our business quickly because we had 1,5bn ISEK in down payments due 5 November," said Edwald.

He explained that Jóhannesson paid 1,5bn ISEK in cash, the reminder of the price was debts he agreed to take over, but emphasised that Jóhannesson is not the sole owner of the new company. "The operation was led by him and he is still the majority owner, but we are working to get other investors on board," he said.

Baugur's role as a dominant media investor on Iceland has been controversial, but Svánborg Sigmarsdottir, a senior reporter with Frettabladid, said most of the freesheet's journalists were just relieved when Jóhannesson put the urgently needed money on the table.

Business angel goes bust

Skype-investor Morten Lund's bankruptcy, following the demise of Nyhedsavisen, is hardly news to the Scandinavians among you, but Techcrunch has an interesting, very sympathetic write-up of the story.

The comments below the story are also worth reading: they make for sharp contrast to the animosity he's often met with in Danish newspaper columns and comment sections, and it was intriguing to see the video of his Le Web presentation which I hadn't heard/seen before.

I've blogged about the Danish freesheet war from beginning to end, including Lund's takeover of Nyhedsavisen, on this blog - it's yet another colourful, and at times unbelievable, tale from the Northern media frontrier that is Scandinavia, a tale deeply intertwined with Mecom's colourful newspaper adventure. For a short summary of the Nyhedsavisen story scroll down to the Icelandic newspaper saga here.

It must be said that the Icelandic part of this story has changed a bit since the latter article was written though (October 08) - in short, the Icelandic freesheet merger was cancelled, and Baugur bailed out the media division of I'll try to get back with more on that soon.  

So it's goodbye to the last newspaper company in Fleet Street

Metro International has just announced it's planning to relocate key operations from Fleet Street to Stockholm by the end of this year, implicitly blaming the move on the financial downturn.

"During Metro's growth period particularly in Europe we have benefited from being located in a media capital such as London. As our business has entered into a more mature state our needs have changed and we have therefore concluded that some of our London functions would profit from being closer to both an operating unit as well as our financial market," Metro's CEO Per Mikael Jensen said in a press release.

I interviewed Jensen at Metro's London offices only February last year, at which point he was talking of employing more journalists in London to build a central content agency, producing content for all of Metro's papers there. How quickly things change.... 

Metro's move from Mayfair to Fleet Street in 2007 was met with appraising nods that print was moving back to  "the spiritual home of British Press". 85 Fleet Street was previously occupied by Reuters, the last major news organisation to move away from the “street of ink” in 2005.  


London, as seen from 85 Fleet Street:
LondonFeb2008 005

Freesheet merger on Iceland

Baugur-backed Frettabladid is to merge with Posthusid Arvakri, the company responsible for Morgunbladid, it emerged this weekend.

"Under the deal, Frettabladid (see Wikipedia for proper Icelandic spelling) will become the freely distributed sister paper of Morgunbladid, and 24 Stundir (the current holder of that title) will be merged into Morgunbladid itself, which is a paid-for newspaper. The deal will mean the loss of dozens of jobs. The reason given is the dramatic shift in the market with a slump in advertising sales and record prices of printing paper," reports, which has the full news story (my Norwegian report of yesterday is here).

To say that another Baugur-backed freesheet bites the dust, might be an exaggeration, but it does look like the end of Baugur's ambitious newspaper adventure. After all, Frettabladid - the "quality" door-to-door distributed freesheet read by some 70 per cent of the Icelandics each day - was supposed to be the media business model of the future, a concept that would turn the world's newspaper industry upside down when Dagsbrun, with Baugur as its main investor, launched it internationally - with Denmark as the first stop.

The news of Frettabladid's arrival in Denmark caused nothing short of a full-blown freesheet war, with a number of new freesheets rushed out to fend off the new Icelandic competition. It was August 2006, the Icelandics had announced their ambitious plans many months before their new baby saw daylight, so early in fact that all their main competitiors all had new freesheets on the street  before Nyhedsavisen finally started publishing 6 October 2006.

I'm digressing of course; we all know how the Nyhedsavisen saga ended last month. But the project was so ambitious, some would say so overtly ambitious, that the end of the saga seems grim. The freesheet was called reckless, immoral even, by its competitors, seeing how it brought down advertisement rates and earnings for other newspaper companies. Its ambitions, and the atagonism they sparked, almost seem like a classic tale of hubris and nemesis, something that has the making of a proper Greek tragedy. But back, to Frettabladid

It was launched in 2001, drawing inspiration from free publications on the continent. At first it wavered, and one year after its inception it had to file for bankruptcy. But only a few days after the bankruptcy it was announced that a group of investors had bought the publishing rights and publication was promptly resumed.

Initially the identity of the new investors was kept secret but in face of heavy criticism and speculation, it was revealed that Baugur Group, a leading retailer and one of the most powerful Icelandic companies, was among the biggest new shareholders. The exact proportion of its shares was however still kept secret as well as other details about the ownership. The fact that Baugur had acquired shares in Fréttabladid proved to be a highly contentious issue and the criticism was fuelled by the apparent secrecy surrounding the deal (as has been the case with so many of Baugur's deals).

Now the concern at the Saga Island is that the new merger will mean an end to media diversity as it effectively creates a newspaper monopoly (see for more

The Danish freesheet war ends: Nyhedsavisen folds

Last night, employees at Denmark's most read newspaper, Nyhedsavisen, received an email  notifying them that the fresheet was to cease publication as of today.

The news came as a complete shock to the employees at the free newspaper. According to, the current majority owner, Morten Lund, approached Metro International  with a proposal to buy its Danish operation - comprised of the recently "merged" freesheets MetroXpress and 24timer - only last week and was rumoured to be preparing an official bid for today. The bid, tough described as "fanciful at the best" by Metro's CEO Per Mikael Jensen, was believed to be financed by American venture capital firm Draper Fisher Jurvetson, recently announced as a major new investor in the freesheet.

Nyhedsavisen was modelled on the "quality freesheet" Frettabladid  that Baugur/Dagsbrun had been so successful with on Iceland. It was Dagsbrun's plans to launch a similar paper in Denmark, backed by Baugur, that forced the "great" Danish freshet war in 2006, which saw a range of new freesheets launched within an unbelievably short span in time (mostly in August).

It did not prove so great for the finances of Danish newspaper companies of course, with as many as five major freesheets competing only in Copenhagen, the Danish capital, for the advertisers gold, the two-year long war turned into a very costly one. Hence the news of Nyhedsavisen closure has been greeted warmly by competing newspaper groups, such as Mecom's Danish arm, Berlingske Media, today.

Nyhedsavisen's management blamed the market downturn and worsened economic outlook for the decision to give up what many have seen as an impossible battle from the very outset. It's estimated Nyhedsavisen lost close to 700m DKK on the venture.  

Update 21:05: Nyhedsavisen's closure leaves Denmark with three major freesheets: both Metro's MetroXpress and Berlingske's Urban predates the freesheet war, while 24timer, the second new major freesheet to be launched in August 2006 (after the now defunct Dato), effectively was acquired by Metro International a while back, and is said to be dragging down the latter's financial results in Denmark.

(NB: Use the tag cloud for freesheets, left-hand side, or the blogbar, right-hand side of the blog, to find more blog posts on Nyhedsavisen, Skype-investor and majority-owner Morten Lund, Draper Jurvetson Fisher, Baugur/Dagsbrun and the Danish freesheet war, which I've blogged about since its inception).  

The newspaper freed from news

This week's news that Bonnier's free daily City would go non-daily from next month on, and reduce its publishing days to Mondays, Wednesdays and Thursday, had many industry experts scratching their heads - not to mention competitors Metro International and Schibsted, now on the same team of course, cheering.

The "new" City will have different themes for each publishing day: Mondays will be devoted to "living", and focus on career, family, relations and private economy; Wednesdays will be "trend-day" and focus on health, fashion etc; Thursdays will be dedicated to the upcoming weekend and have content on entertainment, culture and sport, according to Dagens Media.

One media agancy proclaimed it a great move that should have been made earlier, a move that would make it easier to target advertisement, plenty of others, mostly media commentators, said it was the beginning of the end for the freesheet, Svenska Dagbladet's Martin Jönsson called it a lesson in "the art of almost closing down a newspaper."

For my own part, I can't imagine why I'd want to read a magazine in newspaper format on my way to or from work, when I hardly find time to fit in all the news I'd like to skim through in a normal workday. But then that might just be me, some might find it a welcome distraction from all the bad news the media does tend to have an affinity for.