Kristine Lowe

Baugur's exit from newspapers: much ado about everything

Or why the economic woes of "the Nordic hedge fun masquerading as a country" may not have ended Baugur's newspaper adventure.

A week ago, the executives of Nyhedsavisen, the Danish freesheet launched by Baugur-controlled Dagsbrun in 2006, rushed to denounce headlines that the Icelandic group had sold out of the freesheet that famously provoked the Danish freesheet war. It was all much ado about nothing said Svenn Dam, the CEO of 365Media Scandinavia, the Dagsbrun-controlled company that once owned Nyhedsavisen.

Even though Baugur announced in a press release they had sold their media- telecoms and financial assets to Stodir Invest and Styrkur Invest, and stressed they held no shares in the two new groups, Dam insisted it was just a "restructuring". Morten Lund, an early investor in Skype and the current majority owner in Nyhedsavisen, on the other hand, said this was a non-story as Baugur's top man, Jon Asgeir Johannesen, would be chairman of both groups. Danish journalists who were on the receiving end of Baugur's press release said if this was the case, if Lund and Dam were right, then Bagur had a major communication problem.

Complicated? Well, at least this week's news that Baugur is pulling out of its American freesheet BostonNOW, which was shut down with immediate effect on Monday, couldn't be more straightforward. The bigger question is if this spells the end of Baugur/Dagsbrun's newspaper ambitions though. Does it spell the end of the ambitions to export the 'quality freesheet' concept they've been so successful with on Iceland to the rest of the Western world? Well, I'm not so sure.

The current financial crises could of course spell the end for a company as highly geared as Baugur (though, due to its oblique company structure, we don't know exactly how highly geared), in which case freesheets would be the least of Baugur's concerns. But I have to agree with Lund on one or two crucial points, first: these guys (and gals) "have got BIG balls" (to use Lund's words).

And let's be honest: Baugur/Dagsbrun/Nyhedsavsien, at least in my experience, has been a delight to deal with. A recent poll showed Nyhedsavisen had received what perhaps could be described a disproportionally big amount coverage in Danish media since it launched, mostly negative, something Svenn Dam attributed to a media conspiracy against it.

Now me, I wonder if this wasn't due to the fact that these guys are really good for soundbites. Besides, it's been refreshing to see someone invest so much money in an industry so few seem to believe in (even if it did happen to erode the market for paid for newspapers by drastically reducing their ad revenue, another explanation for why the coverage was largely negative).

Which brings me to the second point it's hard not to agree with Lund on, namely how the newspaper game is a very expensive one. It's also a high-risk game in times of economic trouble, as media is a cyclical industry due to its heavy reliance on advertisment revenues.

I'm sorry for rambling nature of my argument here, got to run to an interview in a second, but as a media analyst I talked to yesterday said: 'we've now seen the end of a very optimistic phase where the economy's been going full steam, which means a lot of ambitions new ventures were launched, competition intensified, and we're now moving into a tougher phase which may or may not be a recession.'

This means two things: overtley ambitions new launches crumble and die; or, and I wonder if this is not the case with Baugur, the company behind those launches, finds a way to reduced its exposure to the risk, making sure they could still cash in at some future, more opportune, point in time...

Picture from Morten Lund's blog published when Nyhedsavisen became Denmark's most read newspaper (which it still is)

Are Schibsted's corporate bylaws dragging down its share price?

Now, here's an interesting contrarian take on what's bringing down Schibsted's share price.

To say that these are not the jolliest of times for media shares would be an understatement. Schibsted, the Norwegian based media group, much praised internationally for its successful online transition, has seen its share price halved since October - from roughly 300 NOK to roughly 150 NOK.

The market consensus seems to be that, like other media companies, it is being punished for its heavy reliance on the mood swings in the advertisement market, and the market is growing doubtful of the viability of its international expansion - in particular its freesheet business. In short: the share is considered high risk as well as cyclical.

But here's another take on this scenario, investor Michael Roessler over at Key Event suggests that "the reason for the persistent market discount to intrinsic value" is that Schibsted's corporate bylaws are written such that majority ownership is not at the 50.01pc level, but at 75.01pc.

In other words, he is saying that The Tinius Trust, created to safeguard the editorial freedom of Schibsted's newspapers, is dragging down the share price.

Admittedly, this suggestion is based on a research report he did in 2005, and by now many of his findings are outdated – Schibsted has largely moved out of TV, while consolidating online, in classifieds and newspapers and expanding in the free newspaper segment – but the corporate bylaws remain. Though Tinius himself passed away in November, it was his hope that these bylaws would be his lasting legacy - and as long as clever inheritance lawyers do not manage tamper with them, it will be, so this still makes for interesting reading (for the full report, follow the link in Mr Roessler's post):

History, Dear Watson
Schibsted in Norway, like Bonnier in Sweden, is a modern implementation of a very old, family-run business. The Schibsted’s have owned the Aftenposten newspaper for 145 years, since 1860.

Mr. Tinius Nagell-Erichson, a member of a branch of the original family, used the cash flow from Aftenposten to buy other papers like Verdens Gang in the 1960’s and was instrumental in introducing the tabloid version.

Mr. Tinius Nagell-Erichson was further instrumental in transforming the private, family-owned business into a holding corporation. Other family members sold their shares in an IPO, but Tinius Nagell-Erichson did not sell.

In what I think he would term an act of duty, he cemented his dominance in the Norwegian national media flag-ship with a 26.1pc ownership and cleverly written bylaws.
At Schibsted, a shareholder majority is not everything above 50pc, but rather everything above 75pc. This corresponds nicely to Nagell-Erichson’s 26.1pc ownership. There is no majority without his shares.

Sell side analysts attribute Schibsted’s lower valuation relative to comparables to “higher perceived risk.” Specifically, analysts cite Schibsted’s “bold acquisitions” as “risky and aggressive.” Danske Securities, for example, argues that a major reason for the,

“persistently low valuation” of Schibsted is the, “higher risk perceived by investors. Schibsted’s relatively high earnings volatility and the stock’s much higher trading volatility are just two examples of this. Schibsted probably confidently expects its valuation to improve markedly and move closer in line with peers’.” – Henrik Schultz, Danske, December 22, 2004.

I believe that this argument is a complete mischaracterization of Schibsted and utterly misses the role of history in Schibsted’s corporate structure today.

First, there is nothing bold or aggressive in the character of Schibsted’s management. Acquisitions at Schibsted are not primarily a proactive, innovative strategic vision for developing the company into the future, but rather a reactive strategy in defense of the threatened markets and their revenues. Schibsted seems to back into its acquisitions when it is motivated by fear...

Even the latest attempt to acquire Alma Media is reaction to threatened ad revenue... Schibsted’s acquisition strategy is not aggressive. It is defensive...

Skype-investor takes control of bet noire Nyhedsavisen

Is it a marriage made in heaven or hell? A marriage of love, convenience or desperation? Last week news broke that Morten Lund, an early stage investor in Skype, had acquired a 51 per cent stake in Nyhedsavisen, the previously Icelandic-owned Danish freesheet.

Ten pence to foot the bill for running a newspaper?
He brought with him a motley crew of other investors, including David Trads, Svenn Dam and Morten Nissen Nielsen from Nyhedsavisen's management, Freeway, the internet company that owns major Danish online portals like dating.dk and arto.dk - even mysterious Chinese businessmen were said to have joined the new board of investors (but let's for the sake of the argument forget about the Chinese).

Rumours also abounded about some clever deal between Lund and Baugur (more about Baugur's involvement later in this post), which would have seen Lund acquire majority control in Nyhedsavisen for roughly 10 pence, in return for taking over the costs of running the lossmaking paper. The freesheet launched 6 October 2006 and Baugur/Dagsbrun expects it to break even in November 2008.

The paper pundits love to hate
Now, don't get me wrong: in terms of readership the irreverent freesheet, modelled on Icelandic Frettabladid, is doing very well. Nyhedsavisen is currently the second most read newspaper in Denmark (with 540,00 readers according to the lastest readership survey), so somebody's got to love it.

I call it bet noire because it's the paper pundits love to hate: according to Denmark's media clergy it's been close to folding since before it launched, and so plagued with money troubles and other troubles that you'd be surprised it hasn't closed months ago.

That is, if you were to believe Danish newspaper headlines... When I talked to Svenn Dam, CEO of 365Media Scandinavia, the Dagsbrun-owned company that publishes Nyhedsavisen, before Christmas, he accused Danish journalists of running a campaign against Nyhedsavisen, suggesting that some newspapers had allowed commercial interests (Nyhedsavisen labelled itself as a challenger to status quo from day one) to influence the way they covered the Danish freesheet war.

The Icelandic invasion
In either case, when the deal between Lund and Baugur/Dagsbrun was made public, some pundits were relieved to see Nyhedsavisen "become Danish", that's always a good thing in this part of the world; not being owned by foreigners.

Now, correct me if I'm wrong, but in all the time I lived in the UK, it didn't seem that foreign ownership was quite such a big deal there, unless of course it was American ownership.

Still, I've heard more than one UK city editor express incredulity over how Baugur, a company from a tiny, remote island, has managed to raid UK high street, scooping up top brands such as Hamleys and House of Fraser.

No wonder then the Danes felt uneasy about the Icelanders invading their newspaper industry with a freesheet specifically aimed at out-competing Denmark's paid-for newspapers (that would be the likes of The Times, The Guardian etc). Nor did it probably help that they supposedly schemed PR plots like these (what a scoop), or that it was a reverse invasion (Denmark ruled Iceland until the Second World War).

But Lund didn't get where he is today by playing it safe, nor by taking the traditional routes, so I think it's a safe bet to predict that Nyhedsavisen will continue upsetting the status quo under his influence. At least, if the media clergy gets it right, until the money runs out....

Jittery markets are risk averse
As for why Baugur has managed to conquer so many prestigious international brands, Lund gives his insight into why he thinks they are so successful on his blog: they've got big balls. Unfortunately, the biggest risk takers are also those who tend to get the worst beating in times of financial turmoil, so there could be rocky times ahead for the private company - now a minority owner in Nyhedsavisen.

The company structure used to work roughly like this: Baugur is the money behind Dagsbrun Media, who owns 365Media Scandinavia, who owned Nyhedsavisen, whose ownership structure will now grow even more complex. For Baugur we could be seeing a move out of cyclical shares in preparation for continued financial turbulence ahead, unless of course the rumours that its subsidiary Dagsbrun has shifted its interest to US media acquisitions is true...

Anschutz not bidding for Metro US, but Metro International is considering divesting titles

Philip Anschutz's newspaper company is not bidding for Metro's US freesheets, despite published reports saying otherwise, an Anschutz's spokesman told Denver Business Journal.

However, Metro International's CEO Per Mikael Jensen recently told me the company currently is undergoing a strategic review where they are looking at what is core and non-core markets for the freesheet pioneer. – Our focus is on improving financial results, said Jensen. To illustrate what we can expect from this strategic review, he cited how the company recently closed a real estate supplement in Stockholm and sold 60 per cent of its Czech operation to a competitor (Mafra). Metro's Finnish operation was recently sold to Sanoma. Jensen confirmed that there was a lot of interest in the company these days and said "It's a bit like being at a ball and everybody wants to dance with you." (more here, in Norwegian). See Piet Bakker's interesting analysis of what might be going on in the company here.

More rumours Schibsted is wooing Metro International

This spring Scandinavian media reported that Schibsted was wooing Metro International. Today, Dagens Media tells us "several sources state that Schibsted plans to buy all, or part of, Metro International." According to the anonymous sources, Metro Stockholm is the prime, or initial, acquisition target. Acquiring Metro Stockholm would put Schibsted in a better position to win the financially draining freesheet war in Stockhom, where Schibsted's Punkt SE currently is competing with Stockholm Metro and Bonnier's City for readers and ad revenues. Both Schibsted and Metro International's representatives refused to confirm or deny the rumours.

Another freesheet bites the dust

Bonnier has decided to pull the plug for the Göteborg edition of its freesheet, City, just as the Swedes take off for the Christmas holiday on Friday 21 December. The free daily has a circulation of 44,000 and was launched when the freesheet craze hit Sweden last autumn. Lars Lundblom from paid for daily Göteborg Posten (GP) told Dagens Media that neither of the freesheets launched in the city back then, Schibsted's Punkt SE and Bonnier's City Göteborg, had managed to get a footing in the ad market so far, so, in his opinion, City's closure would have no effect on GP. He did however concede that the regional freesheet 'war', had led to a decline in over-the-counter sales, but said, for a paper that gets 98,5 per cent of its revenues from newspaper sales from subscriptions, the impact of this was marginal. Newspaper Innovation has more facts and figures.

The great freesheet war – one year on

Last week, to the day, marked the one year anniversary for Nyhedsavisen, the Icelandic-owned freesheet that triggered the once so crowded Danish freehsheet war.

Modelled on the highly successful Frettabladid, it was always the explicit ambition of the paper's backers to take on Denmark's paid-for titles rather than other freesheets - an ambition that is turning the Danish media landscape upside down.

Beating the paid-for titles
Despite all the things that's gone awry for the Icelanders – such as the delayed launch, distribution problems and poor ad revenues – Nyhedsavisen can now boast more readers than well-established paid-for titles such as Berlingske and Politiken, and more than tabloids B.T and Extrabladet.

A quick peek at the latest readership figures reveals that Nyhedsavisen is the country's third most read paper, after JP/Politiken's freesheet 24timer (launched just ahead of what should have been Nyhedsavisen's lauch date in August 2006), and MetroXpress, the well-established traffic distributed freesheet.

Younger readers opt for free news
In other words, the three most read freesheets newspapers in Denmark today are all freesheets, and a recent survey suggests younger readers (20 – 34) prefer the free to the paid-for titles.

In fact, the target group for Mecom-owned Berlingske Tidende, Denmark's oldest paid-for title, is 30+. "It is a strategic challenge to get hold of young readers," Peter Lindegaard, Berlingske Tidende's MD, told Berlingske. He said targeting the 30+ segment was a way to prioritise limited marketing resources.

Readership surveys suggest young Danes prefer to get their news online, or if, on paper, they won't pay for it. Lindegaard's opponent over at JP/Politiken, Lasse Munch, told Berlingske that this is a result of changing media habits, and his company's solution was not to try to change these habits, but to be where young people are.

Free is costly
In this respect, it might be of some comfort to JP/Politiken that they also hold the poll position in Denmark's freesheet market with 24timer.

But it's a poor comfort for those journalists at Politiken, one of the company's two flagship paid-for titles, who will loose their jobs as the paper struggles to save money to compensate for the losses 24timer is inflicting on JP/Politiken.

More to follow

Expert bloggers to Nyhedsavisen

Nyhedsavisen, the Icelandic-owned Danish freesheet, has just hired two political bloggers, Jarl Cordua and David Troels Garby to blog at avisen.dk (via Journalisten.dk)

"David and Jarl can offer inside knowledge that neither the average citizen nor journalist can access. They have access to all the latest political gossip and can contribute to lift the veil on what really happens in the corridors of power," said David Trads, Nyhedsavisen's controversial editor. Avisen.dk already has a range of blogs, written by both journalists and readers, and Trads said the new initiative was meant supplement this universe with resources that went beyond that of your average journalist.

Jarl Coruda will write a blog called "Punch from the right", David Troels Garby one called "Punch from the left".

Schibsted + Deutsche Post = New German Freesheet?

According to Handelsblatt (in German) Deutsche Post is in talks with Norwegian media group Schibsted about launching a national German freesheet (via E24.no).

It's not a secret that Deutsche Post is considering to move into the freesheet market to beef up its revenue streams ahead of the European Union's liberalisation of the market for postal services in 2009. And Schibsted would, of course, with its market leading freesheets in France and Spain and two previous attempts at launching a free newspaper in Germany (via Piet Bakker), be able to add valuable expertise to a potential partnership. For Schibsted's part, Germany must be an attractive market to crack, but the threat of getting sued for unfair competition, as happened with Schibsted's first German freebie project, hasn't exactly gone away...

The 'Danish surprise' is not in Mecom's interim results

Lacklustre results from Mecom's Danish arm was to be expected, but the latest proposed freehsheet merger certainly caught me by surprise.

I must admit I was a bit surprised to see Mecom shares tumble almost 5pc in yesterday's trading, after the company announced its interim results for the first half of 2007. To my mind, the preliminary report offered no big surprises.

Yes, Denmark is Mecom's Achilles heel, as it was Orkla Media's Achilles heel before David Montgomery's investment vehicle acquired it. Those who've followed this story will know that back then, Orkla Media's profit margin in Denmark was about 3pc, compared to 5pc in Poland and 7,5pc in Norway.

With one established and one brand new, albeit short-lived, free paper, the tumultuous Danish freesheet war was not likely to improve the financial prospects for Berlingske Officin, Mecom's Danish arm, any time soon.

Still, Mecom-boss Montgomery was none too pleased whith the disappointing Danish results, and Danish media speculated that this was the source of disagreement which saw Berlingske Officin's CEO Lasse Bolander replaced by Mecom's John Allwood.

The surprise? Well, I was gobsmacked when Mediawatch.dk reported that Berlingske Officin was merging its surviving freesheet, the youth-oriented Urban, with its family-oriented tabloid B.T. a few weeks back. However, the article and headline didn't quite match, the press office was busy, I had other deadlines to chase, and by next morning the headline had been altered to support the article's more modest claim that the two newspapers' administrations were being merged.

Today though, Mediawatch.dk quotes John Allwood saying that merging the editorial teams of B.T. and Urban is indeed an option being considered.

Now THAT prospect threw me. Of all the Danish freeshets Urban probably has the most distict profile, with a dedicated readership among 12-24 year olds, and was on course to deliver its first profit before the freesheet war broke out last August. The proposed marriage with B.T., a very different kind of paper, is certainly not one I had foreseen...

The future may be free, but is it on paper?

I found this picture from Piet Bakker's Newspaper Innovation blog (via Nigel Barlow) quite compelling. Free newspapers are currently published in 50 countries, totalling 40 million copies daily, read by at least 70 million people. Piet looks at worldwide trends for 2007 here, and for Europe here.

However, the price of a 'free future' can be staggering. The latest estimated figures from the Danish freesheet war make for grim reading, and even 'mature' products, such as the US papers of freesheet pioneer Metro International, are still in the red. Besides, these innocent-looking freebies have been blamed for causing everything from forest depletion to subway track flooding, and identified as potent carriers of epidemics such as avian flu.

But then, Norwegian media group Schibsted, who is moving towards break-even with its French and Spanish freesheets 20 Minutes, has stated on several occasions that the company is using its freehsheets primarily to lure people to its websites...

New freesheet merger confirms new strategy

For Danish freesheet 24timer, the key to winning the freesheet war is more local content and less door-to-door distribution.

Or so it seems. 24timer has just masterminded yet another 'merger' with a local freesheet, this time Fyns Stiftstidende's Xtra, securing another local version of its national freesheet. 24timer Xtra will hit the streets 8 August with a circulation of 32,000. Xtra will supply the local coverage, 24timer the national, and the merged freesheet will be distributed at traffic hotspots only.

The merger follows similar deals with Nordjyske's Centrum Morgen and Centrum Aften, and JP Århus. With these moves, 24timer, seems to strike out a very different course from its main competitor, Icelandic Nyhedsavisen.

It was the Icelandic pledge to launch a Danish version of the highly successful Frettabladid, a door-to-door distributed 'quality freesheet', that forced the Danish freesheet war in the first place. But door-to-door distribution has proved difficult and inefficient in Denmark: the distribution form was blamed for the failure of Montgomery-owned freesheet Dato, and these days both Nyhedsavisen and 24timer distribute some of their freesheets via traffic hotspots.

Citizen journalism project survives Danish freesheet merger

It was with some concern I read this week that Nordjyske's regional freesheets Centrum Morgen and Centrum Aften would merge with JP/Politiken's 24timer and be published as 24timer Centrum after the holidays.

Yes, it's just another, perhaps inevitable, merger in the once so overcrowded Danish freesheet war, and 24timer had already swallowed JP Århus+, another regional freebie, but with DitCentrum.dk Nordjyske pioneered one of the most interesting citizen journalism projects around:

A lot of newspapers allow their readers to set up blogs on their site, which is great for increasing traffic to the news site, but most separate the blogs from the rest of the newspaper - which means there's no synergy between the bloggers and the news. Nordjyske has avoided this by taking to heart examples such as American backfence.com, newsvine.com and digg.com as well as Korean ohmynews.com: blogging is not separate from the news stream, but part of it. At ditcentrum.dk readers can upload blog posts, articles, pictures, opinion pieces and poems, which may then be printed in the real paper the next day. And people happily report on local stories such as flooded tunnels, the price level at local pizza takeaways or compile a photo gallery of fun trucks trafficking the region's highways (In this paragraph, I'm paraphrasing a few lines I copy-pasted from a review by Henrik Föhns, published last summer, but the link is broken after Journalisten.dk redesigned its site)

Lars Jespersen, a managing editor at Nordjyske explained: 'The readers' contributions are not confined to a separate section, but scattered throughout the newspaper. We have 12,000 unique users at centrum.dk every week and are very happy about that. The readers' stuff we print can be stories about local affairs, reflections on life, opinions, poems, pictures. Lots of pictures. It's a mixed bag.'

This concept, Jespersen told me, will not be affected by the merger, and, together with its readers, Nordjyske will supply all the local coverage to 24timer Centrum – which will get a circulation of 35-40,000 and be distributed both at traffic hotspots and door-to-door.

Of course, the future success of 24timer as such will not in any way rely on this regional citizen journalism project alone. Far from it: it's still war, and many feel that four major freesheets is at least one too many for the small Danish market. But in the larger scheme of things, this is one of the citizen journalism projects I've come across that makes the most sense to me.

I think people need a strong motivation, or a strong sense of community, to produce citizen journalism that can compete with or supplement mainstream media, as in the case of readers reporting on local issues, and local newspapers are perfectly placed in this respect. I can totally see myself submitting a story for free to my local newspaper about a community issue I care about, political or practical, and, of course, it's the perfect way for a local or regional newspaper to become more relevant to its readers.

The price of a free(sheet) future

The price tag for the Danish freesheet war is approaching 1bn DKK, according to Danish trade journal Journalisten. They have calculated that so far the Icelandic attempt to prove that the future is free has cost the newspaper companies involved 815m DKK, with the now closed Dato taking 196m DKK in losses, Icelandic Nyhedavisen 309m DKK and JP/Politiken's 24timer 310m DKK.

But a row over Journalisten's methods has erupted in the comment field of the said article. The article only mentions in the last sentence that these calculations are based on statistical material from polling companies rather than actual figures from the media companies, and it also asserts that the money could have been better spent to educate 20.000+ university students.

Both aspects are rubbished by Nyhedsavisen journalists in the comment field: 'These numbers are mere speculations,' writes Lars Fogt, who adds that journalists are known to be crap with numbers and refers to a Danish editor who banned his hacks from writing about economy because, in his opinion, they were clueless.

Christina Agger ridicules the assertion that the newspaper companies involved would have spent their money on universities if they hadn't decided to try their luck on the freesheet market, and is at loss over why her own trade journal seems to be of the opinion that it's better for society if she and her colleagues were on the dole rather than supporting themselves by working for these 'bad' freesheets.

Marvellous. The comments, both from Journalisten and Nyhedsavisen's staff, adds a whole new dimension to the article, and I must admit I find them almost more interesting than the article itself.

Schibsted + Metro International = true?

Talking about freesheet wars, is it entirely far-fetched to assume the Swedish freesheet war is partially to blame for Metro International's disappointing first quarter results? The company's CEO, Pelle Törnberg, has said resignations in the marketing department and poor management is to blame for Metro's lacklustre performance in Sweden, identified as one of the company's problem areas, but in any case, the plummeting stock price is expected to make Metro an even more attractive acquisition object, and comes in handy for potential suitors – should the company be for sale.

Last week Dagens Naeringsliv speculated that Norwegian Schibsted was courting the Swedish freesheet giant, eagerly eyeing an opportunity to marry its online expertise with Metro's freesheet expertise, a rumour Schibsted's CEO, Kjell Aamot, declined to deny or confirm. Schibsted's freesheets are of course bigger than Metro's in both France and Spain, but in Sweden Metro is still in poll position among the freesheets, and swallowing a key competitor might increase ad revenues in all markets where Schibsted and Metro are head-to-head.

Does Dato's demise prove the market for door-to-door freesheet distribution is non-existent?

One could argue that Mecom's Dato was a rushed, badly planned, ill-informed product: it was the least well-received of all the new Danish freesheets and in direct competition to Mecom's top paid-for Danish title, Berlingske, as well as its traffic distributed freesheet Urban. But could it be that it is the distribution form, rather than quality, brand name or ability to carve out a niche for oneself, that is on trial in the Danish freesheet war?

When Dato folded, or 'merged' with Urban, last week, Lasse Bolander, managing director of Mecom's Danish division, explained the paper's failure thus: "We thought there was a market for door-to-door freesheet distribution. There isn't."

That, of course, is a very convenient explanation for Mecom, as it removes the whole quality dimension, but there is anecdotal evidence that the explanation isn't entirely far-fetched. Distribution has been a problem from the outset of the Danish freesheet war. All the new door-to-door distributed freesheets have been struggling to gain access to Copenhagen's blocks of flats, threatened with legislation for not respecting consumers who don't want freesheets on their doorsteps, and all of them have recently succumbed to distributing papers in transport hotspots as well as door-to-door.

Interestingly, though it was Dagsbrun's pledge to launch its quality door-to-door distributed freesheet-concept internationally, with Denmark as the first stop, that forced the whole freesheet war, the company's latest launch, Boston NOW, is traffic distributed, and it is in the US. When I talked to a company executive last year, Sweden was singled out as the most likely target market after Denmark, to be followed by various European markets – a strategy enthusiastically promoted in many media outlets. A minor change of strategy, or a sign that the company has given up on promoting this particular distribution model outside of Iceland?

Next victim in the Danish freesheet war: 24timer?

Mecom-owned Dato was bound to fail because it was a defensive move, and a very rushed one at that. This, in essence, is also why I think 24timer will be the next Danish freesheet to call it quits.

After Dato merged with Urban this week, Lasse Bolander, Berlingske Officin's managing director admitted to Berlingske that a key reason for launching Dato last August was indeed, as widely assumed, the announced arrival of Icelandic-owned Nyhedsavisen, which they saw as a threat to the market for [paid-for] morning newspapers, including Berlingske Tidende. In this situation they felt attack would be the best defence.

They say great minds think alike. Now I don't know Bolander or Lars Henrik Munch, JP/Politiken's CEO, well enough to pronounce any verdict on their minds, but it would surprise me if the reasoning at JP/Politiken wasn't much the same (its new freebie, 24timer, hit the streets a mere two days after Dato was announced). In other words: bleed'em dry.

Except, of course, that didn't happen, or has yet to happen, mainly due to the deep pockets of Icelandic Baugur, the biggest shareholder in Dagsbrun (who owns 365 Media, who owns 365 Media Scandinavia, who owns... well, you get my drift). More importantly, Nyhedsavisen's explicit ambition is to be a quality freesheet that competes with the paid-for morning papers, rather than other freesheets, whereas Dato and 24timer were classic freesheets that ended up eating into the readership and advertisement revenues of their owners paid-for titles.

Some Danes, like Mads Øvslien (writing in Berlingske) even complained that a strange side effect of the freesheet war was how the freesheets were delivered bright and early in the morning, but subscribers were left waiting for the paid-for titles from those very same media companies. He concluded: "I don't know many businesses that survive by focusing on their peripheral products at the expense of their core products."

Now that Dato is no more, JP/Politiken will also have to pay more for distributing 24timer, which previously was delivered to Danish households together with Dato. Still, according the latest readership figures I've seen, 24timer is Denmark's most read door-to-door distributed freesheet. If we include the traffic-distributed ones, it's the third most read free paper, after MetroXpressen and Urban – and, now that Dato is gone, Nyhedsavisen is the least read.

How come I still think 24timer will be the next victim in the freesheet war? Because while both 24timer and Nyhedsavisen are steadily growing their respective readerships, it's the paid-for titles that's paying the price – and burning off a fortune to subsidise a freesheet that steals readers from your paid-for titles, as is the case with JP/Politiken, who owns top paid-for titles such as Politiken and Jyllandsposten, doesn't make much sense.

Unless, of course the bosses at JP/Politiken still believe they can exhaust Nyhedsavisen's finances by doing so, or that Nyhedsavisen is too dangerous left unencumbered by competition in the free door-to-door segment.

The Danish freesheet war: who'll be next to throw in the towel?

With four major Danish freesheets left after Dato merged with Urban yesterday, experts still think the market is too crowded and one more freesheet needs to go. Dato is said to have lost at least 100m DKK - setting aside 400m DKK to fight the freesheet war was one of Montgomery's first actions when he finalised the acquisition or Orkla Media last year - and half of its journalists will be made redundant.

Who's next? My bet is actually on JP/Politiken's 24timer, though it seems, with circulation figures approaching half a million, to be doing very well. Dato was bound to fail because it was a defesive move, and a very rushed one at that. This, in essence, is also why I think 24timer will be the next Danish freesheet to call it quits. More in a separate post later... (Since I'm self-employed, my days just snowball out of control sometimes: this is one of those days, not much brainpower left at the end of it).

Montgomery's Dato second victim in Danish freesheet war

As I predicted at the start of this year, Dato – the first new door-to-door distributed freesheet to hit the streets at the start of the Danish freesheet war last August – has become the second free title to be withdrawn from the market. Berlingske Officin, Mecom's Danish division, has wisely decided to merge Dato with Urban, the newspaper group's pre-freesheet-war freebie, and Dato will cease to exist as an independent newspaper as of today (via Berlingske, in Danish).

Back in January I wrote (6th paragraph) that "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 ... 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."

Media companies: hip to the new at the expense of their core products

It's easy to become infatuated by all that the brave new media world has to offer, and the speed by which new products are launched, but the reality doesn't always match the rethoric, and somtimes consumers are decidedly underwhelmed by what media companies think they want.

In Denmark the surge in new door-to-door distributed freesheets has meant those who subscribe to have paid papers delivered on their doorstep are left waiting, and in the US, Variety complains that TV companies love to talk about the brave new, on-demand future, but fail to deliver on present and former promises.

Mads Øvlisen, writing in Berlingske (Montgomery-owned Berlingske Officin is one of two national newspaper groups publishing both a free doo-to-door distributed newspaper and a paid national one) :

"The morning call from the doorstep "The newspapers are here!" has become a much awaited message of joy. For even at our place, it has become an exception that we get the morning paper in time. But the freesheets - owned and subsidised by the big newpaper groups, who find it so difficult to deliver what I consider their primary service, a service I pay for – they are there! I find it difficult to understand the strategy behind this. I don't know many businesses that survive by focusing on their peripheral products at the expense of their core products."

Variety (via Mediabistro):
The CEOs of the giant media companies are out there every week at investor conferences hammering home the same message: "We are hip to the emerging new platforms, we understand the nirvana of anywhere/anytime media, we know the old media's doomed

That's the message, but here's the reality: This summer these very same digital prophets will spend vastly more money on "old media" than ever before as their mega-budget tentpole sequels roll out. So the CEOs are paying lip service to the new, but betting big time on the old.... Ironically, Time Warner's "big sell" comes along at the moment when the company is facing a firestorm of class-action lawsuits and consumer complaints that its existing services are dysfunctional. In short, the "big reality" is that the company doesn't come close to delivering on its present or former promises.

One has to wonder, at what point will consumers say, "I want my old TV set and my old email and my old cell phone, and stop telling me I'm missing out on the future."