Kristine Lowe

Norwegian politicians want to restrict online ownership to maintain media plurality

Trond Giske, Norway's culture minister, seeks to amend the coutry's media ownership law to limit how big a share of national online traffic one company can control, a proposition that garners support from both sides of the political divide (via Adresseavisa.no)

It had to happen sooner or later, didn't it? I mean, Norway's media ownership law already dictates that no party may control more than a third of the newspaper, radio or television market, so why not regulate the national share(s) of the world wide web?

Incidentally, that would be the media ownership law many felt cleared the way for a foreigner like David Montgomery to acquire former Orkla Media, as national media companies had to watch the size of their market shares, but I digress....

'Plurality on the world wide web is just as important as on paper,' said Giske. Yesterday he proposed to introduce categorical ownership limitations for online media, measured by how many per cent of online traffic one operator may control.

Similar proposals have been abandoned twice before, as it was deemed too difficult to measure and categorise online traffic. However, in the light of Schibsted's prolonged efforts to create Media Norway, a merger that would dwarf just about any other player in the Norwegian media market, Giske feels it is time to re-evaluate the media ownership law.

The merger has yet to gain regulatory approval, and after much ado about making sure Schibsted's print ownership stayed within the limits of the media ownership law, the regulatory powers are debating the actual influence of the papers involved and Media Norway's dominant online position. A major objection to the merger is how 'half of Norway' get their online news from Schibsted controlled websites, but that is currently not against the law.

Kjell Aamot, Schibsted's CEO, has rubbished the notion that it's possible to control online media ownership and said it's unfair to regulate national online traffic seeing that Google, MSN and Facebook are opinion formers in the same way as Norwegian news sites.

Adresseavisa quotes Aamot asking whether Giske is "going to stop us owning websites or starting new ones? If bt.no writes a big story that attracts a lot of traffic one day, will they be prevented from publishing a big story the following day so as not to gain too much traffic?"

Or as a friend suggested, will we live to see the day where you'll be greeted with the following message when you try to check Schibsted-owned VG.no (Norway's biggest news site): "Today's quota for online readers at VG.no has been filled, welcome back tomorrow."

Black Monday II? Media Authority to rule on Schibsted merger

Today may also become a black Monday for Norwegian media group Schibsted, as the country's Media Authority is due to give its verdict on the media company's prolonged efforts to create giant media group Media Norway. The merger would see Schibsted's national Aftenposten partner with regionals Stavanger Aftenblad, Bergens Tidende and Faedrelandsvennen and has previously been branded an acquisition by Mecom, with Schibsted bent on retaining a 50,1 per cent stake in the new consortium.

In an op-ed last Monday, Stig Finslo, a director in Mecom's Norwegian arm, Edda Media, asked: 'Who exactly is eroding media diversity in Norway?' He was responding to a journalist in Stavanger Aftenblad who, defending the propesed merger in his own paper, had said he thought it strange how 'Mecom is allowed to ravage as they see fit, causing considerable damage to media diversity, while an ownership integration seeking to strengthen the position of the regional newspapers may be blocked.' Finslo challenged the journalist to document his claims about Mecom.

However, Norway's culture minister has made it clear on numerous occasions that he is 'very worried' about how both Mecom and Media Norway could erode the country's media diversity and thereby threaten local democracy.

Update 15:20: the Norwegia Media Authority obviously shares those worries and has upheld its previous pledge to intervene against the merger, citing Schibsted's dominant online position and the relative size and influence of the newspapers involved as major reasons.

Schibsted on the other hand, contests the Media Authority's interpretation of Norway's media law and will appeal to the country's Complaints Commission.

Competition authority approves Schibsted merger

Well wouldn't you know, just a few days ago the Norwegian Media Authority voiced its disapproval of Schibsted's plans to create giant newspaper group Media Norway, by 'merging' its daily Aftenposten with regionals Faedrelandsvennen, Stavanger Aftenblad and Bergens Tidende, and threatened to intervene against it. Today the Norwegian Competition Authority has approved the merger, though demanded that Schibsted observe certain conditions, mainly to do with not creating a printing monopoly. Any radical alterations to the original merger plans? Not really, at least not according to Schibsted. It must be a good thing that there are several authorities involved: gives you a new news story almost every day. Better prepare for more consultations with the Norwegian Media Ownership Authority – Dagens Medier reports that a final decision is expected by 15 September.

Schibsted's merger dreams may be doomed

Yesterday's announcement that the Norwegian Media Authority will intervene against Schibsted's grand plans to create a newspaper group that would dwarf all other players in the Norwegian market, has apparently not made Schibsted's execs give up on their grand vision, but it's looking increasingly unlikely that the merger will go through – unless the terms are radically altered.

The Media Authority has refused to take into account Schibsted's professed intention to sell its shares in regional newspaper Adresseavisa to reduce its share of the country's newspaper market. Media professor Helge Östby has suggested Schibsted reduce its stake in the proposed media group, Media Norway, from 50,1 to 49,9 per cent, but Tinius Nagell-Erichsen, whose trust holds the controlling stake in Schibsted, has vehmently denied this is an option.

As regular readers of this blog might remember, Birger Magnus, Schibsted's executive vice president in Norway, has previously stated that he fully understands Norwegian media's concern about foreign owners, but that it is beyond him why they should obsess about how many per cent Schibsted ends up controlling in Media Norway. Last time I checked, the majority of Schibsted's shareholders were ... eh... foreigners, but surely, as long as the Norwegians get run the show, that is besides the point – or maybe there's foreigners and then there's foreigners?

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.

War
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...

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."

To merge or not

Norway's culture minister is worried it will reduce newspaper diversity and harm local democracy. The newspaper's employees are worried about job cuts resulting from 'synergy effects'. No, we're not talking about David Montgomery or another foreigner and/or venture capitalist buying into Norwegian media, but rather about today's vote on a merger proposal that would dwarf just about any other player in the Norwegian media market.

It has taken the parties quite some time to agree on the proposal that will be presented to the boards of Norway's biggest broadsheet and four biggest regional papers today. With several shareholders in the different papers, such as Erik Must (Adresseavisa) and Mecom (Bergens Tidenede and Adresseavisa), opposing Schibsted's demand for majority control, it seems increasingly unlikely that the merger will go through. However, Aftenposten reports today that should Adresseavisa, whose board is said to be opposed to the merger, vote against it, other regional papers may be invited to join the regional newspaper company.

The merger is intended to save costs, increase revenues and improve the papers' negotiating power with advertisers. On the face of it it's a merger that makes a lot more sense to Schibsted, who has demanded they get minimum 50 per cent of the shares in the new company, than the regional papers involved, all of which have better profit margins than Schibsted's Aftenposten.