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

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

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

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

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

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

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

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

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

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

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

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