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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...


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