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Nyhedsavisen bailed out by venture capital

After weeks of speculations of whether the end was near for Denmark's most read newspaper Nyhedsavisen, it emerged yesterday that American venture capital Draper Fisher Jurvetson (DFJ) had come to the rescue.


Even though Morten Lund, the majority owner and previous early stage investor in Skype, said in a press release last week that a new ownership had been agreed, a new "world class" investor would back the paper and the delayed accounts would be handed in, details of the new ownership structure surfaced until yesterday and according, to Berlingske, the accounts were subitted Friday 1/8.


The accounts äre reported to be delayed because the accountant demanded that money to secure the freesheet's future had been transferred to a company account before he signed it. DFJ is reported to have invested an undisclosed but substantial sum in Morten Lund's company ML Medie ApS, enabling Lund to increase his stake in Nyhedsavisen from 51 to 85 per cent, while Icelandic Stodir Invest retain 15 per cent. Lund has previously said about £15m (150m DKK) was needed to bring the freesheet in the red.


"We are proud to do business with Morten Lund, and since we have been investors in Hotmail and Skype, it's not new a new thing for us to provide a free service to challenge the established market," Tim Draper, the founder of DFJ said in a press release announcing the partnership. "Personally, I'm always looking for something that can turn an industry upside down," Draper said on a previous occasion when asked what kind of ventures he likes to invest in.  


How well doesn't that rhyme with what Jon Asgeir Johannesson, Baugur's main man, said in an interview with Börsen, the Danish financial daily (who annoyingly keep a lot of their content locked away behind pay walls), at the very start of the country's freesheet war in 2006:


"In the future there will be millions of websites and TV- and radio stations, but there will only be a few newspapers left and they will be a platform for advertisers who want to reach a wide audience."


It was always Nyhedsavisen's ambition to turn the newspaper market upside down by challenging the paid for dailies with a "quality freesheet" - modelled on Icelandic Frettabladid. And, despite its financial difficulties, one must admit that by becoming the country's most read newspaper in such a short time, it has accomplished this - though venture capital firms are not known to be very patient investors, so doubts of the newspaper's financial foundation will linger.   


One way for media to get community right

What if your news site could create a place online where it was so attractive to participate in the discussion that politicians, lobby groups and your average Joes would all happily post under their full names to make their voices heard, to argue their case in a civilised manner: thereby creating a virtual conversation hub where journalists and readers, politicians and voters could inform each other, or at least exchange ideas and information?


If I understand Bengler correctly, that is what they have tried to achieve with Origo, a social network developed on behalf of A-pressen, one of Norway’s biggest local newspaper groups (to be precise, according to one of the Bengler-guys, Even Westvang, Origo is a service that has a social network, a bit like Flickr, which is about sharing pictures but has social aspects as well - where who you know is used to tell you what’s new for you according to social relevance). You can read more about the basic hows and whys of Origo in this piece I wrote for (or, if Norwegian isn’t all Greek to you, here and here).


It all goes back to how you scale quality online debate successfully: in Origo’s case it has meant requiring people to identify themselves (at least when they register) and have stable identities; Origo does keep a track record on users - so people who insist on behaving like trolls can be evicted - and creating technical solutions which better visualise that people are in fact having a conversation, not just a shouting match.


There are several examples of local politicians finding Origo a useful place to be: both to launch initiatives, or distribute news about these, and to participate in debates, which make it seem to me that these measures must be paying off. The way local newspaper Lofotposten is using the site is another example of how the Bengler guys seem to have achieved at least some success with what they set out to do: making it an attractive place to act in the same role or capacity as the one you have in real life (as a politician, a journalist, a human rights activist, a vegetarian etc etc) .   


“We have looked a lot at how a publishing tool used together with news sites should work. The big difference between social media and news sites is that social media know a lot more about you, which makes these sites heavy to develop because you’re effectively making personal media sites shaped around the activity of the individual user,” Westvang, who, intriguingly, sees Origo as a rhetorical tool acting in the world on behalf of its developers, told me.


(Btw: Matt, I owe you a comment on community vs. network, I’ll try get back to you in a post on that soon)

Is shorting partly to blame for the plunge in media shares?

Back to what is now the rather old question of whether it just "the fear factor", or if it is the market’s loss of faith in the media's business model that’s to blame for the recent hammering the industry’s received on the worlds bourses:


This piece on short-selling in today’s Independent reminded me that media analysts I’ve talked to did mention shorting could be partly to blame for what Stephen Glover described as the City having gone ‘barking mad’ over newspapers. Short-selling is much more common these days - only Tuesday Berlingske wrote (in Danish) it has now even caught on among private investors - and could have exacerbated the swings of the market, forcing the value of media shares much lower than there was reason for (the rationale being: if you believe media will suffer as a result of the temporary woes of the advertisement market, you might downgrade the shares but not send them quite as far down as they have been).  

Denmark's most read newspaper may be forced to close

Nyhedsavisen failed to hand in its annual accounts on deadline yesterday, which could spell the end for the infamous freesheet, according to Berlingske.


Danish media have reported for some time that the freesheet that once forced the costly Danish freesheet war is struggling to find new investors to help foot the bill of running the paper, a prerequisite for part of the management to continue in their roles. The lack of guaranteed future funding is also supposed to be the reason why the accounts are delayed. But even though Nyhedsavisen missed the big deadline, a last minute rescue is still possible.


The management has refused to comment on recent developments, but last night the freesheet’s current majority owner, Morten Lund, a former early stage investor in Skype, tweeted: “Today [Monday] was a day beyond aII days (exept having kids) - I have one word for you: WOW!” That doesn’t really sound like a downtrodden and defeated man fighting for his newspaper’s survival, but if the freesheet is forced to close it would be welcome news for main competitors Mecom, JP/Politiken and Metro International. Only yesterday, Metro, which publishes freesheets across the, globe reported a bigger-than-expected 83 per cent fall in quarterly operating earnings, hit by weak sales and advertising, and Denmark was singled out as one of the most problematic markets (Newspaper Innovation has the full figures).


Update (15pm CET): news just broke that Nyhedsavisen has doubled its share capital (from 10-20m DKK) by converting debt, which means Icelandic Stodir Invest may have parted with the company and the ownership structure been changed. 'Morten Lund and the Icelandics came to an agreement last night. I have signed the accounts and we will not be liquidated," Morten Nissen Nilsen, the company's MD, told Ritzau, via Berlingske (which means that tweet I quoted might have been key to what's just happened)


Update 23/7: in a press release published on his blog (in Danish), Morten Lund said he still holds majority control in the newspaper company, and that the annual accounts will be submitted on Thursday morning.


Picture from Morten Lund's (former) blog:



Revealed: my level of geekiness

Gee, I beat Paal Hivand and was only three points behind's Anders Brenna, a long-time programmer and IT-journalist.

Not sure how I did that, my knowledge of Tolkien and Slashdot could hardly be enough. I've always been good at translating abstract or technical issues into simple terms that make sense to the 'uninitiated', but, even though I do accomplish most of what I bend my will and/or focus to, I'm not very techy, or don't consider myself to be (sometimes, especially when my mind is elsewhere, say on deadlines, I consider myself plain stupid). Anyway, here's the quiz: how geeky are you?

65% Geek

OnePlusYou Quizzes and Widgets

Recession may be looming, but now is a great time to start a magazine

Of course, financially it is a bad idea, as most of them fail, but, despite the current sense of doom on the stock markets, it appears now is the best time in years to start a magazine.


Just this morning I was reading about the collapse of Spain’s biggest property company Martinsa Fadesa, and thought to myself: my, this doesn’t bode well for Schibsted and Metro International, especially seeing that this probably won’t be the last such collapse we’ll se in the Spanish property market (if you wonder why Schibsted and Metro should be worried about this, have a look at their portfolios).


However, chance would have it that the next post I read in my newsreader was one by Swedish media blogger Vassaeggen, aka Olle Lidbom, who presented the rather counterintuitive argument that now’s a great time to start a magazine (I’m paraphrasing his conclusion in the intro).


The gist of his argument is that innovation is at a low-point in the big publishing companies after the massive wave of consolidation we’ve seen in Sweden (and Norway) recently, given that consolidation usually means rationalisation, and, statistically, good magazines launched during hard times have a bigger chance of a long life.  


Lidbom pointed to this fascinating article in The New Yorker, Let the Bad times roll (2001), to support his argument. The article looks at several magazines and companies that saw daylight during very hard times indeed, including Business Week which was founded in September 1929, six weeks before the Great Crash. Two key points jumped at me in the article:


  • During a boom, it's easier to raise money and easier to sell products. You'd think that would be a good thing if you were trying to start a business. The problem is that everyone else thinks so, too; when the economy is hot, everyone's an entrepreneur. The more companies there are, the less likely it is that one of them will be able to sustain a lasting competitive advantage, no matter how flush the marketplace is. Starting a business is like investing in stock: you want to buy low and sell high
  • What's more, the easier it is for start-ups to raise and make money, the harder they find it to manage that money wisely. Companies need discipline—an ingrained sense of the relationship between effort and reward, product and profit. That's where a nice, brutal slowdown can come in handy

Now, I must admit I have my doubts about magazines, partly because, if they’re not related to my beat, I only find time to read them on flights. I’d rather put my money on a new e-zine, news site or something: lightweight, low-cost, the only overheads would be salary - but then, I don’t have any money to gamble with, so that’s all theoretical.


Talking about investing, a property in Spain once the market hits rock bottom wouldn’t be so bad either, if it wasn’t for all the horror stories I’ve heard about red tape and the country’s legal system. And then there are media shares of course…


As for light-weight, am travelling at the moment and the new composer editor in Typepad may be a lot fancier, but hardly light-weight enough (yet) to make it an agreeable travel companion (this may effect the formatting of this post)

Has the City really lost its marbles over media?

Well, perhaps not. Despite these ever so eloquent musings of Stephen Glover last Monday, it is looking increasingly gloomy, at least in the short-term, for an industry that relies so heavily on the health of the advertisment sector (which is a bit like becoming financially dependent on someone with a serious bipolar disorder, oscillating between extravagant shopping sprees and shutting the door to the world in periods of bottomless depression).


Just this evening (8pm), this ticked in to my newsreader from Financial Times: Marketing budgets over the next 18 months are facing their sharpest falls since the terrorist attacks of September 11 2001, according to a survey widely regarded as a confidence barometer for the broader economy as well as the advertising industry. The Institute of Practitioners in Advertising’s Bellwether Report, released on Monday, says budgets for the current year have been revised down for the third quarter in succession. The rate of decline “was gathering to a pace not seen since the immediate aftermath of the 9/11 terrorist attacks”, it said. 


For today’s Independent, Keith McGregor, restructuring partner at Ernst & Young, told the paper: "Mistrust and trepidation have spread. Raising capital is perilous and equity markets are demanding unprecedented reassurance, especially from the leveraged and those exposed to home construction or the consumer."


Exposed to the consumer? Yes, in every possible way. Leveraged, or highly geared, yes, that applies to many media companies as well, especially a company such as Mecom, of course, which is financed by debts and has suffered a terrible beating on the stock market recently. Besides, how strategical are its investors, and how patient if the advertisement slump drags on? However, the European markets it operates in aren’t necessarily as badly hit by the downturn as the UK is, but this - that many of the companies on my beat operate in several markets - is why I’ve been watching and waiting for the ghost of recession to spread through Europe, and I have to admit I expected to see it effect advertisement spend and financial results much sooner.


Still, Nils Pratley wrote in The Guardian recently: “Buy when there is blood on the streets, advised Sir John Templeton, the celebrated investor and philanthropist... It is excellent advice, as Templeton proved time and again, and a few market shrewdies are asking whether current conditions are sufficiently bloody to be tempting.”

Not all media companies are equally immune to raiders: in desperate times such as these ownership structures could shift – both through raids and consolidation - as could the advertisers’ favour. The Guardian recently quoted Sir Martin Sorrell, chief executive of the advertising group WPP, saying: "The pressure on the newspaper industry in western European markets is both structural, because of disintermediation by the web, and cyclical because of slowing growth rates. The cyclical part will return, the structural one will not. The simple fact is that more people are reading newspapers or newspaper content online, rather than offline."

This reminded me of an interview I did with Norwegian media researcher Arne Krumsvik a while back, where he speculated that should we see a serious advertisement slump in Norway, it might be the death knell for the print editions of tabloids like VG and Dagbladet, the famous last straw that finally made advertisers seek shelter online (already the online profits of these papers much surpass their print profits).  Against this backdrop, this line from Peter Preston’s column, is, well, richly imbued with meanings: “This is a voyage of discovery, not simple despair: and we shall all understand the future rather better when it's over.” Mercifully, bear markets tend not to last very long, as one media analyst I talked to recently was keen to emphasis, but there are of course those, who, given the volatility of the market, would put more faith in the words of say Jonathan Cainer

Do you trust private persons who blog?

This is one of the key questions in a survey two master students are conducting for a thesis on blogs and trust (you can find a link to it here, in Norwegian).


Trouble is, it’s a bit like asking “Do you trust people who talk?” or “Do you trust people who write letters to the editor?” – it depends on who they are, what I know about them, where they’re coming from, what their agenda is etc etc. In its current form, I can’t imagine the results of the survey can be used for much as the questions are too ambiguous (which in my case meant I often chose ‘neither agree nor disagree’).


When asked if, on a scale from 1-7, you agree or disagree that private persons who blog are credible, which number to pick? Yes, I trust the blogs penned by private persons I read regularly (surprise), but that is not to say I trust all private persons who blog – and why would I spend time reading blogs I don’t find credible?


As a journalist, it’s not unusual for me to use blogs as a starting point for my reporting. But I see the blogosphere a bit like a virtual pub: you don't go home and write up what some stranger said over a few pints as if it is the whole and unvarnished truth, but the “pub” is a great place to get ideas, input, leads - information that has to be examined further.


Of course, if you run into a regular you know quite well, and who you know is a director with the company he talks about, you will trust his account much more and perhaps not spend an equal amount of time checking his credibility etc:


I don't treat online sources all that differently from how I treat real world sources, and of course I’m more likely to trust the ‘regulars’ in my ‘local’ cyber pub  - that’d be the one where all the media geeks hang out – and the people they recommend, more than a total stranger, say from the place where the stamp collectors hang out. It’s also a lot easier for me to verify the credibility of a media person than a stamp collector, as I know the media industry and its issues very well, but know precious little about stamps: how to judge them, who’s who in the stamp world etc.


Unfortunately, I do see journalists who, having just discovered blogs, leave behind all concepts of critical sense and just copy paste - especially if it's a newspaper industry source who've just jumped on the web 2.0 bandwagon - come to think of it, a bit like they copy paste what other online newspapers write daily, and everyone in the industry knows better than to trust a fellow journalist’s account, right?

A room with a view

Kvinesdal 022downsized

The view from my hotel room in Kvinesdal this weekend, where I was covering a big festival. I came back with some 400 photos, but after working from 7am to 11pm for three days in a row, I'm still struggling to convince my body that neither Mondays nor Tuesdays are part of the weekend - with limited success, I might add.

A bullish view on the media future

Why are media shares in such a mess at the moment? The short answer, of course, is that it’s a bear market out there, but at least one analyst thinks the pain is only temporary.


Media shares have gone from heaven to hell in the last twelve months, and it keeps getting worse. A while back I blogged about whether it’s a structural problem, if the media industry’s business model is fucked, as Nick Ward of Panmure Gordon put it, or if the industry is just suffering the effects of a jittery market.


When media shares took yet another massive beating earlier this week, I had a chat with Henrik Schultz, a media analyst at Kaupthing, who I know thinks the media sector is just going through a rough patch at the moment. His view:


”It’s a real bear market out there. The market is particularly worried about companies with big exposure to the advertisement market, so these get the worst beating. If they have high debts in addition, like Mecom, they are punished even more.


“Right now investors are really worried about consumer spending. Everyone with big exposure to the consumer sector is punished. The worst turmoil is over for financial institutions, but we’ve yet to see the impact on consumer spending.


“We’re in a real bear market now, but these rarely last very long. We’ve already put at least six months of this market behind us in the media sector, but of course it hurts when it goes on and on,” he said, adding that he is confident media shares will get a real lift in six to twelve months.


Kvinesdal 008-2

The bear is back (picture from Nordagutu station, Telemark, snapped from the train when driving past)


Now, I must admit that I’ve been watching and waiting for the ghost of recession to spread from the US and through Europe. Watching and waiting for its footprints to appear in the quarterly results of media companies like Metro International and Schibsted as the advertisement slump set it.

And it’s certainly a story that’s still happening: at an early stage the Spanish property and job markets, and the corresponding classified sections, were hit, later the same market segments in Denmark, where the newspaper ad market also is ravaged by a two-year-long freesheet war. 

In Norway, I think it’s yet to kick in – in fact, there are those who think Norway might be spared. But only Wednesday I was talking with Kees Pijnapples, editor-in-chief of Mecom-owned de Gelderlander, who said revenues in Holland were down as a result of a slump in parts of the classifieds market.

Now, I promised you a bullish view, Schultz is certainly bullish about the outlook, but me? We’ll I’m traveling through bear country at the moment - I kid you not, just look at the photos in this post - and I’m a bit grumpy since the web access here is very limited (hell, even my cell phone is struggling to find a connection here). Besides, I guess I’m more interested in recording the story as it unfolds than in predicting the outcome.   


And, if I can only find a spare moment while covering the festival I’ll be attending this weekend, I’ll tell you a very bearish tale from my part of the world…


Kvinesdal 002 

Photo snapped from the train while travelling thru Telemark, Norway

Troubled times for Mecom

This morning the Mecom share hit a record low, as threats of industrial action looms in Holland and protests have reached a new creative peak in Germany.

As readers have pointed out to me, I did neglect blogging about recent Mecom developments last week, but matters reached a boiling point yesterday when Wegener-editors decided to support industrial action in Holland, and staff at Berliner Zeitung in Germany went to the rather unusual step of advertising for a new publisher (if you’re fluent in Scandinavian languages, I’ve  covered these stories more in-depth  with a colleague of mine here and here).

The editors-in-chief of Mecom’s most recently acquired newspaper group, Wegener, decided yesterday to go on strike next Monday evening and stop the presses on the following day if a conflict with the regional newspaper groups’ new board of directors was not resolved.

“There will be more talks to avert industrial action, but there are very serious tensions between the two parties, after the new Wegener CEO introduced plans to cut 400-450 jobs, 80-90 on the editorial side, last week,” Thomas Bruning, the general secretary of the Dutch Journalist unions told me.

Mecom-boss David Montgomery was expected in Holland yesterday, but staff at Wegener's titles made it very clear that, as matters stood, he was not welcome in the newsrooms. There was almost an echo of bygone times as staff rallied behind the call for industrial action, as seen in this video from a staff meeting at Wegener-owned de Gelderlander. Editor-in-chief of the title, Kees Pijnapples, told me they were still in talks with the new Wegener management and he sincerely hoped they would avert industrial action.

Update (10/7): in the end, the strike was averted. Last Friday, Wegener's management agreed to amend the restructuring plan and present a new plan in September.

Competent newspaper staff desperately seeking new publisher…

Staff protests at Mecom-owned Berliner Zeitung have reached a new creative peak. Journalists have long been unhappy with Mecom's regime, in particular recent job cuts and Josef Depenbrocks dual role as editor-in-chief and managing editor of the title. Yesterday they went to the unusual step of placing this ad in Die Tageszeitung, desperately seeking a “serious” publisher:




The gist of it goes something like this (full text here): ‘Highly motivated daily newspaper staff, which has landed in an unfortunate situation, is looking for new challenges. We can offer committed, thorough and critical staff... high profiled German authors with unique traditions they want to preserve.’ No time to attempt a proper translation right now, but Martin has more on the story in Norwegian here.

A dream come true, sort of (or why it’s been a bit quiet here recently)

You know, ten years ago I really fancied glasses. I thought they’d rather suit my personae, or perhaps the persona I wanted to project stronger to those who did not know me.


But my eyesight was much too good, so after testing it for three consecutive years, I gave up and only thought wistfully of glasses every now and then. And since I spend ungodly long hours in front of the computer screen as a net crazy journalist, with small ‘breaks’ doing copy-editing and translation,  I thought my eyes were only a bit tired, in need of more rest or perhaps a pair of reading glasses, as I found them protesting so much at the end of my workdays this spring, my ‘extracurricular web activities’, such as blogging, suffered.


Until I saw the optician a week and a half back and found journalisting (or was it blogging?) has made me really short-sighted. So since I picked up a pair of glasses last Friday, I’ve been adjusting to seeing the world SO much clearer (did I really see that badly?) in-between my usual deadlines. It sure took some getting used to, but I’m just about ready to get back on the blogging track today…