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On Mecom's board room revolt, the German deal and new disposals

Didn't I just say there were no boring days with this company? Two days after that comment six of the company's directors resign after a failed coup to oust Mecom-boss David Montgomery.

It's good to see Rob back in the comment section copying me in on the news, he's copied me in on some really interesting links in the past, but on this account I must admit I just failed to address the drama due to lack of time. Now, my colleague Martin provides some really interesting background on the boardroom mutiny attempt and how it came about here (in Norwegian).

According to the sources Martin talked to, the failure to sell Edda Media, Mecom's Norwegian division this summer, before the price offers were reduced, was one of several concerns which led up to the the boardroom revolt.

Now I'll be the first to admit there are internal dynamics at play here that I'm not qualified to opine on, but as one who's followed the company closely I do think selling Mecom's German arm rather than the Norwegian one is a good move.

If I were to put on my business developer/analyst hat I'd say it's the best bet on the future Mecom could make: due in part to the macroeconomic outlook for Germany vs. Norway, but also because how far ahead the Norwegian newspapers are in terms of online develoment - a fact that Montgomery himself was keen to point out to me.

As the most profitable division in Mecom Edda Media might have fetched a better price if sold last summer - to take one of the courtiers: A-pressen reduced it's offer with roughly one billion NOK since then - but we can only speculate if that was due to the worsening financial outlook, completing the due diligence tests or both.

However, the Norwegian business generates a good cashflow and is much better poised to deal with the downturn and to be a player in the future media landscape than the German which would have needed a lot of investment in order to embrace all the advantages online (and there is no getting around doing that if newspapers want to stay competitive the current market).    

Also, the fact that Mecom failed to make more of its German business - e.g. by making Netzeitung its online operation and taking advantage of the expertise of this site, the first standalone news site in the country, as Olav Anders has pointed out on several occasions - suggests to me that Mecom's German management was not up to the job.

Mind you, this conclusion is also supported by some of Joseph Depenbrock's statements - such as this one about not needing the trust of his employees  (see esp. this link) - and my many talks with employee and union reps. These will always have their own agenda, but it was kind of telling when an employee representative sugggested to me that Depenbrock might have achieved better results if he'd emphasised the benefits of a more effective organisation and of new online possibilities rather than cost-cuts and negative aspects.  

As for what disposal Mecom should make next, more disposals are needed to reduce the debt level, I'm wondering if the company's stake in Rzeczpospolita is not more trouble than it is worth. The Polish state has been discontent with how the British media group has run the ship, especially with not turning over a better profit (oh, the ironies here) and Truls Velgaard, Mecom's Polish CEO threatened with legal action based on this conflict - though local union reps have told me they think this is a political conflict and that they were happy with Velgaard as a boss.

So it will be interesting to see what happens when the Polish state announces what it wants to do with its stake in the company that owns Rzeczpospolita later this week. Several parties have announced their interest. Mecom has also been in talks to divest some of its Dutch operations, and then there's of course Polaris Media's bid for Edda Media's papers in Western Norway, worth roughly 600m NOK, to keep an eye on.

If you're following this story, I'd love to hear what you think about recent developments and the road ahead (however, I'm in London 'til Wednesday morning, and if I'm slow to reply it's because my internet access will be limited while here).  


It doesn't have to be a sign on the wall but Alexander Lebedev is buying (a) paper(s)...
Maybe an idea for 'our' David.

And speculations in The Netherland are going on. A belgian groep will buy the AD from PCM...?
Will Wegener/Mecom sell his part of AD too and to whom?
Or maybe more...
Will David sell his Wegener...
You see the 'paperworld' is just a thriller and a little bit of Russian roulette.

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