Saturday, April 08, 2006

MECOM buys a foothold in the Dutch newspaper market

The fight for the newspapers in the Southern part of the Netherlands is over. The British company MECOM has won the bid. Of the other bidders, Wagener had already stepped out. And the Belgian –Dutch combination Concentra and NDC lost the bid.

The Media Groep Limburg B.V., Grafisch Bedrijf Media Groep Limburg B.V. and De Trompetter B.V. (freesheets) will cost MECOM 200 million euro. Earlier 140 to 160 million euro was seen as a fair price, but 200 million euro is definitely over the top. So the conclusion is that it is a strategic investment.

MECOM is the newspaper company of David Montgomery, the former ceo of the UK Mirror Group. The company has already some newspapers in Germany and is now getting a foothold in the South of the Netherlands. It will not be a surprise that the company will expand to Belgian, in Concentra’s territory, and into Germany. But that is not the reason, why MECOM paid so much.

Although the investment company Apax is the owner of PCM, MECOM is the first foreign newspaper company entering the Dutch newspaper market. MECOM will not just buy three titles and be satisfied as long as there is some profit. The company will use the position in the Southern part of the Netherlands to smoke out the regional newspapers. Presently the majority of these newspapers are in the hands of Wegener, NDC and De Telegraaf. De Telegraaf is selling up the regional newspapers and started with the Southern newspapers. So now de Telegraaf regional newspapers are a prey to NDC and MECOM. But there is a larger fish to be caught. De Telegraaf holds a 20 percent shares in Wegener. Given the present course of De Telegraaf, it is speculated that the company will sell the shares. So Wegener will an acquisition target. Wegener will not survive on its own; so it will need a financial partner or will have to be bought. NDC can not buy it as it is far smaller. MECOM looks to have the best cards for that scenario.

The investment of MECOM is not for the short term. MECOM has bought a foothold in the Dutch newspaper market.


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