Monday, March 12, 2007

Wegener on its road to foreign management

Last week I had the pleasure to see a forecast partly fulfilled. In 1995 I wrote in the Dutch publication Telecombrief Magazine, that the regional newspaper company Royal Wegener would be acquired by a foreign publisher within 10 years. At that time I supposed that it would be a German newspaper publisher as the circulation area of Wegener boarders with Germany. There was a lot wrong with the forecast. The foreign publishers missed my deadline already for two years. And the participating publisher is not German, but British. But the basic forecast still stands: not for long Wegener will be acquired by a foreign publisher.

Last week David Montgomery's British Mecom Group picked up a 24 percent minority share in Wegener. This had been in the air since a year, when Mecom took over the Limburg Dagblad. The minority share package was in the ownership of newspaper company Telegraaf Media Group. But as this company was not allowed to expand its influence in the newspaper sector, it put the shares in the safe and waited for an offer. Now that De Telegraaf has cashed, the company can invest the money in television and digital media.

Mecom will deploy 108 million GBP for a 24 per cent stake in the Dutch publisher Wegener, which has about 20 per cent of Holland's newspaper market. Mecom and the publicly-listed Wegener will now enter into talks, with Mecom seen as a likely candidate to make an offer for the entire company.

In April 2006 Mecom won the bid for The Media Groep Limburg B.V., Grafisch Bedrijf Media Groep Limburg B.V. and De Trompetter B.V. (freesheets) and paid 200 million euro. The high price was seen as part of a strategic investment. And so it turned out. Now Mecom is after Wegener, which has seven daily paid-for newspapers in the central part of the Netherlands, including De Gelderlander, a title with a daily circulation of 154,000 copies. It is expected that Mecom will need to pay an estimated 550 million euro in order to get the other 76 percent of the shares. If the British company succeeds, the acquisition will shake up the newspaper scene in The Netherlands.

And there was more news from Wegener. Han van den Berg, manager strategy with Wegener, said: Wegener has money for multimedia. Wegener has invested in digital media since 1995, doing foolish investments and some daring ones. In the pioneer years of Internet Wegener started a joint venture with a broadcast company; within half a year this was broken up with a big fight remaining as there was no written agreement from the start. Then came the project City Online, a Web 2.0 project avant la letter with local portals; but the project failed due to a heavy 3D-environment and other technical and ethical problems. Besides the editors-in chief of the regional newspapers wanted to have more influence.

But presently Wegener has built up its digital media around its own newspapers (the digital commons and regional portals) and it has started digital expansions of its classified ads such as Jobtrack and Autotrack. It has also collaborating with the Yellow Directory service iLocal. And the company has taken a 37 percent minority share in the beleaguered housing site Funda.
Wegener presently earns 2 percent in digital media of its total amount of 650 million euro in revenues. Major money maker in digital media is Funda. The other activities do not really contribute yet. The company wants to push its 49 percent joint venture with iLocal.

It is only a matter of time that Wegener will fall into foreign hands.

Blog Posting Number:690


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