Tuesday, May 15, 2007

Wegener to be acquired by MECOM

Ever since the British media investor MECOM bought its first Dutch newspaper group Mediagroup Limburg from the Telegraaf Media Group, it was clear that the regional newspaper company Royal Wegener was the next target. Next step of MECOM was buying 24 percent of the Wegener share held by the Telegraaf Media Group. Now MECOM is negotiating an agreement to acquire the rest of the Wegener shares for about 800 million euro. The deal is not official yet, but it will be a friendly take-over. And, most important, the Dutch monopoly body will not interfere in the negotiations, but will await the results.

The take-over of Wegener has been a long awaited move. But did I write in 1995, when I was working for Wegener, that the company would be acquired by a German company, the reality of today is that Wegener will be taken over by a British media investor. MECOM, the British investor is weaving a European network of regional newspapers. Companies have been bought on Germany (BV Deutsche Zeitungsholdung), Norway (Orkla Media), Denmark, Poland and Ukraine. With Wegener MECOM adds 7 regional newspapers to the portfolio.

It is intriguing that MECOM, the investment vehicle of David Montgommery, a former CEO of the British newspaper The Mirror, buys only regional media. These media are mainly regional newspapers with internet extensions. But in Norway Orkla exploits radio and television stations together with newspapers. It is clear that MECOM will go after the complete media range in the various regions. Not much synergy can be reached on the news feeds, nor can sales efforts in regions be combined. Yet efforts for selling ads to newspapers, radio and television as well as internet can be combined. Perhaps in the end savings can be made on the buying of paper.

The arrival of MECOM as the new owner of Wegener has upset the labour unions. They fear labour reductions. They saw already 50 jobs go when MECOM bought the Mediagroup Limburg. Besides Wegener was in the middle of a reorganisation to make the company mean and lean. The transfer to the tabloid format meant that 300 people will be laid off; while other reductions have been announced. Yet the fear for lay-offs was also present in Germany. But so far, no reorganisations have taken place yet.

A surprise was the green light from the anti-cartel watchdog NMa. Their reaction to the indicative offer of MECOM on Wegener was that the NMa would not block the take-over. A spokesperson for the NMa said: The borders between national and regional media fade, just as the borders between newspapers, radio and internet. In this way new markets will develop. This will also generate new criteria for unacceptable media concentrations. The NMa expects MECOM and Wegener to offer their offer to be approved. It might be expected that there will be minor problems to be solved. The NMa forbade the Telegraaf Media Group, the former owner of the Mediagroup Limburg, to merge the two newspapers in the South of Limburg. With Wegener bringing in a third newspaper in the same region, NMA will have to make a ruling on this situation, e.g. the sale of one of the newspapers. As this region is surrounded by German and Belgian regions, competition might step in; on the other hand MECOM might extend the newspapers across the border and certainly the German border, given the German holding.


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