Monday, September 03, 2012

BPN 1609: One Dutch freesheet in the future

Last week the Telegraaf Media Group (TMG) announced the acquisition the freesheet Metro. TMG  already owns the freesheet, Sp!ts, since the launch of Metro in The Netherlands on June 21, 1999. TMG claims to keep both freesheets alive.

Why Metro was sold
Metro Holland had a turn-over in 2011 of 23.4mln euro. Its EBIT in 2011 was 451,000 euro (2%), a sharp decline as in 2010 Metro Holland still recorded an EBIT of 3.6mln euro (15%). The present goodwill of the brand is 3.6mln. This decline is due to the dip in the advertisements, which is being felt by all Dutch newspapers, paid or free. Besides the freesheet market has reached its saturation in The Netherlands.
Another reason for selling off the Dutch Metro is the strategy by Metro worldwide to sell off in the European titles and invest in Latin America, where the freesheet market is still growing. Editions have been launched in Guatemala, in Peru, Colombia, Mexico, Brazil, while an  edition in Argentina is being planned.

Is TMG allowed to buy the Dutch Metro
The Dutch Netherlands Competition Authority (NMa) has not yet been asked to look at the acquisition. It looks like the TMG did its homework. If both companies have a turn-over of more than  30 mln euro, the companies should inform the NMa. Both companies should have more than 113.450.000 euro in turn overs, before they are obliged to inform the NMa. The turn-over of the Dutch Metro had only been 23,4mln euro in 2011, so the NMa does not need to be informed so far, unless the turn-over of 2012 is dramatically higher.

Two freesheet titles in one company
There are few newspaper publishing companies in The Netherlands who liked to acquire a freesheet. The Belgian/Dutch Pressgroup already indicated not to be interested in freesheets. They had their try in 2008 with the launch of De Dag. Wegener terminated the freesheet De Pers in March of this year after failing to get sufficient advertisement volume. So why should TMG acquire  the Dutch Metro and keep both titles alive?
TMG immediately stated, that Metro would stay as an independent title. In fact one of the TMG managers stated that the differences between Metro and Sp!ts would increase. The advantages of the acquisition would be in the common printing, distribution and sales of advertisement.  And as TMG is the only one in the freesheet market, it can up the prices of the advertisements, the management stated.

Just a question of time
The arguments by TMG to acquire Metro sound reasonable, but are just cosmetic. If TMG wanted to create a difference between its own freesheet Sp!ts and another freesheet, it should have acquired De Pers; it probably would have been cheaper than Metro. Sp!ts is a throwaway freesheet, while De Pers had content. Now TMG has two throwaway freesheets, of which Sp!ts is the stronger brand. It will just be a question of time that TMG will kill one of the freesheets as both will go for the same advertisements and the editorial content will hardly differ.

IMHO, before 2015, Metro will be killed off and Sp!ts will survive as the only Dutch freesheet as there are not enough advertisements budgets with the ad companies and not enough budget for two editorial staffs of throwaway freesheets.

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