Thursday, February 02, 2006

De Telegraaf: taking up positions

Yesterday there was some sensation going around in the Netherlands. News Corp of Rupert Murdoch sold Sky radio to the newspaper company De Telegraaf. It now means that De Telegraaf has four radio stations, three in the Netherlands (Sky radio 101 FM, Radio Veronica and Classic FM) and one in Germany (Sky Radio Hessen). The German station will most likely be sold on as De Telegraaf does not have any interest there.

The acquisition is interesting in more than one point. It indicates that De Telegraaf is setting out a strategy in a serious manner. It is now one of the most complete newspaper companies in the Netherlands. It has a daily newspaper, a Sunday paper, a free broadsheet (Sp!ts), regional newspapers (or wjhat is left of them), a magazine group, multimedia assets (Habbo Hotel, Classified), shares in SBS Television and now three radio stations.

The acquisition is remarkable in as far the shares it takes in the radio stations. Officially, it only took 33 percent of shares. The rest was taken by the bank ING. But this was a technicality. In the Netherlands publishers are not allowed to take a majority interest in other media such as television and radio. So a consortium was set up, giving De Telegraaf formally 33 percent of shares in the radio station holding. But there are clauses in the contract, offering the rest of the shares to De Telegraaf as soon as the media law is relaxed and newspapers can participate in RTV companies. So picking up the Sky radio companies is strategical: taking up positions for the future. In fact the companies are broadcsting like analogue media in a crossmedia mix.

Why did Murdoch sell the stations? Murdoch has operated these stations for years without paying any license fees: income were the ads, expenses were the disc jockeys and the equipment. And the income side was higher than the expense side. But after the last spectrum assignment exercise Sky radio companies had also to pay up for the use of frequencies. And as Murdoch does not have any newspaper assets in the Netherlands to combine radio and newspaper activities, it was more advantageous to move out all together.


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