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.

Never a dull moment at PCM

There is news again from PCM; but solid news this time. The Dutch newspaper and book publishing company has a new chairman of the board of directors. After all, but one of the board members have left, Mr Rob Bonnier has been appointed as the chairman, be it ad-interim.

The Foundation Democracy and Media, the major shareholder in the company, has appointed Bonnier, installing, at last, an experienced director. He finds Mr Caspar Broeksma, next to him as an ad-interim director.

Mr Bonnier has a lot of experience in the governance and management of stock quoted companies. He was the cfo of the paper company KNP BT from 1983 till 1997. Presently he is the chairman of the board of directors of DSB Bank and has some other directorships.

What is the governance and management state they find PCM in? The Foundation of Democracy and Media, after Apax’s exit, again the major shareholder of the company, needs shaping up with strong governors. The board of directors needs another two directors, as the old board has left, except for Mr Strengers. The daily management needs at least a new CEO, as now only Mr Bert Groenewegen, the financial man, is in function and is the last informed link to the company.

What do they find on their plate? Besides solving the immediate management situation, they will have to look into the merger talks that have been going on with the Foundation of Democracy and Media and the NDC/VBK, the Northern regional newspaper and national book publisher, since the beginning of the year. So far the CEO of NDC/VBK, Mr Jan Roos, has been tipped as the new chairman of the board of directors of the merger company PCM – NDC/VBK (my god what a name!).

On the other hand Mr Bonnier and Broeksma will find another problem on their plate. They will have to deal with the MNa, the Dutch monopoly watchdog. Their merger is going to be a major media concentration in Dutch newspaper world as well as in the book publishing world. MNa will have to consider the situation that after a merger there will be three major newspaper publishers: De Telegraaf, Royal Wegener and the PCM – NDC/VBK combination. De Telegraaf, a national newspaper company, wants to expand in broadcasting through its SBS link. Royal Wegener, a regional newspaper company, is being courted by the Europe oriented newspaper company MECOM. And the new combination has national and regional newspapers and will be dominant in book publishing. NMa might approve the merger, but with many condition.

So besides strengthening the governance structure of PCM, new daily management, most likely ad-interim, is needed immediately, while the new board members steer their merger plans passed the NMa. After a wild period at PCM, a new period might follow in which a solid strategic course for company can be set out in silence.

Blog Posting Number: 728

Tag: newspapers